New Homes: Developers, Housebuilders and Management Companies — [Mr Clive Betts in the Chair]

– in Westminster Hall at 9:30 am on 5th January 2022.

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Photo of Clive Betts Clive Betts Chair, Levelling Up, Housing and Communities Committee, Chair, Levelling Up, Housing and Communities Committee 9:30 am, 5th January 2022

Let us begin the first parliamentary sitting of the new year by wishing everyone a happy new year. As is now tradition before all our sittings, I remind all hon. Members that they are expected to wear face coverings when they are not speaking in the debate. I am also asked to remind everyone to get a lateral flow test—provided, of course, that you can get one—at least twice a week, before coming on to the parliamentary estate. These can be done at the testing centre here as well. Welcome, everyone.

Photo of David Johnston David Johnston Conservative, Wantage

I beg to move,

That this House
has considered the role of developers, housebuilders and management companies in new homes.

It is a pleasure to serve under your chairmanship, Mr Betts. Happy new year to you and to everybody else who is here this morning. This is a 90-minute debate, and I have said to quite a number of people that I could easily speak for at least 90 minutes on this topic—it will be a relief to everyone that I am not going to do that. The reason is that it is a source of huge frustration in my constituency. Owning a new home and the development of new homes should be a source of great joy, but too often it is a source of great distress. There are a few reasons for that that I want to talk about, but before I go into those, I want to say at the outset that, contrary to some of the media stereotypes about areas such as mine, most people in my constituency are not opposed to new homes. If they are homeowners themselves, they entirely understand why other people want to own a home. They often have children and grandchildren whom they are trying to help get on the housing ladder. They know that we need housing for key workers. They know that sometimes people just want to move into one of these new homes from where they already live in the constituency. But people have real frustration with the way in which these things are developing and the problems they are causing in the local area.

The first issue is simply the quality of a lot of the homes that go up, because it is often poor. Sometimes it is very good, but too often it is poor, and constituents’ homes have major defects that take years to try to deal with. I have constituents who have spent two, three or four years—sometimes more—trying to get these defects repaired. This is not like buying a cheap version of something on eBay, half-expecting that there might be something wrong with it. This is the biggest purchase that any of us will make, and we do not expect to then have years of trying to sort out the problems with it. Unfortunately, when constituents try to do that, they feel completely outmatched by the builder that built their home. Sometimes the builder will blame the contractor; sometimes they will say that there is nothing wrong: “We signed it off according to building regulations.” But I have been in some of these places and we can see these huge issues. It is completely unacceptable that people are experiencing them.

The second issue is about the impact of these homes on the environment. That has two major aspects to it. One is what it does to the local environment around the area. Naturally, people can see greenfield sites disappearing. One constituent wrote to me and said that the biodiversity commitments that a particular house builder had made had not been kept whatsoever. There is an impact on air quality and water quality, but the other aspect is how the homes themselves are built. I am continually asked by constituents, “Why are we building so many homes that we know we will have to retrofit in a few years’ time?”, and there is no easy answer to that. I am continually asked, “Why can’t every new home have solar panels? Why can’t every new home have a heat pump?” I understand why: there are various reasons why we might not put the same thing in every kind of house.

I completely welcome the Government’s commitment to having electric charging points in every new home. I really welcome the future homes standard, which will make new homes from 2025 net zero ready, with a 75% reduction in their emissions. But the point still stands that thousands of homes are going up right now and we know that because of our ambitious net zero goals, we will have to retrofit a lot of them. The reason is that it is cheaper for the house builders to build them that way today.

The third issue is affordability. I have said a few times in this place that no one who rents has ever said to me, “There are too many new homes going up.” They say only that those homes are not affordable. They say that they have saved for years and years, and it does not matter how much they save; they do not get close to being able to afford one. The average house price in my constituency is £335,000. The average house price in my constituency is £335,000. To London ears that might sound fine, but it is 9.2 times median income, and that is out of reach for most people. An affordability threshold of 80% of that is still not affordable. Again, we run into bad practices. We all know that developers commit to a certain number of affordable homes, but time after time that number is driven down on the grounds that the development would not be viable if that commitment were maintained, so broken promises are a constant theme.

