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Housing and Planning Bill - Report (1st Day)

– in the House of Lords at 3:08 pm on 11th April 2016.

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Votes in this debate

Clause 2: What is a starter home?

Amendment 1

Moved by Lord Best

1: Clause 2, page 1, line 13, at end insert—“( ) is subject to a restriction requiring repayment of the 20% discount, reduced by 1/20th for each year of occupation by the purchaser, for a period of 20 years,”

Photo of Lord Best Lord Best Chair, Communications and Digital Committee

My Lords, in moving my amendment, I am grateful for the support of the noble Lord, Lord Beecham, and the noble Baroness, Lady Bakewell of Hardington Mandeville. I draw attention to my housing and planning interests in the register.

This may look like a dull, technical amendment, too dull to be the first for consideration on Report, but it gets to the heart of the fundamental problem with the Bill—namely, the introduction of measures to generously subsidise home ownership schemes, in this case the new starter homes initiative and, later, the extension of the right to buy, with the subsidies being found by a transfer of public resources away from low-cost rented homes for less affluent households. Most of us in this House are very supportive of the Government’s ambitions to ease acute housing shortages by getting more homes built and to assist more of the next generation to become owner-occupiers. Very few of us, however, want to see more homes for better-off potential buyers at the expense of significantly fewer homes for those on lower incomes who struggle to find rented housing that they can afford.

The starter homes initiative, in the format set out in the Bill, was a manifesto commitment at the last election, and this amendment does not seek to undermine the concept or to diminish the number of first-time buyers whom starter homes can help. But the amendment tries to ensure that this new initiative is not so generous that it displaces, by the end of this Parliament, a very high proportion of all new homes for those who, with the best will in the world, are not going to buy a property in the near future. As with so much of the Bill, we may or may not be unnecessarily anxious about the Government’s intentions, because so much of the detail remains for later regulations. We have all been entirely sympathetic to the Minister, who has had to tell us so many times that our questions cannot yet be answered. The only way to resolve key concerns is with changes to the Bill, as with Amendment 1.

The starter homes scheme of 20% discounts for 200,000 first-time buyers is the flagship policy in the Bill. Those buying in London could get help to the tune of £112,000, while those outside London could get more than £60,000. Without Amendment 1, those discounts would take the form of grants that the purchaser can keep when they sell after a period initially set at five years, but with the Government now suggesting eight years. A 20% discount on the average value of property acquired by first-time buyers last year would be £43,000, so 200,000 starter homes will cost the country some £8.6 billion, assuming no further increases in house prices over the life of this Parliament. The resources to pay for this generous subsidy are to be found partially by switching government grants away from affordable rented housing and, most prominently, by switching the present requirement on housebuilders to include affordable rented homes in their new developments to, instead, including a proportion of starter homes. In relation to grants for social housing by 2021, virtually no grant aid will be available to housing associations or councils for affordable rented homes, which will mean the lowest level of support for those who cannot be home buyers since 1919—that is, for a full 100 years. Switching the gains from granting planning consent, or Section 106 agreements, as they are called, away from helping poorer families and single people to instead supplying starter homes, will hugely diminish this highly successful method of achieving affordable housing for rent.

Amendment 1 would still offer the same level of support for the first-time buyer on day one, greatly reducing the level of the deposit as well as mortgage repayments. But it would mean the funds being returned proportionately if and when the purchasers sold up, as they almost certainly will, within the next 20 years. Since most first-time buyers move on after five to eight years, the amendment would recycle up to three-quarters of the initial support. The billions saved by this measure would make it possible for the starter homes initiative to be in good measure an addition to, not instead of, desperately needed new homes for less affluent households.

As well as the social arguments for moderating the generosity of the starter home subsidies, there are powerful economic and financial arguments. First, a subsidy available to an entire group in a particular category—in this case, to hundreds of thousands of first-time buyers—runs the risk of simply being absorbed into a higher price for the purchasers. Everyone is entitled to the same subsidy, so everyone can pay that much more for the same product. This means the starter home subvention could prove inflationary, pushing up prices without increasing supply. The position becomes even more problematic if the 20% starter home discount is combined with 20% interest-free Help to Buy loans enabling people to purchase at 40% less than the market price. The position gets quite out of hand in London, where Help to Buy can cut the initial price by 40%, meaning the combination with the starter-home subsidy could enable purchasers to get a 60% reduction in the initial price, which would have obvious inflationary consequences. I can hardly believe it is a serious proposition that a buyer of a property costing £500,000 in London would actually pay only £200,000, getting the other £300,000 from government schemes.

Secondly, there will be a lot of dead weight in the starter-homes proposition if those who are already willing and able to buy without a subsidy are given the same 20% discount, which is worth £43,000 on average. This will be an unnecessary extravagance, ultimately at taxpayers’ expense.

Thirdly, a subsidy for just one product in the market will squeeze out demand for other valuable products. As well as replacing low-cost housing for rent in terms of government funding and use of planning requirements, subsidised starter homes are likely to crowd out the new, unsubsidised, build-to-rent sector, as the British Property Federation has suggested. Melanie Leech, the BPF chief executive says:

“Government must not marginalise this important sector in its race to deliver Starter Homes”.

Fourthly, in the case against the Government putting so many eggs in the one basket of starter homes, there is obvious unfairness, not just in respect of those not earning enough to benefit or not able to find a deposit of 5%, which could be more than £20,000 in London, but in respect of all those who would like a starter home but who will not find one available. There are likely to be around 400,000 first-time buyers every year, but no more than 50,000 starter homes, so seven out of eight new buyers each year will not benefit from the average £43,000 grant. Those buying second-hand properties or buying in an area where starter homes are not built will get nothing, and they are the great majority of first-time buyers. Those who are aged under 23 or who do not manage to purchase before they are 40 will get nothing. Those on the edge of London will get only half as much as those within the GLA area, and there will be no help for the many young couples who bought a tiny flat and now need more space for a family but cannot move because they cannot afford a bigger mortgage. The potential resentment of the majority of new buyers who will get no benefit from the billions involved in this initiative would be much reduced if the starter home subsidy—those grants averaging £43,000 nationally but up to £120,000 in London—were repayable, albeit on a gently reducing basis over 20 years, if the purchaser left.

Finally, in Committee we heard the concerns of mortgage lenders and housebuilders who are worried about distortions in the marketplace if the subsidy is too generous. Housebuilders see the problem that big subsidies may initially push up prices for properties sold as starter homes but with a depressing effect on adjacent new homes not available with big discounts and on the second-hand market where no bonus is available. Housebuilders worry about the depressing effect on homes they build later when starter homes come back on the market with no discount. If builders feel they must move away from building anything other than starter homes for the first-time market, since no one will want to pay 100% when by waiting they could get a new home for 80% of its value, that might mean a decline in the overall output of new housing.

Amendment 1 would take the pressure off the wider market by moderating the generosity of the starter homes package. A powerful argument against reliance on starter homes with lavish subsidies to solve the UK’s housing problems is that the switch away from the current flow of affordable rented homes through housing associations and councils will mean lower total housing production. To reach the admirable goal of 1 million homes over the life of this Parliament, most observers agree that a combination of homes to rent, not dependent on the speed of the sales market, and new building for sale is vital. The robbing of Peter to pay Paul—the shift from affordable housing to starter homes—places disproportionate emphasis on the tenure that is restrained by the speed of the market, almost inevitably undermining the Government’s chances of addressing overall shortages while disadvantaging those households in the toughest circumstances.

This amendment would allow those starter homes to proceed but in the knowledge that a high proportion of the initial subsidy—the £8.6 billion in today’s money—would flow back again as people moved on, and could finance a continuation of the affordable rented programme, thereby increasing overall housing numbers, which I think we all agree should be the goal of the Bill. I beg to move.

Photo of Lord Shipley Lord Shipley Liberal Democrat 3:15 pm, 11th April 2016

My Lords, I shall speak to Amendment 5. I declare my vice-presidency of the Local Government Association, since we are starting Report. In Committee we had a very lengthy discussion on starter homes; on whether the 20% discount should exist in perpetuity rather than for five years; on whether cash sales should be permitted; and on the impact of Section 106 agreements and the consequent adverse impact on the number of affordable homes for rent. We argued that starter homes should not be the central policy proposal in the Bill since homes of all tenures are needed, particularly for rent. Since then, the Government have conceded that an age limit of 23 and above should be imposed to prevent richer parents buying starter homes for students. They have also conceded that the five-year limit on resale should be extended to eight years with a taper.

Amendment 5, to which my name is attached, proposes that the 20% discount should apply in perpetuity. The other amendment in this group, Amendment 1, which has just been moved by the noble Lord, Lord Best, would increase the length of time for which a starter home should be held from five to 20 years, again with a taper. Either is much preferable to the Government’s current position. Amendment 5 seeks to keep a starter home as a starter home in perpetuity. Amendment 1 would deliver a similar outcome in practice, since a starter home would remain a starter home for very much longer than the Government propose. It would also be potentially easier to implement in administrative terms. We should note that the Government’s two changes will not stop cash sales for those who are over 23. Nor will they prevent rich parents buying homes on behalf of children and then securing a cash bonus when the home is sold.

The context today is important. People expect fairness from our legislation, and that fairness dictates that housing policy should not be about only the 200,000 owner-occupiers who could gain from a cash windfall; it should also be about people on low and middle incomes who cannot afford to buy a home even with a 20% discount, who should be helped to secure a home for rent—and not just in the private sector.

There are two amendments in this group, Amendments 1 and 5—but if the noble Lord, Lord Best, wishes to test the opinion of the House, I believe that he should be supported.

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice)

My Lords, I shall also speak to both amendments, having signed both—which I suppose is by way of an each-way bet. I hope that the odds turn out to be favourable.

Many noble Lords will have received a letter from the Minister of 7 April in relation to starter homes, and I shall return to that later. But I also wrote to her on 4 April with a number of queries and I received a reply some four days later. That reply raises some interesting further questions. I asked about the Government’s definition of affordability in this context and whether it would be determined in relation to average house prices in a given area, subject to the proposed caps, or whether, and in what way, the definition would be linked to income. The reply was that since starter homes would be purchased by first-time buyers under 40, the Government would expect them to be below the average house price for the area and to be offered at a genuine minimum 20% discount, but that,

“the discount may be greater in some locations”.

I do not recall that this latter possibility has been raised before. Can the Minister exemplify the locations in which a greater discount might be offered and indicate who will determine it and upon what criteria?

