Housing and Planning Bill - Report (5th Day)

Part of the debate – in the House of Lords at 5:15 pm on 25th April 2016.

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Photo of Lord Best Lord Best Chair, Communications and Digital Committee, Chair, Communications and Digital Committee 5:15 pm, 25th April 2016

My Lords, I support the noble Baroness, Lady Royall. I do not wish to prolong this debate too much, having already spoken on this matter in Committee.

We all know the issue: we need more affordable homes for local people in rural areas. There are various ways of trying to secure these. We used to get grants and build housing association homes and council housing but we do not do that any more: it accounts for about only 3% of the output. We have rural exception sites, where you get planning consent only if you are going to build housing for local people—and I am very pleased to note that such sites get special treatment in the Bill.

The third and largest way in which we have secured affordable housing for local people in rural areas has been by requiring housebuilders to make a proportion of all the homes they build affordable housing, either for rent or for shared ownership. This has produced about 55% of all the rural housing that we are now churning out. I say “churning out” but we are still producing a trickle—we ought to be producing about twice as much in rural areas—and we do not want to see any measures that diminish what we are already doing. It is a small enough contribution as it is, and the Government’s idea that in any development of less than 10 homes there will be no requirement for affordable housing, either for rent or for shared ownership, will cut out a very big chunk of that 55% of the affordable homes that we are building.

Why on earth would the Government do that? The answer is that small builders complain that there is too much red tape if they have to provide affordable homes instead of just building executive homes, homes for commuters or retirees, or second homes and the rest. They say, “This slows us down. We can’t get back into business after the big crash. We smaller builders need this extra help”. However, those of us who have looked at this in some depth do not believe it to be the case. There are several reasons why we do not feel that this provision will unleash a lot more housebuilding in rural areas.

First, the housebuilder will be able to pay more for the site because they will have no obligation to produce affordable homes. The landowner, who will know that, will put up the price, and the value will be not in the affordable housing but in the higher value that can be paid to the landowner. While we are all delighted to see the landowner do well out of this, it is not really the point, and it will not help the housebuilder to buy land more cheaply.

Secondly, big housebuilders will phase developments that were going to be of 25 or 30 homes into two or three chunks that come just within the limits. That is the way housebuilders will work it so that they do not have to provide any affordable housing, even though in the end there will be 25 homes on the site—so that will not work, either.

Thirdly, it will be more difficult to prevent the opposition that the nimbys—the local opponents—are bound to bring against developments in villages if none of the homes that are to be provided on a site is for local people. It will antagonise local residents rather than securing support for development in rural areas. So we do not think that letting small builders—and indeed bigger builders, who, as I say, will develop in phases—off the hook will produce more homes overall, let alone more homes for local people. So this amendment is about dropping this requirement.

We have had productive meetings with Ministers. I am grateful to the noble Baroness, as always, for listening intently to what we have attempted to achieve, and there has been a good deal of sympathy for the line we are taking. I just urge Ministers to recognise that this way of producing affordable housing would cost the Government nothing. Ultimately, it would come out of the land value through the housebuilder. We would be providing affordable housing on the back of the development that was going to happen in those villages. There is no requirement for a government subsidy, so it is thoroughly commendable. Starter homes are going to cost something like £8.6 billion, and right to buy for housing association tenants will cost a little over £8 billion, and possibly £9 billion, over four years. Those are big numbers, but in this case it is affordable housing for free. So I strongly recommend that the Government think of backing off from their proposal, which will diminish the output of rural housing.

Where I think we have got to in our discussions with the Government, if can put this out in the open for your Lordships, is that they are keen to see an exclusion from the rule that if there are fewer than 10 homes, no affordable housing is required, to cover national parks and areas of outstanding beauty. Although I fear it may be done through regulations, whereas we would wish it to be in the Bill, I think that the Government may be willing to say that they would enter into a discussion with each local authority and allow, where the case can be made, for the rule that 10 units means no affordable housing to be dropped in other rural areas as well. It would not be too tightly defined but would be across the piece in rural areas. However, we will wait to hear what the Minister says on this. There is still Third Reading to go, but I am now slightly nervous that we will not be able to reach an accommodation, as we had hoped, before then. But I will leave that to the noble Baroness, Lady Royall, to determine.