Photo of Justin Madders Justin Madders Shadow Minister (Future of Work), Shadow Minister (Business and Industrial Strategy)

The hon. Gentleman makes a particularly important point about affordable housing. I am often told that developers who make such arguments about viability are working on a 20% profit margin per property. Does he agree that that is completely unsustainable?

Photo of David Johnston David Johnston Conservative, Wantage

The hon. Gentleman makes an important point. I was just about to say that when the taxpayer is subsidising the development of affordable homes and when the profits of house builders are so large—often bordering on 30%, come rain or shine; they are making these profits in all weathers—it is completely unacceptable for them to play this game so that people are unable to get on the housing ladder.

The fourth aspect that I want to talk about is the role of management companies. After someone has purchased one of these new homes, the costs do not always stop. People are often signed up to quite expensive contracts with management companies who purport to provide services to maintain communal areas, and it is often very difficult for residents to find out what is being done for that money. The charge goes up year after year, but their communal area is not maintained. They are told that staff are employed to do things, but they never see the staff. They work hard to try to get transparency about what is being provided for the money, but they cannot get it. They get a basic summary, and that is about it. The people who try to get the information are often well qualified, but they cannot get it.

I know of a management company—the residents do not want me to name them, so I will not—where many of the residents are elderly, sick or vulnerable, and they feel completely bullied and exploited by their management company. Right now they are being pressured into taking a new lease, which they do not want to take because they know it will be bad for them, but they fear the repercussions if they do not or if they go to someone to talk about it. They have talked to me, but, as I have said, they do not want to me to talk about who they are. That is an appalling situation for people to be in. Far too often there is a real problem with the way in which management companies fleece people in new homes when those people have already spent so much money.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

I thank the hon. Gentleman for securing the debate. In preparing for it, I looked into leasehold in the United Kingdom. In England, Wales and Scotland, people are unable to buy their leasehold, but Northern Ireland is one part of the United Kingdom where they can. Does the hon. Gentleman agree that when it comes to purchasing the freehold, people certainly get a “fleecehold” in England, Wales and Scotland? In Northern Ireland they have a chance to buy it out. Does he feel that that should happen here on the mainland?

Photo of David Johnston David Johnston Conservative, Wantage

I completely agree with the hon. Gentleman, and I expect the Minister will address that point when he speaks later. Most people think that they own their home, but they can often end up feeling like tenants. I experienced that myself until recently. I used to get a bill for £300 on Christmas day every year. The bill, dated 25 December, was £300 for absolutely nothing, but constituents of mine are in a much worse situation.

The fifth aspect I want to talk about is the overall broken system in which the process operates. I do not blame the Government entirely. Councils have some responsibilities: One is if they do not enforce the planning conditions when developers go above the assessed numbers that they are supposed to build. Another is if they allow the same application to be made over and over again, when they could refuse it after two tries. They do not take a bigger-picture view. There are villages in my constituency, such as Sutton Courtenay, that feel hugely overdeveloped because individual applications are all being approved and nobody is looking at what is happening to the whole area and why it might not be a good idea to keep approving those applications.

Ultimately, these companies have to be held accountable for their behaviour. They apply for sites that they know the local plan does not allow them to apply for, as is happening in Grove, in my constituency. They continually try to build on flood plains. They continually fail to adhere to their section 106 agreements and community infrastructure levy agreements—sometimes not building infrastructure at all, and sometimes building pointless things, such as a pathway that goes only halfway across an estate or a bike path that leads to nowhere, just so they can say that they have done it. All those things are going on with new developments in my constituency. I do not blame Government for it all, but it is the Government’s job to ensure that the system does not operate in that way.