The Government are apparently working with the industry and valuation professionals,

“to ensure an agreed, transparent valuation process is agreed”, to demonstrate that the discounted sale price is indeed at least 20% less than the market value. In her letter to Members in general, the Minister quoted the Office for National Statistics price statistics, showing that the new-build average was £291,000 in England—slightly more than the average for all dwellings—while for first-time buyers it was £181,000 excluding London. She expects that the actual starter prices will be lower than the average, even before the 20% discount.

But this of course assumes that developers will not take advantage of the scheme to increase the cost of new homes to buyers, who will be cushioned by the scheme from such increases by the operation of the discount. This is not an industry noted for its philanthropic propensities. At the very least, we must expect developers to build at prices which will, after the discount, meet the current level of new-home prices—that is, at 25% more than the discounted price. What, after all, will be the vaunted “local open market value”? It surely cannot be a simple average, which is what the Minister appears to assume.

I also asked about the size of the deposit that buyers will have to find, to which the enlightening response was that,

“this will be determined by individual lenders”, with whom the Government are apparently in discussion. As with so many of the concerns about this Bill, Parliament is being asked to establish this scheme with absolutely minimal or indeed no information about how it will work in practice.

Similar concerns apply to my third question about the reviewing of price caps and the geographical areas to which they will apply. This will, like so much else, be kept under review, with local authorities being consulted and with a power to prescribe different rates for different areas—but with no advance timetable.

I asked what standards in relation to building density, space, energy efficiency and special needs—for example, for disabled people—would be required and by whom they will be determined. The opaque answer was that starter homes,

“will be subject to the normal planning considerations and building regulations”, to be agreed—an interesting word—at local level. So, despite the significant public contribution and the tax-free gains to be made by the first-time buyers, the Government are doing nothing to address these concerns. In fairness, they refer to councils’ ability to require higher levels of accessibility and to apply the nationally described space standards, and they have published,

“an initial set of design exemplars”— but these will be optional.

In reply to a question about enforcing the prohibition on lettings, the Minister indicated that discussions are in train with the industry, lenders and local government which might involve a requirement on a starter-home owner to provide evidence of personal occupation—for example, in the form of council tax or utility bills. I should have thought that this would not be too difficult to evade and very difficult and costly to oversee effectively.

On tenure, I asked what consideration would be given to the provision of a mix, including affordable social rented housing, for which there is huge demand, as the noble Lords, Lord Best and Lord Shipley, have already said. The reply was less than comforting, stating that planning authorities will,

“need to apply their plan policies, including those on affordable housing, in light of the legal starter homes requirement”.

It went on to affirm:

“We would expect them to seek other forms of affordable housing, like social rented housing, where it would be viable”.

But this formulation begs the questions of what “seeking” means in terms of any power to require such a provision and what is meant by “viability”.

Some other questions are responded to after a fashion in the Minister’s more general letter. Thus, in response to questions raised by me and my noble friend Lord Campbell-Savours, she stated that an individual who had inherited property might still be considered a first-time buyer—a very convenient provision for the fortunate few. And yet another consultation is to take place on how to enforce the requirement to occupy the starter home—a question raised by the noble Lord, Lord Greaves.

It is impossible not to conclude in relation to these and other matters that we are being invited to buy not just a legislative pig in a poke but a veritable herd of such animals. This makes it all the more necessary to improve the Bill, as most of the amendments in the relevant groups that we shall discuss today seek to do. In particular, there is the major question which is the subject of Amendments 1 and 5, which would require a tapered repayment of the discount on sale, in the case of Amendment 1, or, as in Amendment 5, that the discount should last in perpetuity, thus avoiding a double bonus to first-time buyers by way of tax-free gains from both the discount and the inevitable rise in value over time—without even the need for offshore financial organisations to be involved.

The Minister’s letter of 23 March referred to the consultation document’s request for views on a taper, indicating a maximum period of eight years and accepting buy-to-let restrictions during the restricted period—but not, of course, after the restricted period. But why not? Properties could after all be sold on a leasehold basis with such restrictions being made for longer periods, thereby ensuring that they will remain available for first-time buyers.

The consultation includes a proposed national starter-home requirement of 20% on most—whatever that signifies—housing developments. Characteristically and worryingly, no such proposition is to be found in relation to affordable rented homes in the social housing sector or elsewhere. We are therefore being asked to endorse a costly approach to a massive housing problem for the benefit of only one section of the population, to a greater or lesser degree at the expense of people whose own needs and aspirations will continue to be unmet.

I need to refer to my local government interests as vice-president of the Local Government Association and a councillor in Newcastle—where, incidentally, a very small and well-designed street of bungalows for elderly people the local residents were kind enough to name after me. I hope that the House will support this and other amendments. I am quite happy to join the noble Lord, Lord Shipley, in supporting Amendment 1 if he chooses to test the opinion of the House.

We are in a position to encourage the Government not only to think through properly the implications of their policies but to ensure that the outcome of this Bill is fair to those seeking new homes to buy, to the taxpayer in general and to those who are in great housing need. The amendment goes some way to helping us ensure that and I hope that the House will support it.

Photo of Lord Taylor of Goss Moor Lord Taylor of Goss Moor Liberal Democrat 3:30 pm, 11th April 2016

My Lords, I should draw the attention of the House to various interests that I have around development and with local councils, and in other respects in this area, as set out in the register of interests.

I want to start by saying something which I do not think has yet been clearly articulated, which is that I welcome the Government’s emphasis on the need to provide new homes and to address the issues of affordability. There has been a big change in government understanding around housing need; the issue has risen rapidly up the list of the priorities of the public, as is shown directly in opinion polls, and not only the Government but all parties have sought to respond to it. We should therefore debate this matter in the context of understanding that the Government are attempting to address some very real issues, not least the fact that the group of people most excluded from the housing market—or at least the ability to buy into it—are those without substantial capital. The key thing about first-time buyers is that, having not been part of a housing market that has seen rapid capital increases, they struggle to put together a deposit. Indeed, when I stood down as a Member of Parliament, my wife and I with young children looked at living in London, which was an obvious place in terms of the way in which my career would go, but the sale of a home in Cornwall would not provide the capital to buy a family home in London. That illustrates the scale of the problem. However, I have strong concerns about the way in which the Government have designed their starter home initiative as part of the work they are doing to address it.

First, we need to understand that the need for this measure arises only from a massive undersupply of homes. The starter homes initiative does not address undersupply: it only changes who has access to the limited supply coming forward. We can perhaps take some potentially affordable homes for rent away and turn them into starter homes with a discount for first-time buyers but, in doing so, second-time buyers who are perhaps moving from a flat to a two or three-bedroom house because they are having children do not get the benefit.

I am afraid that housebuilders may well react to this part of the market being addressed through starter homes by shifting other parts of their mix higher up the market to return the discounts. More importantly, they will not look to sell into the low-cost sector because they know that that is being eaten away by starter homes. Why would anyone buy those products if they could buy a starter home otherwise?

I emphasise that the big issue is to provide more homes—we can have other debates about how to do that—but this policy will not do so. Indeed, it may have the opposite effect. I have spent some time talking to large housebuilders and lenders about this policy and, although the Government have made some adjustment in the phasing of the discount period, there is no question that both are concerned about it. The large housebuilders who have targeted relatively low-cost homes now see a product that effectively rips out the possibility of any certainty in their market for it. Many of them have also relied on pre-sales of affordable rents to housing associations to help fund early development phases. Therefore, relying on future sales to replace those rented products which can be pre-sold to housing associations to provide capital to enable development may make it harder to fund development going forward.

In many respects the concerns raised by lenders should alarm us more. They are concerned not about the inability to lend to people buying these properties—self-evidently, they are a relatively low risk; if they have a 20% discount they can then make back later they are not a high-risk lending proposition—but about those they have lent to previously who are in that part of the market with which this policy will directly compete.

Let me explain what I mean. I live in a poor community where there has been rapid housebuilding because land values are low and houses are sold at low prices. The large numbers of people who have brought those properties in the China Clay district, a relatively undesirable part of Cornwall for many—I do not agree with that view but it is reflected in the house prices—are young people , young nurses, young teachers and first-time buyers, exactly the group this policy is targeted at. When they come to sell, they would expect to sell to first-time buyers again, but how will they sell their property at the kind of prices they previously paid if now people can buy a brand new home at a 20% discount in exactly the same market? That is why the lenders are worried. They are concerned that this will have a dramatic distorting effect on the value of homes that people of the same group already live in but who simply bought their homes previously without the advantage of the discount.

I started by saying that I think the Government are trying to do the right thing—they are trying to address housing issues and the issues of young people who are unable to raise capital—but there is a simpler solution, and that is to offer the 20% discount in perpetuity. Why would that be so much better? For precisely all the reasons I have just mentioned. It would no longer distort the market because the people who would buy these homes with an in-perpetuity discount of 20% would be those who could not afford to buy a home at full cost. They would participate in any rise in the housing market that happened over time and they would be able to build up capital for when they move on, but this would not distort the market because anyone who could afford to pay the full price would do so and would then benefit from the whole capital appreciation of the value of the home. It would target much more precisely those with limited capital who could not otherwise afford to buy and it would not have the same distorting impact on the wider market because there would still be a market there to sell into for those who could and would afford more.

Perhaps what is most important is that it would not distort people’s decisions about when to move on because I am worried about what we are doing for those who are buying into this proposal. Let us take a young couple who are thinking about buying their first property. They do not yet have children. They cannot afford a lot, so they buy a small flat. But they will have to give up the discount when they have a child in order to get the room they will need for the baby. How can that be right? Or do they delay the purchase and rent for longer because of the possibility that in a few years’ time they will have a child? What do they do if they have had one child and now want another one and therefore want to move on?

People will hold back from their sale, and it is because of that worry that frankly I understand absolutely why Amendment 1 has been brought forward. It addresses some of the issues for lenders and encourages people not to see the discount as a short-term investment, thus creating a new asset investment class with a view to getting it back in five or eight years. On the whole, the amendment is worth supporting because it is better than the status quo, but do we really want to lock people in to thinking that they have to stay in the same home for 20 years in order to get the full benefit of the discount? I cannot see that that is the right thing to do.

Some time ago Cornwall pioneered the principle of homes being given an in-perpetuity discount—not affordable homes, but simply properties built by local housebuilders with a covenant on resale that is tied to local wages. They would always be below market levels and would always be affordable to people on low incomes. There has been a really strong demand for those homes. Housebuilders like them because if they can get land at relatively low cost they are not too costly to build and they know that the sales will be there. Buyers like them because they know that they can then afford to get into the housing market and see the commercial uplift that comes as house prices rise, but they can then sell on again when it is right for them as a family to do so—perhaps when they have a child, the relationship breaks up, or things change because an inheritance comes through.

Making the discount in perpetuity would create a market for those who cannot afford to get their first foot on the ladder. As it stands, the starter home policy creates a very different vehicle: it is an investment vehicle with a 20% bonus at five or eight years. In a market for housing that is distorted by undersupply, which this policy does not address, and a market for housing that is even more distorted because it has become an investment market rather than one for the purchase of a home, the last thing the Government should be doing, in genuinely trying to address this issue, is introducing a product that is even more finely tuned as an investment product aimed at producing a return rather than providing a step towards the security of a home that meets people’s needs.

Photo of Lord Horam Lord Horam Conservative

My Lords, the noble Lord, Lord Taylor, said graciously that there has been a sea change in Government policy towards housing in the past year or so that recognises that there is obviously a severe problem in London and the south-east in particular, but also in other parts of the country. In debates on housing, we have heard occasionally from the noble Lord on the Liberal Democrat Benches about the different perspective of Pendle in the north-west, but broadly speaking it is recognised that there is a real crisis in housing throughout almost all the country. The Government should be congratulated on this imaginative proposal. I do not suppose that anyone will want to stop it going through in its broad shape, given that it has gone through the other place, but we are here to improve things and I think this proposal can be improved.

As the noble Lord, Lord Best, pointed out in his speech moving Amendment 1, it is a very expensive proposal that will cost £8.6 billion if it achieves the full panoply of 200,000 results. That is a lot of money. Even though some of it is offset, it is offset in ways which housing experts rather deplore. For example, less Section 106 affordable housing will be built if this development goes ahead. As the noble Lord, Lord Taylor, pointed out, there will be fewer Build to Rent proposals, which is one of the most imaginative things on the housing horizon. I also get the impression from talking to housing associations that they are concerned about the shared equity homes into which they have put a lot of money, and which are fully supported by Government grant. Those are just three areas that may well be adversely affected by so much emphasis on starter homes.

The question therefore arises which the noble Lord, Lord Best, put rather well: can we somehow take the pressure off the situation by creating a slightly less favourable position for those taking on starter homes? His suggested method of, in effect, people paying back for the advantage they get is entirely sensible, and it does not necessarily mean locking a person into a home for 20 years. As I understand it, a discount of 1% could be paid back if they move after one year, or 5% after five years. The full 20% would be paid back after 20 years. People obviously move over a period of time so it seems to me, as an economist, that this has some sense. People who have the magnificent benefit of a 20% discount on their home acquisition will—after a period, obviously—pay back in a steady flow. There will be a steady flow of cash coming into the Treasury and the department that can be used for other housing purposes. Therefore, there is some sort of quid pro quo for all that the Government are laying out in this sensible way.

On the other hand, I hope the noble Lord, Lord Taylor, will forgive me for saying that I do not understand how his proposed discount in perpetuity would work. If you have in perpetuity two different classes of housing, eventually the market will somehow arbitrate between houses that do not have a discount and houses that do. Eventually, someone—an estate agent—will say, “Well, if you want this other more attractive one you can buy it but, of course, it will cost a bit more, even if we head it as ‘furniture and fittings’, or whatever”. There will be a means of the market arbitrating between the two and the advantage will eventually disappear. Although I understand the idea behind Amendment 5, it is impracticable so it should not be supported. However, because Amendment 1 would bring in a flow of cash to the housing market, that seems to have a great deal of merit.

Photo of Baroness Warwick of Undercliffe Baroness Warwick of Undercliffe Labour 3:45 pm, 11th April 2016

My Lords, I want to speak very briefly to Amendment 1, so powerfully moved by the noble Lord, Lord Best, and to comment now on the closely associated Amendments 8, 10, and 11. I shall focus on the impact of starter homes on the provision of affordable housing and on the effect starter homes could have on the long-term future of rural communities. I declare an interest as chair of the National Housing Federation, which represents England’s 1,000 housing associations.

It is undeniable that starter homes have the potential to help some young people on to the housing ladder. However, the Bill as drafted undermines the wider supply of homes of all tenures that are so critical to making housing affordable for young people. Clause 4 requires developers to deliver starter homes as part of their Section 106 obligations. When this is coupled with proposed changes to the definition of affordable housing, whereby developers can build starter homes to meet their Section 106 obligations, I fear it will lead to a significant fall in the supply of the sub-market homes, or truly affordable homes, that are so badly needed. That is because the housing crisis is different in different communities. Local authorities need to have the freedom to plan across a range of tenures, based on their strategic housing market area assessment.

I will not rehearse the many, many arguments that have been made in the several debates on rural areas that we have had in this House. The Government are consulting about the size of site that might be excluded from the starter homes requirement. I hope the Minister will say something on that today, but rather than restricting the option to 10 or fewer, as the consultation does, I would like her to consider excluding rural exception sites completely. The Government are endangering the bond of trust between the landowner, who provides these sites at below market value, and the housing providers. Landowners might be either unwilling to provide sites, or will seek a higher price for the land. Even if sites of fewer than 10 homes were excluded, this would apply to only half the total number of rural exception areas. This could lead to the end of affordable housing within five years, resulting in more young people leaving the rural areas they grew up in.

The best way to drive up new supply and to increase opportunities for home ownership is to deliver homes across all tenures. Starter homes should be seen as part of that, not the sole solution.

Photo of The Bishop of Coventry The Bishop of Coventry Bishop

My Lords, I apologise for not engaging with the Bill at an earlier stage. Other colleagues from this Bench who have engaged with it are unable to be here today. I declare an interest: I have five children, and I worry very much about how they will own their own properties. Two have already managed to; the other three will need to work on it. It will be a little bit difficult for them. They will not have a great deal from me to help them, as they come from a clergy family. That is my second declaration of interest. Living on a clergy stipend for most of my adult life and living in clergy accommodation means that I have got to know the letting world reasonably well as a way of trying to make provision for my future and my family’s future when I am evicted from my house at some point.

I very much commend the Government for the whole initiative of trying to help people on to the housing market. As a parent, I appreciate that enormously. A good deal of me is attracted to this proposal. I can see it being very helpful for my third son, who is just getting to that point. It could be extremely beneficial to him, but I worry about how it would leave my fourth and fifth children when they are in that position.

I simply wanted to say that there seems to be a moral principle to secure the permanent benefit of public funding in this way for as long as possible and to minimise the potential for this scheme to be used unduly for investment purposes.

Photo of Lord Cameron of Dillington Lord Cameron of Dillington Crossbench

My Lords, I support Amendment 1. For the purposes of Report, I declare my interests as a farmer and landowner, as a rural landlord of domestic property, and as the ultimate landowner of an exception site leased to Hastoe Housing Association.

I wish to make only one point—to re-emphasise what others have hinted at. We are all aware of the shortage of affordable housing in our country. We are also aware that this is not a short-term problem. I expect that most of us will have received the rather bleak report from the National Federation of Property Professionals, predicting that property prices and rents will continue to rise until at least 2025 because of the shortage of housing, particularly affordable housing. Meanwhile, the Government have promised to build 200,000 new starter homes by 2020. This will be the main plank in their policy to deal with the severe shortage of affordable housing. Let us say that it is 50,000 starter homes a year, although I expect that it is even more than that by now. The transience—that is the key word—of these starter homes, which causes them to fall out of the affordable sector currently after only five years, maybe eight, means that we will have to go on building 50,000 starter homes a year for ever.

We are trying to fill the bath with the plug taken out. Amendment 1 is an effort to put the plug back in. Therefore, I strongly support it.

Photo of Baroness Williams of Trafford Baroness Williams of Trafford The Parliamentary Under-Secretary of State for Communities and Local Government

My Lords, before I begin, I note that those of us discussing the housing Bill on the last day before recess were the last ones out of this place, and we are the first ones back in to discuss it today. I am very glad to see the noble Lord, Lord Kennedy, back, as well as the noble Baroness, Lady Bakewell—who is much chirpier than she was. I apologise for anything that the housing Bill took out of noble Lords.

Before I turn—or, in some cases, return—to the amendments we are discussing today, noble Lords will have seen that over the recess I wrote giving further detail on how the Government have reflected on the debate so far, and saying that we will amend the Bill as a result. It is worth considering where we have come from. For example, to reflect noble Lord’s concerns about starter homes we introduced a requirement to consult when changing price caps, and have now introduced flexibility on the upper age limit so that more couples and injured service personnel can benefit. Many noble Lords—for example, the noble Lords, Lord Best and Lord Shipley—were also concerned about parents exploiting starter homes for their children. Today, I will move an amendment to address that.

The consultation document we published in March—referred to by the noble Lord, Lord Beecham—has been directly influenced by your Lordships’ House, as have amendments I will move later when we discuss banning orders. Those amendments were inspired by contributions from the noble Lords, Lord Beecham and Lord Campbell-Savours. We are due to debate electrical safety, and I look forward to discussing with the noble Baroness, Lady Hayter—who is not yet in her place—and the noble Lord, Lord Beecham, the steps we can take to make homes as safe as they can be. The amendment I will move later is a direct response to the points raised through your Lordships’ House.

I will continue to reflect as we turn to later parts of the Bill. I know, for example, that there is a lot of concern that noble Lords would not have the opportunity to see how we plan to implement the Bill’s clauses on social rents. I will write this week giving that further detail, so that noble Lords can approach next week’s debate as informed as they can possibly be.

I said before the recess that I trust that, as we discuss this Bill on Report, we can move closer on a number of matters about which we will all agree. I do not think there has ever been any dispute over the need to increase the number of homes built to meet this housing crisis. There is the need to ensure that housing markets and the planning system that enables their growth work as well as they can. I hope that a number of our debates will not divide us, and that we will take to Third Reading a Bill that is practical and improved as a result of the expertise that noble Lords have shown throughout.

Turning to Amendments 1 and 5, I thank the noble Lords, Lord Beecham and Lord Best, for Amendment 1, which would require the repayment of the 20% discount reduced by 1% for each year of occupation for a period of 20 years. I also thank the noble Lords, Lord Shipley, Lord Beecham and Lord Kennedy, for their Amendment 5, which would require the minimum 20% discount on a starter home to be retained permanently with the property. The noble Lord, Lord Beecham, asked for clarification on when the discount might be larger. That would be in the situation where local authorities, for example, negotiated a larger discount. I think it was my noble friend Lord Porter who pointed out how he had done that in Lincolnshire. It is difficult to speculate at this point where this might be done with starter homes. The point is that local authorities can and do negotiate larger discounts.