If I had to sum up the problems in my constituency, it would be, “Too many homes, too little infrastructure.” The two district councils that my constituency covers are, relative to their size, in the top 10 areas for house building in the country, yet they are in the bottom third for infrastructure spending. That is a huge bugbear. To put that in numerical context, an estimate of the population change between 2017 and 2027 found that the largest town and surrounding area in my constituency, Didcot, will increase from 36,000 to 51,000. The second largest area, Wantage and Grove, will increase from 17,000 to 27,000—that is in a 10-year period. Faringdon is getting thousands more people, and Wallingford is getting thousands more.

The infrastructure is not following that. It is harder to get a GP appointment, the roads in the constituency get more and more congested and it is harder to get a school place. One village has a 220-child school, and 300 houses have been built right next to it; just last year, the catchment area became less than 470 metres. People who have lived there for a long time and who expected their children to go to that school now cannot get in. When my constituents hear that planning reform may mean new houses and that they will not be able to oppose them, or that the Oxford-Cambridge arc may mean more houses, or that the council leaders’ Oxfordshire 2050 plan may lead to more houses, they are not concerned out of nimbyism; they are concerned because of their experience, over many years, of so many houses being built and so many promises being broken.

To conclude, I will talk about a few things that I think should happen. There are lots of things, and there are plenty of experts in this room who I know will talk about other aspects. First, we need a much tougher regime for the quality of new buildings. I know that the new homes ombudsman will deal with some of these issues, but it is completely unacceptable to pay that much money and have that many problems. We need very tight quality conditions, and the threshold needs to be raised. If it is not met within a certain timeframe, there should be penalties; issues must not go on for years.

Secondly, we need “use it or lose it” planning permissions. I know that there are debates about how best to do this, and I am frequently written to about the 1 million permissions that have not been built on. I know that there is a debate about land banking and whether it happens; hon. Members would be hard pressed to persuade me that it does not, at least from the developers’ point of view. We in this place are familiar with the phrase “dig a trench.” The emphasis has been on starting the building: companies dig a trench to suggest that they have started building, and the houses then take years to appear. We need these homes to be completed within a certain period. If they are not, taxes might be levied or fines paid, but I think that the permission should be lost entirely.

Thirdly, I want to talk about environmental standards. If it takes several years for these houses to be built, they should be built to the latest environmental standards, not to those that existed when the developers got permission. That is what is happening at the moment: companies are building houses to an environmental standard of several years ago, when they should be building to a standard of the future. That needs to change.

We have got to make developers and house builders commit to their affordability criteria. Our big house builders are doing completely fine for profits for their own viability, so they cannot keep saying that developments would not be viable if they committed to what they originally promised.

When it comes to management companies, we need a much stricter regime, because the current one is very murky. Companies are getting away with appalling practices, bullying residents into things and fleecing them, year after year, for things that are not being provided. We need a tougher regime under which companies cannot keep hiking charges without an extraordinary set of circumstances. The charges often go up because of things the company itself has done and got wrong, and it passes the cost on to residents who had no say in the first place. Much more transparency is needed, and penalties for such bad behaviour.

I understand that house builders want a level playing field, because an individual company does not want to commit to expensive things if its rivals are not doing so. That is where there is a role for Government in raising standards, so that all house builders have to do the same. I want more of a level playing field for smaller companies, such as Greencore Construction in my constituency. Many such companies are more environmentally friendly and more efficient, and produce higher-quality homes, but they are often outbid by the financial muscle of the big boys. Perhaps we need to reserve a greater proportion of development sites for such companies or give them greater access to capital. I am all in favour of smaller organisations rather than larger ones—I ran small charities, not larger ones. I think we can get a better product from smaller house builders, and we need to help more such companies into the market.