I made clear in Committee that we want to ensure that starter homes are sold to those genuinely committed to living in an area and not to those who would simply wish to quickly sell to secure financial gain. However, we also want to support mobility. Many noble Lords expressed concerns about the proposed five-year restriction that would enable the owner to sell at full market value after five years of occupation. I listened carefully to the quite extensive debate in Committee and to the views of the sector. As a result, we are seeking views in our consultation on whether a tapered approach should be introduced. This would enable owners of starter homes to sell at an increasing proportion of market value over time, stepping up to 100% after a maximum of eight years. We consider that restrictions beyond eight years would unreasonably limit young people’s ability to move on. That is a similar point to the one made by the noble Lord, Lord Taylor, on the growing family, although I think that we made them for slightly different reasons. We do not want these houses to be restricted in perpetuity as we think that that would make it more difficult for the first-time buyer to move to a new home as their family needs grow and their circumstances change. Starter homes are for young first-time buyers whose needs will change. If you only ever own a proportion of the property, the step to full ownership is a much, much greater challenge. We want to support mobility, not hinder it.

The amendment of the noble Lords, Lord Best and Lord Beecham, presents a much longer taper. My first concern is the limitations this would place on individuals. A couple in their mid-30s, buying a starter home as their first house, would need to stay until they were in their mid-50s to realise the full value of the property. Starter homes are about people buying their first home, not their only home.

Clause 2 provides the Secretary of State with the power to make regulations on these restrictions. The use of secondary legislation allows us to consult the sector and then bring affirmative regulations back to Parliament for agreement. Placing these restrictions in the Bill would take away our ability to engage properly and would also limit flexibility to make adjustments in the future. We will consider all responses to our consultation carefully, and I welcome noble Lords’ views to help inform the resulting regulations. We need to work with those who will make this work on the ground to test our proposals and to ensure that the restrictions are feasible, proportionate and effective. In particular, the views of lenders are important, as the noble Lord, Lord Best, said. They have confirmed today that they welcome the principle of a taper but want to continue to discuss how best to make it work in practice. They are not supportive of a 20-year taper in the Bill. Furthermore, we are working with the sector on drafting model Section 106 clauses to help local authorities and applicants with securing the post-sales restrictions. This will help to standardise the approach to securing starter homes and reduce burdens on the planning applications process. It will build the restrictions into the conveyancing process so that first-time buyers and their advisers are aware of, and have certainty on, our approach.

Finally, I wish to be clear that we have listened to noble Lords’ concerns expressed in Committee and are now consulting on a taper to seek wider views from those who will make it work on the ground without hindering mobility. I hope that the noble Lord will not divide the House but be satisfied with the commitments that I have made. I ask that the amendment be withdrawn.

Photo of Lord Best Lord Best Chair, Communications and Digital Committee 4:00 pm, 11th April 2016

My Lords, I am grateful to noble Lords all around the House for supporting Amendment 1 in my name. The noble Lord, Lord Shipley, proposed the alternative of the discount remaining at 20% in perpetuity. That admirable idea would moderate the generosity of the measure and ensure that the public benefit from this big discount lasted for very much longer—indeed, for ever. However, there are some technical difficulties with it. You would need to have a valuation each time anyone sold the property to see what the 20% represented a percentage of and you would need someone to police who is buying to determine whether they are a genuine first-time buyer and so on. These properties will be dotted around all over the place. A lot of complexity could be involved in that alternative, although in principle it is sensible.

The noble Lord, Lord Beecham, pointed out that housebuilders may sell their properties for rather more, knowing that buyers can pay rather more because they are getting a big discount. He raised a lot of interesting questions. I am afraid that starter homes are still a step into the unknown. This is the hazard that we face in debating them. The noble Lord, Lord Taylor of Goss Moor, applauded the Government’s ambitions to increase the number of homes being built and to help first-time buyers, as we all do. He liked the in-perpetuity arrangements but he was also very much in favour of Amendment 1 and felt that anything that discouraged short-term, speculative use of a discount would have a distorting effect on the market and should not be there.

I am grateful indeed for an economist supporting Amendment 1. The noble Lord, Lord Horam, welcomed the starter homes initiative in principle, as nearly all of us do, but felt that it could be improved. He greatly welcomed the idea of there being a payback over a period of years once people moved out and moved on. The noble Baroness, Lady Warwick, was equally supportive and the right reverend Prelate gave the House a very practical illustration of a family with five children. Even in the most affluent of households, finding the deposit for five children to buy would be a pretty uphill struggle. Starter homes, as a way of helping people who will not be able to get hold of a deposit, will be a useful addition, but the right reverend Prelate felt that securing the public benefit for as long as possible—which Amendment 1 achieves—would be useful. The noble Lord, Lord Cameron of Dillington, talked about the transience of an arrangement where, after five—or possibly eight—years, all the benefits are lost to the wider public. That is what the amendment seeks to avoid.

I am grateful to the Minister, who mentioned that she has been listening. She has, indeed, been an absolute model of courtesy, patience and helpfulness throughout Committee and I know there will be amendments to come. She already concedes that the initial proposition, which is that people who buy a starter home get nothing back in the first five years of occupation and after that time collect the whole of the average of £43,000—possibly over £100,000 in London—was not a very helpful way of doing things. Instead, the Government are likely to go for a taper so that one keeps a proportion each year. However, that taper would run out after eight years, whereas Amendment 1 proposes that the public benefit is retained for 20 years, with the occupier getting more and more of the benefit the longer they stay there.

The Minister hoped that I would not wish to test the opinion of the House on this. I am clearly reluctant to do so when she has been a listening Minister throughout this process. We have the assurance that secondary legislation, after further consultation, may produce regulations that take us further in the right direction, but this is only in prospect for the future. Only by putting things on the face of the Bill can we, ultimately, be sure that they will happen. So, with a slightly heavy heart, I would like to test the opinion of the House.

Ayes 275, Noes 181.

Division number 1 Housing and Planning Bill - Report (1st Day)

Aye: 273 Members of the House of Lords

No: 179 Members of the House of Lords

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Amendment 1 agreed.

Amendment 2

Moved by Baroness Williams of Trafford

2: Clause 2, page 2, line 7, leave out “under” and insert “at least 23 years old but has not yet reached”

Photo of Baroness Williams of Trafford Baroness Williams of Trafford The Parliamentary Under-Secretary of State for Communities and Local Government

My Lords, I apologise for the delay—first day back and all that—but I will now move the amendments. Amendments 2 and 3 require qualifying first-time buyers to be a minimum age of 23 to be able to purchase a starter home.

As I made clear in Committee, the Government want to strongly discourage starter homes from being considered as commercial investment opportunities rather than homes to live in. Many noble Lords expressed concerns about the eligibility criteria for those able to purchase a starter home, including the possibility of such homes being used as an investment vehicle. One area of risk has been identified as parents buying starter homes in the name of young children, or even their young adult children who are not yet in a position to buy because they are not in stable employment but in higher education.

I listened carefully to the debate in Committee, and, as a result, we have tabled the amendment to introduce a minimum-age criterion that would limit the ability to purchase a starter home to those who are aged 23 or over. This would prevent individuals purchasing a starter home in the name of a child or perhaps a student under the age of 23.

We have considered the age that adult children leave education or training to enter the job market so as to become realistic first-time buyers in their own right. We estimate that about four-fifths of higher education students turn 23 either during their final year or after graduation. This minimum age requirement strikes the right balance between providing real opportunities for hard-working young people and families to secure a home and discouraging starter homes from being used as an investment opportunity.

My department’s analysis of Council of Mortgage Lenders data suggests that, in 2015, only 4% of first-time buyers were under 23. I expect that this minimum age requirement would directly impact a relatively low proportion of potential buyers, but would restrict the scope to game the opportunity provided by starter homes. I therefore ask that this amendment be agreed to.

Photo of Lord True Lord True Conservative

My Lords, I was unable to attend the Committee sitting in question, but I read the report carefully and understand entirely where my noble friend is coming from. She said that it may affect only 4%. I congratulate her on responding to your Lordships in seeking to address the potential abuse that she rightly identifies, but there is always a risk of viewing legislation from a London position and in a world where so many people who write and think about legislation went to university. Many people do not go to university, and in some parts of the country property values are quite low. In that 4%, there will be aspirant young couples—plumbers or mechanics married to teachers—who have the same hope to make a start in life and who should not be excluded from the opportunity for the sake of closing a loophole.

I know how difficult this is, and I will certainly not oppose my noble friend’s amendment, but it will go back to the other place as a Lords amendment, so it will be subject to further consideration. I ask that we have a mind in this great House to that small 4% who may not have been to university, do not live in high-property-value areas but want to be first-time buyers and to benefit from the provision. I congratulate my noble friend on responding to the House, but I hope that, when the Bill goes to another place, my right honourable friend the Secretary of State will give further consideration to twiddling the amendment a little.

Photo of Lord Lansley Lord Lansley Conservative 4:30 pm, 11th April 2016

My Lords, I wanted to say a few words, including in relation to Amendment 4 in my name, which is in this group but does not relate to the age restrictions or requirements. I share with my noble friend Lord True an appreciation that our noble friend the Minister listened exhaustively and exhaustingly throughout Committee, and has taken the trouble to bring back amendments that are the basis of that reflection on some of the issues raised—and rightly so.

Amendment 4 relates to the definition of a starter home. I have always started with the plain English definition that a starter home is a new dwelling built expressly for the purpose of being available to first-time buyers. That, of course, is what the Bill says, but it puts a number of additional caveats on that definition, expressed in Clause 2, including the specific age requirements that the group relates to. But the Bill also, under the purchase provision in subsection (5), makes it clear that this will happen through purchase. What does “purchase” mean for the purposes of the Bill? Does it include or exclude when somebody buys with a mortgage? I think that clearly, by definition, we must assume that it includes buying with a mortgage and that it does not just mean buying outright. But what about if somebody buys through a shared equity arrangement, or staircases to purchase through a rent-to-buy arrangement? My understanding from the prior discussions on the Bill is that they are not included, but my submission in the amendment is that they should be. From the standpoint of first-time buyers, those are routes to home ownership, which is what we are looking to promote.

One figure that we have not referred to yet on Report but which has been instrumental to our debate is that 86% of young people looking to go into the property market want to own their own home. Of that 86%, a significant proportion currently cannot do so. The manifesto commitment is absolutely right and admirable, and appeals to them for that reason, but there will be a proportion for whom, even at the discount to the market value, as Savills’ work for the Local Government Association demonstrated, finding the deposit—because we know that deposits have at least doubled in the past decade or so—will be very difficult in some parts of the country. So maximising the mechanisms by which young people can buy a starter home, including other mechanisms for buying a starter home, seems a reasonable approach.

There is a good argument against this proposal, which is—very straightforwardly—that the starter home is a distinct product and separate and different from shared ownership or indeed rent to buy, and if we were to conflate these things we would make it much less clear what the starter home requirement relates to. But the Government should look at the technical consultation; the calculations on the back show the Government’s estimate of the proportion of affordable homes that would be available for the starter home requirement at the average subsidy through developer contributions on sites in excess of 10 units. The answer was that 22% as a starter home requirement could be delivered on the average as already assessed on the viability of those sites. The Government are now consulting on a 20% starter home requirement, with the implication that the overwhelming majority of that affordable housing contribution will be consumed by the starter home requirement. It therefore seems that the starter home requirement should include more of those affordable housing requirements and mechanisms. Otherwise, a significant proportion of young people might be left out of the opportunity, through affordable housing contributions, to own their own homes. If you were to take the 20% requirement down to, say, 15%, which is one of the options discussed in the technical consultation, the net result is that at 200,000 homes a year over five years, you do not get 200,000 starter homes. It is only at 20% that you get 200,000 starter homes over five years so, in that sense, we are between a rock and a hard place. One of the mechanisms for dealing with that—and I continue to commend it to the Minister in her further thoughtful approach to the Bill—is to think about whether the definition of starter homes is unnecessarily narrow. A slightly wider definition, to embrace some of the other products that enable young people to buy their own home, would allow us to meet the starter home requirement more readily and ensure that a larger proportion of young people are able to access a home of their own through these proposals.

Photo of Lord Best Lord Best Chair, Communications and Digital Committee

I shall speak briefly to Amendment 10, but I add my support for Amendment 4 in the name of the noble Lord, Lord Lansley. Amendment 10 states that age-restricted housing schemes for older persons will be exempt from any requirement to provide starter homes. I do not think this will detain us for very long because it is pretty obvious that if you are building an extra care scheme for older people, or even a block of retirement apartments, there is no place for housing for people under 40, for whom starter homes are intended. The 22% requirement simply cannot apply if we are to have those homes built for older people. I therefore hope that the Minister will be able to be very reassuring on this point and that wherever a developer or a housing association puts in for planning consent for an extra care or continuing care development, a retirement village, a retirement community, a sheltered housing scheme or a retirement apartment block the planner will be able to say that in these cases there is no requirement to insist upon starter homes and that the developer can proceed with a scheme exclusively for older people. That will help younger people as well because nearly everyone who moves into a retirement apartment leaves behind a three-bedroom or possibly even a four-bedroom family home and frees a flow through the marketplace that helps everybody right through the system.

Photo of Baroness Bakewell of Hardington Mandeville Baroness Bakewell of Hardington Mandeville Liberal Democrat

My Lords, as this is the first time I have spoken on Report, I draw the attention of the House to my interests as set out in the register as a South Somerset District Council councillor and as a vice-president of the LGA.

I rise to support Amendment 10. As the noble Lord, Lord Best, ably demonstrated, age-restricted housing schemes for older people should, by their very nature, be exempt from the requirement to provide starter homes. The majority of these schemes will have been designed around the needs of older people and will be completely tailored to their needs. The ethos of the Government’s starter homes policy is targeted at younger people between the ages of 23 and 40. It would be inappropriate for starter homes to become part of an elderly people’s complex, and they should therefore be exempt. This should be clear in the Bill.

Photo of Lord Porter of Spalding Lord Porter of Spalding Conservative

My Lords, as this is the first time I have spoken on Report, I remind the House of my declaration of interests. It is long and exhaustive, and I do not propose to read it out again. Noble Lords should refer to previous copies of Hansard or to the register, where it is all recorded.

I support my noble friend Lord True on the age restriction. I would not go through the wrong Lobby on this minor issue, which is going to go to the other end of the building and hopefully someone will look at it, but the age restriction based on the arguments that were exercised in this House excludes some people who may well be able to purchase a starter home if they are not university students. To exclude people who are not university students because we are worried about avaricious parents of university students seems perverse. I hope the Government will try to work out a way in which we can get a restriction on people getting into schemes that does not preclude those youngsters—probably in couples, with trades behind them—who could earn enough money, subject to being able to get access to a deposit, for 80% of the value of the scheme where they would not for 100%. That aspect requires a bit more work.

In response to my noble friend Lord Best’s comments about properties for the elderly being excluded from this measure, quite clearly there would be an expectation that we would not be putting starter homes on elderly-unit accommodation. However, that is not to say that a developer, if the financial circumstances warranted it, should not be expected to pay a commuted sum to offset the cost of starter homes on an alternative site. Some more work needs to be done on this to ensure that we are not allowing some developers to get off without it while we are imposing it on others.

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice)

My Lords, the Opposition support the Government’s amendment here. I guess that a line has to be drawn somewhere with regard to age, and the Government are probably right to have drawn it where they have.

I also support the amendment in the name of the noble Lord, Lord Lansley. I hope the Government will take it back in a positive sense because he makes a strong argument for extending the principle to these different forms of ownership—they are quite compatible with the Government’s intentions, after all—and meeting the particular needs that he has so clearly identified. I hope the Minister will feel able to say that she will take that back positively and perhaps return later on Report if she cannot accept it today. It would be ideal if she could accept it today but I guess that she may not have that freedom. Still, a positive response would be very welcome.

I sympathise again with the amendment moved by the noble Lord, Lord Best. I am not sure whether that needs to be in the Bill so long as it is on the record that it is the Government’s intention that the thrust of the amendment would be realised in practice. If the Minister were able to give that assurance, that might avoid the need to amend the legislation. That is a matter for her judgment, but it might be a way forward.

Photo of Baroness Williams of Trafford Baroness Williams of Trafford The Parliamentary Under-Secretary of State for Communities and Local Government

On the government amendment regarding the minimum age of 23, I take the points made by my two noble friends. The under-23s are of course aspirants too, and in certain parts of the country this policy might really help them. But as the noble Lord, Lord Beecham, says, we have to draw the line somewhere and, given that 96% of 23 to 40 year-olds will benefit, that is where we have chosen to draw it.

I thank my noble friend Lord Lansley for his Amendment 4. As noble Lords will know, we are committed to delivering the 135,000 shared-ownership and 10,000 rent-to-buy products. Each has its place, and these products can and do complement each other. They can be considered by councils as part of their wider affordable-housing requirements for their area, and the starter homes clauses will not prevent these developments coming forward. We will be touching on this later on Report.

However, trying to blend them would create complexity and lose the distinctive characteristics of each, and it could put at risk our starter homes manifesto commitment. For example, if a young person entered a right-to-buy arrangement, at what point in their occupation of the property would they be committed to purchase? After how many years of occupation would they be entitled to sell at an increased market value? That could be difficult to justify when we need to deliver as many new homes as possible.

Still, we recognise that there may be different routes to purchase, and over time there may be different opportunities to consider how these will fit within the overall starter home model. Much of the detail on the model will sit in secondary legislation, and the definition of purchase in the Bill is broad enough to allow different purchase mechanisms to be used. As the starter home model rolls out, we will keep it under review.

I also thank the noble Lords, Lord Best and Lord Beecham, and the noble Baronesses, Lady Andrews—who is not in her place—and Lady Bakewell, for Amendment 10. Our consultation on the starter homes regulations sets out potential flexibility on the on-site starter homes requirement. We recognise that some developments, including age-restricted schemes, do not easily lend themselves to an on-site provision, and we do not want to render those schemes unviable or undeliverable.

The consultation proposes that the requirement should not apply to dedicated supported housing which provides specialist accommodation for a particular group and which includes an element of support, such as residential care for older people. A starter homes requirement could have an adverse impact on the viability of such developments and we propose that they are exempted. Furthermore, we propose that housing designed specifically with older people in mind, but with no additional support provided, will be subject to an off-site contribution to starter homes. An on-site contribution would not be compatible with the function and design of this form of housing. I believe it is right and proper to wait for the outcome of that consultation on the important issue of older people’s housing, rather than rush into making changes now, and I think that that is what the noble Lord, Lord Beecham, was driving at.

Finally, I hope that the Government’s amendment to impose a minimum age of 23 provides reassurance that starter homes will provide homes to live in, rather than investment opportunities. I have listened carefully to the debate, and I hope that the steps I have set out make noble Lords feel that they do not have to divide the House. It is only right that we work with the sector to agree an approach that supports home ownership and operates fairly. Rather than rush to a legislative provision now, we need to listen and respond before bringing affirmative regulations back to this House. With that, I ask noble Lords not to press their amendments.

Photo of Lord True Lord True Conservative 4:45 pm, 11th April 2016

Before my noble friend sits down, I apologise for not having reminded noble Lords of my interest as leader of a local authority, although the issue that I raised would not apply there. I was disappointed by my noble friend’s response and by the response from the Front Bench opposite. If the Labour Party does not recognise the potential situation of young people in craft or trade, who may be precisely the sort of people who are caught if we have an arbitrary age limit, that is disappointing. This issue may be dealt with in regulations, but regulations cannot solve the problem if there is not primary legislation at the cut-off stage. I ask only that there is some criterion where people under 23 have to show whether they are in full-time employment or have their own income as the basis for securing a loan. It ought to be possible to bring in that other 4% of aspirants and I hope that that will be considered.

Photo of Baroness Williams of Trafford Baroness Williams of Trafford The Parliamentary Under-Secretary of State for Communities and Local Government

I would not like my noble friend to think that I did not agree with his point about aspirant young people. I totally agree with him. Without closing down the conversation, I pay tribute to what he said, and things may come forward to deal with that age group.

Amendment 2 agreed.

Amendment 3

Moved by Baroness Williams of Trafford

3: Clause 2, page 2, line 9, leave out “or minimum age”

Amendment 3 agreed.

Amendments 4 and 5 not moved.

Clause 3: General duty to promote supply of starter homes

Amendment 6

Moved by Baroness Bakewell of Hardington Mandeville

6: Clause 3, page 2, line 38, after “homes” insert “and other types of social and affordable housing”

Photo of Baroness Bakewell of Hardington Mandeville Baroness Bakewell of Hardington Mandeville Liberal Democrat

In moving Amendment 6, I shall speak very strongly in support of the other amendments in this group. While the Government’s aim to provide starter homes for young people is to be commended, it should not be seen as the only route for people to access homes and accommodation. As the noble Baroness, Lady Warwick of Undercliffe, said and as was said in Committee, local authorities up and down the country continually update their housing requirements and are able to assess the local need for all types of social and affordable housing. There must therefore be a requirement for them to provide other forms of homes outside the starter homes programme, which they are willing and able to do.

A large of number of residents will require homes to rent, as their incomes and circumstances will preclude their buying a home of their own regardless of their desire to do so. The needs of such residents should be met by local authorities, which are keen to fulfil their housing function in this direction.

Alternative social and affordable housing will also include shared ownership—as has been said—and shared equity schemes, as well as social rented homes. For local authorities to focus entirely on the starter homes programme will leave a large number of families, couples and single people without any means to access a home. It is a basic right for every individual to have a home that is fit for purpose so that they may access employment and ensure that their children are able regularly to attend school.

Having carried out their housing needs surveys, English planning authorities should grant permission for residential developments only where their survey indicates a need and a demand for such housing. This could include starter homes but not to the exclusion of other forms of affordable housing. I look forward to the Minister’s response on this important matter and I beg to move.

Photo of Lord Kerslake Lord Kerslake Crossbench

My Lords, I shall speak to Amendments 8 and 9 and in doing so declare my interests as president of the Local Government Association and chair of Peabody.

The amendments form part of a series of amendments intended to make the Bill fairer, more localist and more workable, while respecting the manifesto commitments made by the Conservative Party during the general election last May. The specific purpose of Amendment 8 and the consequential Amendment 9—I would argue that it is consequential—is to place the responsibility for determining the proportion of starter homes in any particular development where it should properly lie: with the local planning authority.

We discussed at length during the Committee stage of this Bill, and indeed today, how starter homes as an initiative has moved from being an interesting and positive new way to provide additional supply of new housing to effectively replacing affordable rented housing in new developments, despite the fact that starter homes will serve a very different group of people, being available only to those on middle or higher incomes in those areas where housing is in high demand. Shelter has calculated, for example, that 98% of families who are on the Chancellor’s national living wage would not be able to afford a starter home.

In Committee, we also learned that there is not one housing market in this country but many, each with their own different needs and issues. It is for this very reason that we require each local authority to consider carefully its local housing needs and draw up a local plan to meet them. The Bill, however, gives the Secretary of State the power to prevent the approval of individual planning applications unless they have met the specified requirement for starter homes. It is hard to think of a more overbearing and centralising action that the Government could have taken on something that should so clearly be a matter for local decision. So far as I am aware, it is also completely without precedent. I cannot establish any previous Government who have sought to specify the types and tenures of housing in individual planning applications in this way.

On 23 March, just prior to the Easter Recess, the department issued a technical consultation document on starter homes. It proposed a single starter homes percentage of 20%, with exceptions only for very small sites and where the viability of the scheme was in question. The Government’s consultation document does not give an estimate of how many affordable rented houses this would displace but both the Local Government Association and Shelter believe this to be significant. Indeed, the department’s own numbers estimate that, in cash terms, 91% of affordable housing contributions on an average site will be redirected to starter homes.

I have no doubt that a figure of 20% starter homes will be right for some parts of the country, but I am equally clear that for many others it will not. There is a risk that further delays will be added to the planning process as local authorities struggle in individual applications to reconcile this top-down requirement with what they know is right for their own area. Amendment 8 leaves the choice with individual local authorities but makes clear that the local authority must have regard to the provision of starter homes when it comes to make its decision. This, taken with the general duty to promote starter homes that is already in Clause 3(1), will provide more than sufficient onus on local authorities to take forward the Government’s intentions. There is enough leverage already in the Bill. We must surely be able to trust local authorities to make the right decisions based on their own local needs and circumstances.

In other parts of the debate in Committee—for example, on the appropriate size of new housing—Ministers were clear in their view that local authorities are best placed to understand and decide what is required locally. This must surely be the case for type and tenure; otherwise, we are effectively in this Bill going for “pick and mix” localism.

Today the four leaders of the Conservative, Labour, Liberal Democrat and independent groups of the Local Government Association took the unusual step of writing a joint letter to the Guardian about the Bill. In it they say the following:

“Current proposals for starter homes carry a risk that a crucial supply of new affordable rented homes will be displaced, and despite 20% discounts they will still be out of reach for the majority of people in need of an affordable home. Councils support measures to boost home ownership, and starter homes are one of the ways this can be achieved, but we are also urging peers to back amendments allowing councils to decide how many starter homes, alongside affordable rented homes, are on each development to ensure they meet the needs identified by councils with their communities”.

The letter ends:

“New homes are badly needed and councils are keen to build them. The Local Government Association believes we will only see a genuine end to our housing crisis if we are able to get on with the job”.

Quite so.

I hope, even at this late stage, that the Government will see fit to accept this amendment.

Photo of The Earl of Listowel The Earl of Listowel Crossbench

My Lords, I declare my interests in the register as a landowner, a vice-president of the Local Government Association and a trustee of several child welfare charities, including the Brent Centre for Young People in north London, which provides mental health support for adolescents. I shall make clear why that is a relevant declaration later.

I rise to speak to my Amendment 7A and to support the other amendments in the group. I was grateful for the Minister’s response to this same amendment in Committee and for the opportunity to discuss its concerns with her and the Minister in the other place this morning. I have retabled the amendment because I would like further reassurance from the Minister that the Bill will not direct resources away from more secure accommodation for low-income families, a concern that the noble Baroness, Lady Bakewell, and others have raised in relation to this grouping and elsewhere. My amendment would place a duty on local authorities to provide an adequate supply of affordable homes for families in temporary accommodation. For many years, low-income families have become increasingly dependent on private housing. Tenure there tends to be more insecure than the alternatives and we have seen the rate of family homelessness rising again as a consequence.

Recently I spoke to two early-years teachers and the head teacher of a primary school in west London. Those early-years professionals were acting as family support workers and described a sea change in local housing provision as homes have become more and more overcrowded and families are more and more transient. They work hard to build relationships with troubled families, but often those families move on within a few months. All their work comes to naught because of instability of tenure. We are learning more and more about the importance of a secure start for children in stable families where the parents make a strong attachment to their children even before birth, but especially in the early years. Such children are much more likely to grow up without the mental health issues that arise particularly in adolescence. So I would be grateful if the Minister could provide a further assurance that the Government are giving priority to working with local authorities—my noble friend Lord Kerslake talked about the importance of working in partnership with them—and others to provide low-income families with the secure housing they so urgently need. I look forward to her response.

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice) 5:00 pm, 11th April 2016

My Lords, the amendments in this group deal with the need to broaden the concept that the Government are promoting to ensure that a range of different needs are met, and in particular that affordable homes for rent should be included in the policy as it develops—literally—on the ground. That is the thrust of the amendments to which I and my noble friend Lord Kennedy have added our names, and to which those who tabled them have already spoken.

I can recall a time when the Labour Government’s requirement for regional housing strategies to be prepared was vigorously opposed by the Conservative Party on the grounds that it was an interference with the local decision-making powers of individual authorities. It was a view that overlooked the need to regard the provision of housing as more than just the concern of an individual authority because, of course, some were finding it impossible to make provision for their communities simply because of the dictates of geography. The classic case was that of Stevenage Borough Council, which was literally unable to build within its boundaries and was prevented by its neighbouring authorities from making any further provision for its residents.

Now we have a situation where the Government are apparently to determine what counts as a starter home and are taking, in the views that have quite correctly been put to your Lordships’ this afternoon, a much narrower view than is acceptable, in particular in relation to looking purely at the supply of starter homes for purchase when that cannot meet all the current needs and those that are likely to arise in many parts of the country.

I hope, therefore, that the noble Baroness will feel able to accept the thrust of the amendments. I do not know which of them will be put to the House; I suspect that it will be Amendment 8, tabled by the noble Lord, Lord Kerslake. Although it does not refer explicitly to the provision of affordable rented houses, it places the responsibility where it should lie, which is on the local authority. There is an implicit indication that local housing need will have to reflect the need for rented homes as well as owner-occupied properties.

This does not in any way vitiate the Government’s approach. It will not and does not seek to prevent the building of homes for sale in this context, but it recognises that more than one need must be met. I hope that the Government will look sympathetically at this proposal—and if the noble Lord chooses to test the opinion of the House, the Opposition will certainly support him.

Photo of Lord True Lord True Conservative

My Lords, I, too, should declare an interest as a member of the Leaders’ Committee of London Councils. I should make it clear that London Councils is sympathetic to the amendments in the group, although I do not speak on its behalf.

I hope very much that my noble friend, in summing up, will show the same understanding she had in Committee for the issues raised in the amendments. There is certainly a concern about the hierarchy of need and the difficulty in some areas of providing affordable housing, and the potential problems, particularly in high-income areas in my case, of starter homes squeezing out. I know that it is not the intention of my noble friend Lord Kerslake, or anybody else, but I do not want to see us getting to the point where we make it less likely that a government initiative, which was a manifesto initiative, and has been supported, will be implemented across the board. It is an extremely difficult balance to strike.

I am seeking is something that is not necessarily on the face of the Bill but which shows a real display of understanding by the Government of some of the tensions and difficulties. I think that I heard in Committee—and I am sure that I will hear again today—about the difficulties of providing for the gamut of different types of housing needs in an area. That will certainly include affordable for rent, starter homes where we can do them, and other things of a different nature. So I would be nervous of putting something in the Bill that might inhibit or be used to inhibit—it could be the basis of legal challenge, or whatever—the delivery of starter homes, but I hope that my noble friend will show very much that she has heard and understands the spirit of the amendments.

Photo of Baroness Williams of Trafford Baroness Williams of Trafford The Parliamentary Under-Secretary of State for Communities and Local Government

My Lords, I thank the noble Lord, Lord Shipley, and the noble Baroness, Lady Bakewell, for their amendment, which would require local planning authorities to promote the supply of other types of social and affordable housing in addition to starter homes. I thank, too, the noble Earl, Lord Listowel, for his amendment to require key-worker housing and temporary accommodation to be included. I also thank the noble Lord, Lord Beecham, and the noble Baroness, Lady Bakewell, for the amendment requiring local planning authorities to promote the supply of other home-ownership products and affordable homes to rent, as well as starter homes.

As I said in Committee, we want to address a specific gap in the market for young, first-time buyers. An additional product is therefore required to help a generation into home ownership. A recent report by NatCen Social Research found that home ownership continues to be one of the most important milestones in life for young people. For example, 77% of respondents said that longer term, they would prefer to own their own home. Just over two-thirds of respondents reported that owning their own home was essential to feeling that they had actually succeeded in life.

That is why we are legislating for starter homes to ensure that delivery will be supported across all areas. Support is available through our Help to Buy ISA to help purchasers to save for a deposit. Starter homes will offer an affordable step on to the property ladder, with lower costs and the benefit of immediate ownership, helping people to achieve the step up to their second property in due course.

Clause 3 expects councils to actively support starter homes as a new product in their housing mix. But it does not remove their ability to deliver other affordable housing and home ownership products alongside starter homes, and we fully expect them to continue in this vein. Nor does it remove their local plan policy. Local authorities already have legal duties to house the most vulnerable in society and to consider housing needs in their areas.

We are helping people to access homes that they can afford in a number of different ways, and the Bill should not be seen in isolation. Our spending review commitments represent the largest affordable housebuilding programme by a Government since at least 1979. We believe that affordable shared ownership and other home-ownership products have an important role to play as part of the diverse and thriving housing market in helping those who aspire to home ownership but may otherwise be unable to afford it.

The spending review has committed £8 billion to deliver a further 400,000 new affordable housing starts, including the £1.6 billion to deliver 100,000 affordable homes for rent and £4.1 billion to deliver 135,000 shared-ownership homes. It builds on our strong track record of affordable housing delivery. We have delivered 277,000 affordable homes since 2010, including nearly 200,000 to rent. In the last year we have added more than 50,000 social and affordable rent homes, and twice as much council housing has been built since 2010 than in the previous 13 years.

We fully believe that local planning authorities know their area. We would expect them to seek other forms of affordable housing such as social rent where it would be viable, and we are currently consulting on the starter-homes requirement for the regulations to seek wider views so that we get this right. Local planning authorities have the option to release more land for housing of all tenures, as needed, in their local areas. They are very aware of their commitments to meet local housing needs and they will strive to meet these needs.

Amendment 7A, in the name of the noble Earl, Lord Listowel, specifically refers to families requiring temporary accommodation and to key workers. As I have already outlined, there are a range of tenures available that could help accommodate key workers. Councils can promote affordable housing schemes for key workers if they want to prioritise this. As I explained in Committee, they are also required to consider homelessness under the Homelessness Act 2002. But our aim with this legislation is to drive a focus on delivering starter homes—a new product that is much needed to address a growing problem among the under-40s. Our legislation focuses on this product to ensure that it has the necessary attention to secure delivery, but not to divert attention away from other products. We know that local authorities will continue to look to provide other forms of housing tenures. We do not need to promote these as part of this duty.

I now turn to Amendments 8 and 9, which I thank the noble Lord, Lord Kerslake, for. They would allow a local planning authority to have regard to the provision of starter homes, based on its own assessment of local housing need and viability. I have heard the arguments that planning for starter homes should be devolved to the local level. I will explain the Government’s proposals and why we are taking forward our requirement.

The English housing survey, published in February, found that 19% of all households live in the private rented sector and 17% in the social rented sector. This amounts to 8.2 million households. We know that aspiration for home ownership is high. This requires a new approach. Starter homes are a manifesto commitment and a national priority, so all local authorities must play their part in delivery. Therefore, we are currently consulting on a starter homes requirement to be set out in regulations.

We are seeking views on a 20% starter homes requirement on sites of 10 units or more, or larger than half a hectare. We accept entirely that this may not be appropriate for all residential schemes and a number of exemptions are being proposed, such as: a general viability exemption for those residential developments where it can be clearly demonstrated that the starter homes requirement would make the site unviable; and potential exemptions for specific housing types, such as estate regeneration schemes and developments led by affordable housing. We are also suggesting that there are particular cases, such as private rented sector developments and older people’s housing, where an off-site commuted sum in lieu of on-site provision would be more appropriate. This amendment would bring considerable delay to starter home delivery. Noble Lords are very aware of the difficulties in some councils of bringing forward local plan policies: many years of delay in some cases, and 30% of councils have not adopted a post-2004 plan. The Bill includes measures to accelerate the process but we cannot risk these delays for starter home delivery.

Over time, I expect local authorities to begin to assess the needs of first-time buyers in their area and reflect this in their housing needs assessment. However, first-time buyers want homes now and cannot wait for 336 planning authorities each to undertake local needs assessments before action is taken on starter homes. The Government believe it is important that the delivery of starter homes is as simple as possible for buyers, developers and local authorities, with a clear national requirement. Our modelling showed that 20% is a reasonable minimum figure for the requirement. The NPPF directs local authorities to plan for a mix of housing based on current and future demographic trends and the needs of different demographic groups, and this remains government policy. We estimate that 50,000 to 70,000 traditional affordable housing starts will come forward by 2021 through Section 106, alongside the starter homes requirement.

I want to be clear that the Government are totally committed to promoting the supply of housing across all tenures. I commend local authorities for all the work that they do but legislation is needed to promote the supply of starter homes and ensure that delivery is maximised. With that, I hope noble Lords will feel content to withdraw their amendments.

Photo of Baroness Bakewell of Hardington Mandeville Baroness Bakewell of Hardington Mandeville Liberal Democrat 5:15 pm, 11th April 2016

I thank the Minister for her response, which was quite encouraging but does not completely satisfy me. I thank all noble Lords who took part in this debate, especially the noble Lords, Lord Kerslake, Lord Beecham and Lord True. I am still concerned that local authorities that know their residents and what is going on in their areas, and are best placed to decide what types of housing are needed for their areas, will have to provide 20% starter homes on all their developments because that is the Government’s intention. I understand the need for starter homes and the Government’s wish to fill the gap in the market and to help people into home ownership. However, I believe it should be for local authorities to decide how best to fulfil this gap in the market. Nevertheless, having heard what the Minister said, I beg leave to withdraw Amendment 6.

Amendment 6 withdrawn.

Amendments 7 and 7A not moved.

Clause 4: Planning permission: provision of starter homes

Amendment 8

Moved by Lord Kerslake

8: Clause 4, page 3, line 15, leave out subsection (1) and insert—“( ) An English planning authority may only grant planning permission for a residential development having had regard to the provision of starter homes based on its own assessment of local housing need and viability.”

Photo of Lord Kerslake Lord Kerslake Crossbench

My Lords, I listened very carefully to the debate. I think we all agree on the ends here: more housing supply of all types and tenures. However, on this issue I fear I cannot agree with the Minister on the means. The imposition of a top-down control would delay the process of providing starter homes, not assist with it. There is a duty in the Bill and local authorities will respect and deliver that. Regretfully, along with my noble friend Lord Best, I would like to test the opinion of the House on this issue.

Ayes 280, Noes 194.

Division number 2 Housing and Planning Bill - Report (1st Day)

Aye: 278 Members of the House of Lords

No: 192 Members of the House of Lords

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Amendment 8 agreed.

Amendment 9

Moved by Lord Kerslake

9: Clause 4, page 3, line 22, leave out subsection (3)

Photo of Lord Kerslake Lord Kerslake Crossbench

My Lords, this amendment is consequential to Amendment 8. It entirely follows on from that amendment as it relates to the specified housing requirement and obviously, if that has been removed from the Bill, regulations to define it are no longer needed. I move it formally.

Amendment 9 agreed.

Amendment 10 not moved.

Amendment 11

Moved by Lord Cameron of Dillington

11: Clause 4, page 3, line 29, at end insert—“( ) The regulations shall confer discretion on an English planning authority to exclude starter homes on rural exception sites.( ) Rural exception sites are—(a) small sites in, or adjoining, rural settlements of fewer than 3,000 people;(b) sites which would not normally be used for housing;(c) sites which seek to accommodate households who are either current residents or who have an existing family or employment connection with the community where the development is occurring.”

Photo of Lord Cameron of Dillington Lord Cameron of Dillington Crossbench

My Lords, I regret that during the Recess I failed to meet the DCLG ministerial team to discuss this and other rural amendments. The fault lies mostly with me because I was away in Rwanda for a lot of the time with a parliamentary group looking at agriculture. There was a certain amount of confusion over ministerial diaries early on as well. This morning I had meetings in Cornwall and was not here till late but my noble friend Lord Best has met the ministerial team, including the Secretary of State and others, and I gather there is some good news to report on this amendment, which makes the most persuasive speech that I had prepared rather redundant. I was going to talk about the importance of exception sites to rural areas and the unanimity we had in Committee, and about communities, public space and so on, but, as I say, all that is redundant.

I think one of my points is still worth making on the basis that I have not yet seen the detail of the Government’s acceptance of this amendment. In the debate we had in Committee, the two most frequent words we heard were “in perpetuity”. Landowners and farmers want to give the land to their community in perpetuity. Villagers want these houses to be for village families in perpetuity. In my experience, even the young families who occupy the houses want to see their houses serve the village in perpetuity, as though they were passing on the baton in a relay race to keep their village alive. The undeniable fact is that most people—everybody, actually—in the Committee debate said that the problem with these transient starter homes was that they were not in perpetuity, although to some extent the vote on Amendment 1 may have changed that slightly. The lack of perpetuity is a serious problem for the trust that is needed to help the exception site movement keep going as strongly into the future as it has in the past.

I say “movement” because in a way that is what it is. Everyone involved needs to sign up to its objectives and aspirations for it to continue to serve rural communities so well into the future. Everyone has to know exactly where they stand. The very fact that we were talking about starter homes on exception sites is enough to undermine that trust. However the Government decide to backpedal from their currently damaging position, it is most important that the amendment is in the Bill. Statements made on the Floor of the House do not persuade parish councils or landowners because they have to trust what is going on. Pleas to wait until consultations are completed hold no water. Even government promises of regulation do not really promote the necessary trust. We have to have a firm, no-nonsense commitment in the Bill because that is the only way we will be able to restore the trust needed to ensure that proper exception sites continue to provide the vast majority of the incredibly important affordable housing in our small but important rural villages.

Having said that, I will leave it to the Minister to give us what I understand is the good news. I echo the remarks made by my noble friend Lord Best and thank the Minister for her constant courtesy and unflagging attention to the arguments and discussions we have had on the Bill. In her place, I would never have had the energy to keep going endlessly for the very long days we had, and I certainly would not have had the patience. I thank her very much for her conscientious dedication and tolerance, and particularly her attention to this amendment and her acceptance of it. I beg to move.

Photo of Baroness Williams of Trafford Baroness Williams of Trafford The Parliamentary Under-Secretary of State for Communities and Local Government

My Lords, I thank noble Lords, particularly the noble Lords, Lord Cameron and Lord Best, for the persuasive arguments they put forward in Committee. We would not want to create some of the effects they talked about, such as benevolent landowners putting forward sites that are then slapped with a starter home policy. I ask the noble Lord, Lord Cameron, to allow me to take this issue away and return to it at Third Reading. I hope that that will help him and other noble Lords who plan to speak on this amendment.

Photo of Lord Cameron of Dillington Lord Cameron of Dillington Crossbench

If there are no other speakers—

Photo of Lord Best Lord Best Chair, Communications and Digital Committee

I was going to say that it was possibly not worth me intervening at this point, other than to echo the words of the noble Lord, Lord Cameron of Dillington.

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice)

On behalf of the Opposition, I congratulate the noble Lord on apparently achieving his objective of persuading the Government to be reasonable. We very much welcome the indication that that will be the case. I hope this is a trailer for what might happen when we discuss right to buy and its impact in rural areas. It is a parallel situation. There are particular needs in those areas which have to be reflected in the legislation and the changes the Government envisage. I will not ask the Minister to commit herself today to that point, but we look forward to a sympathetic response on similar lines when we get to it. I am sure the House will join me in thanking the noble Lords, Lord Cameron and Lord Best, for pursuing this case so assiduously and with what is apparently a very satisfactory outcome—although we will read the small print when it arrives.

Photo of Baroness Bakewell of Hardington Mandeville Baroness Bakewell of Hardington Mandeville Liberal Democrat

I, too, thank the noble Lords, Lord Cameron and Lord Best, for having negotiated what looks like an agreement we can all sign up to, but I will be looking forward to the detail at Third Reading. I gave a long and detailed speech in Committee on this subject. Your Lordships will be pleased to know that I am not going to do the same today, but I still feel very passionately about rural exception sites and protecting rural communities, so I will be looking closely at what comes forward at Third Reading.

Photo of Lord Cameron of Dillington Lord Cameron of Dillington Crossbench

I thank noble Lords for their support and congratulations, if that is the right word. I, too, look forward to the detail and possibly to having future discussions with the Minister but in the mean time, I beg leave to withdraw the amendment.

Amendment 11 withdrawn.

Amendment 12

Moved by Lord Foster of Bath

12: After Clause 4, insert the following new Clause—“Planning obligations: starter homesRegulations under sections 3 and 4 shall not disapply the provisions of section 106 of the Town and Country Planning Act 1990 (planning obligations).”

Photo of Lord Foster of Bath Lord Foster of Bath Liberal Democrat

My Lords, I beg to move this amendment standing in my name and that of my noble friend Lady Bakewell and to speak to Amendment 13. I have been listening to the debate with great interest, both today and earlier in Committee, and I have three key concerns about this part of the Bill. The first is that starter homes, notwithstanding the attempts being made by the Government to change the definition, are simply not affordable homes. All the evidence from Shelter and others shows that they will be out of reach for most middle-income families.

My second concern is that starter homes will largely be built instead of, rather than as well as, the affordable homes that would previously have been built under Section 106 agreements. If enacted, the Bill will see the end of truly affordable housebuilding in this country. As the noble Lord, Lord Best, put it, we are robbing Peter to pay Paul because over the last 10 years, planning obligations such as Section 106 have helped to deliver some 250,000 genuinely affordable homes for purchase and rent. This will cease if the planning obligations are abolished and replaced with a starter home-only obligation.

The Minister will of course argue that we have not yet seen the regulations which will set out the percentage of starter homes that local authorities will be required to deliver on different-sized sites and in different areas. I suspect she will argue that we cannot claim that there will be a starter home-only obligation. But we know, as already discussed during our deliberations on Amendment 8, that it is the Government who want to impose the number of starter homes on each site. They have already consulted on the 20% figure, which we have heard about. We also know that they acknowledge, as the impact assessment makes clear, that:

“This may reduce or alter the mix of affordable housing provided which could impact on those individuals seeking affordable housing”.

The Government themselves acknowledge that this is going to change the whole nature of the mix of different tenures and so on. If the figure of 20% starter homes goes ahead, it is clear that there will be very little remaining scope for other forms of genuinely affordable housing. It will, in effect, mean a starter homes-only obligation.

My third concern is that local discretion is being trampled over and the vital role of local plans ignored. Local plans are vital so that councils can ensure truly integrated communities, in which new houses are built with a range of tenures and prices for rent and for purchase. Additionally, they ensure the sustainability of such integrated communities, so that alongside new housing there is the appropriate infrastructure—from shops, schools and GP surgeries to roads and public transport. Achieving such sustainable, integrated communities has required the judicious use of Section 106 agreements and, more recently, community infrastructure levies. If developers are exempted from the community infrastructure levy and from some aspects of Section 106, the planned 200,000 starter homes will place additional pressures on local schools, roads and other infrastructure, creating an additional non-funded burden for already hard-pressed local councils. I note that the Government acknowledge this in the Explanatory Memorandum and the impact assessment; they say that it will be reflected in the new burdens principle. When the Minister sums up, I wonder whether she might say a little more about how that will be reflected when we get the local government finance settlement towards the end of the year.

These two amendments are ways of trying to mitigate the concerns I have expressed, but it is genuinely difficult to get to grips with what the Government’s plans for Section 106 and the community infrastructure levy really are. In relation to starter homes on exceptional sites, the impact assessment is totally silent. It was left to a later ministerial Statement by the Minister, Brandon Lewis, to say what was to happen. He said that,

“local planning authorities should not seek section 106 affordable housing and tariff-style contributions on Starter Homes; and they should be exempt from the Community Infrastructure Levy ”.

While he said that local planning authorities will be able to seek other forms of Section 106 contributions to mitigate the impact of the development, he also said that tariff-based contributions to general infrastructure pots will not be permissible. The impact assessment makes it clear that this approach will apply to starter homes on conventional housing sites.

The claim by Mr Brandon Lewis that the process of agreeing planning obligations would change little as a result of the Bill is therefore certainly not one that I share, nor is it shared by many experts; nor is his further claim that the mix of tenures contained in Section 106 agreements would remain a matter for negotiations between town halls and developers. If it is the Government who are going to impose a percentage of starter homes on a site and restrict community infrastructure levies and Section 106 obligations, then things will change significantly more than a little—as Mr Lewis put it—and town hall negotiations with developers will be very seriously curtailed.

These two amendments, in different ways, seek to do something similar to Amendment 8, which is to return power to our local councils. The Minister said that she has confidence in local councils, so I hope she is confident that they will use the opportunities of Section 106 judiciously. They want to get houses built, and will want to get starter homes built as well as other forms of housing, but they will also want to be able to carry out their duties as local planning authorities to plan for sustainable, mixed development. They will not be able to do that if the restrictions in the Bill in relation to Section 106, for example, go ahead. I beg to move.

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice) 5:45 pm, 11th April 2016

My Lords, I have a good deal of sympathy with what the noble Lord has just said. In particular, I very much commend his implicit view that we should not really be talking about individual developments or about just catering for a particular group of people but should be concerned with communities with a range of interests, ages and people of different backgrounds—not simply a group, important though it is, seeking to purchase homes for the first time.

It also seems to me that this part of the Bill cannot be read just on its own terms, as if it is unrelated to some of the material that follows. In the planning section of the Bill, there is of course the issue of PIP—permission in principle—and the Government’s ability to effectively prescribe what is to happen on brownfield and other sites. The two things seem linked to me, and the suggestion in these amendments is one that the Government should consider very carefully. We have heard a good deal about local aspects—the Minister herself was saying just a few minutes ago that the Bill would make provision for local people—but what is meant by local in this context? For example, you could have sites in London, in hard-pressed boroughs with their own housing needs, which would no doubt become available for starter homes, potentially at the expense of people from that particular borough, unless the Government are able to say that they could be limited to the residents of that borough—which I think is a bit unlikely, although it would be interesting to see whether the Government would contemplate that.

We have of course seen considerable changes in the make-up of communities in inner London and in other cities, and the danger seems to me to be that without Section 106 agreements, and without looking rather carefully at who might benefit from the desirable provision of starter homes, and from where they might be coming, we could simply be importing people into the area at the expense of those already living there. Perhaps the Minister could indicate whether such a consideration has been taken on board and the extent to which it might be reflected in the implementation of this part of the Bill. Otherwise, the concerns expressed by the noble Lord, Lord Foster, will resonate even more profoundly. There has to be a way of securing a balance in all these aspects, and at the moment there does not seem to be, within the Bill, an adequate provision to achieve that purpose.

I hope that the Minister will respond constructively rather than—if I may say so, with all due respect—complacently. I do not mean she would be complacent in her own right, as it were, but that it would reflect complacency in the Government about the impact of what they are providing here, unintended though it may be.

Photo of Baroness Williams of Trafford Baroness Williams of Trafford The Parliamentary Under-Secretary of State for Communities and Local Government

My Lords, I thank the noble Lord, Lord Foster, and the noble Baroness, Lady Bakewell, for the amendments and the noble Lord, Lord Beecham, for speaking to them. I need to be clear right from the outset that there is nothing in Clauses 3 and 4 that prevents the use of Section 106 with starter home developments, and local authorities will still be able to seek on-site Section 106 infrastructure contributions. Section 106 agreements are crucial for securing the supporting infrastructure. Indeed, our starter home requirement will be secured on sites using Section 106 agreements. We are working with the sector on draft model Section 106 clauses to help local authorities and applicants with the process. As such, we expect authorities to continue to have regard to the need to secure Section 106 agreements on starter home developments, as they would do on any other development.

The noble Lord, Lord Foster, asked about the new burden assessment. I can assure the House that the new burdens on local authorities arising from starter home duties, such as that of providing monitoring information, will be considered in the usual way that new burdens are.

Planning decisions for all developments, including those that contain starter homes, will still need to be made in accordance with local planning policy, subject to the starter homes requirement and other material considerations. Infrastructure considerations will clearly need to be issued.

Yes, we are going to reaffirm in national planning policy that affordable housing contributions should not be sought for starter homes and that we need to exempt starter homes from community infrastructure levy contributions. I make it absolutely clear that this will align with existing practice on affordable housing and that local authorities will continue to be able to seek site-specific infrastructure improvements, if they are necessary to make the development acceptable in planning terms. They will also continue to be able to seek additional on-site affordable housing, including housing for social rent and shared ownership, where it is viable to do so.

I have listened carefully to the debate and hope that the reassurance that local authorities will continue to be able to use Section 106 agreements to secure infrastructure on sites means there is no need to divide your Lordships’ House and that the amendment will be withdrawn.

Photo of Lord Foster of Bath Lord Foster of Bath Liberal Democrat

My Lords, I am grateful to the noble Lord, Lord Beecham, for his support for the amendment. I entirely agree with him about the importance of developing mixed, sustainable communities and of ensuring that there are a range of different tenures within them. I also say to him that I have never, so far in my time in the House, found the Minister complacent. I thank her for the very generous way in which she has given of her time to talk to many noble Lords and know she has listened to many of the concerns that have been expressed by Members of your Lordships’ House.

However, I am not entirely convinced by the arguments that she has made this evening. We are in difficulty because we know that, as with so many things, the Government are still consulting. We do not know what the outcome will be in relation to the percentage of starter homes that will be imposed on particular sites and we have not seen the model Section 106 agreements that the Government are currently developing. This puts us in a very difficult place but there will be further opportunities for discussion and to come back to these issues so, at this stage, I beg leave to withdraw.

Amendment 12 withdrawn.

Amendment 13 not moved.