My final point is that infrastructure needs to go in first. It is not right to pile more and more houses and people into an area, but to do nothing to support local services and infrastructure. I have been campaigning for Grove station to be reopened, for improvements on our roads and for better medical facilities. GP surgeries are bursting at the seams because thousands more people have been added to the area—Members have heard the numbers. GP surgeries and school places have not been added along with the people. Infrastructure must go in first. Unfortunately, over decades my constituents have been told too many times that the infrastructure will come with the houses, but it never has, and now they do not believe it. That has to come first. As part of that, we might better capture the land value increase that comes with planning permission. At the moment, the increase all goes to the owner. Some of it ought to go to the local community who will live with the new houses, not to the landowner who has sold the land.

The balance of power is wrong. Management companies, house builders and developers have too much power, and local residents have too little. The Government cannot be blamed for every single thing that a private company does, but they can help to restore the balance, so that local communities do not see new houses as a curse on the area they used to love.

Photo of Clive Betts Clive Betts Chair, Levelling Up, Housing and Communities Committee, Chair, Levelling Up, Housing and Communities Committee

There are eight colleagues wishing to speak in the debate, and I want to start the winding-up speeches just before 10.40 am. That gives us just under an hour, which is six or seven minutes per person. I will not put a formal guideline on speeches, but I ask that people comply with that time limit.

Photo of Justin Madders Justin Madders Shadow Minister (Future of Work), Shadow Minister (Business and Industrial Strategy) 9:49 am, 5th January 2022

It is a pleasure to see you in the Chair, Mr Betts. Happy new year to everyone who is here today. I congratulate David Johnston on securing the debate, on his useful introduction and on the interesting points he made. This may be the first debate of 2022 and it may be a new year, but, as we have heard, many of the issues we are debating are not new and, aside from the leasehold scandal, have had insufficient attention from this place.

We absolutely need more places for people to live; I doubt there is a Member in this place who disagrees with that. While the Government set some general targets about how many homes should be built, the detail is rightly left, in the main, to local councils. In reality, they and the communities they represent have limited say over what sort of homes are built, where they are built and, as the hon. Member for Wantage mentioned, how the infrastructure that goes with them is delivered. That is the nub of the problem, because we are often told that the wrong type of home is being built in the wrong type of place. That can be argued ad infinitum, and it often is. The bottom line is that we are continually falling short in achieving enough decent affordable housing.

Decent housing is critical to the national infrastructure. It is the bedrock of people’s lives, yet it is too often left to the market to resolve, and the market is clearly failing. In my experience, developers all too often show contempt for local communities by riding roughshod over the development conditions imposed on them: working longer hours, making more noise, and building higher and closer than they should to existing properties. That creates more work for the beleaguered planning department and puts more demands on councils that, after a decade of austerity, simply do not have the powers and resources to keep up.

By the time the council manages to catch up with a complaint, quite often the house is already built and the drains put in. It is a massive financial, logistical and legal battle to get developers to stick to plans when they have got that far down the road. Many councils simply do not have the capacity to get into such fights, especially when the case is about a couple of metres. It might not look much on a plan, but for someone living next door, a couple of metres makes a huge difference.

What about roads being brought up to an acceptable standard, so that they can be adopted by the local authority? People are waiting years for roads to be adopted. I do not blame the local authority, which sets out what needs to be done but does not have the resources or time to continually chase developers who have sold the homes and moved on. Where is the incentive for developers to come back and finish the job they started?

I want to say a few words about the massive expansion of estate management companies. It seems that the idea of the developer paying the local authority a commuted sum to cut the grass and maintain common parts has had its day. This reduces developers’ costs, although it does not seem to lead to cheaper house prices. It costs the homeowner far more in the long run because they are, in effect, paying twice for the maintenance of open spaces: once through a management fee and once through their council tax. Once again, though, it is the council that gets lumbered with all the grief and blame.

With developers looking to replace their lost funding streams, with what I hope will be the end of leasehold, I am concerned that estate management companies will become the new payment protection insurance of the house building industry. There is little regulation or transparency and, if we are honest, little need for estate management companies in most settings, so why do we have them? House builders build houses—that is their core business; they are not interested in managing estates. Indeed, they cannot wait to get rid of them to a company that specialises in such things.

Developers creating an estate management company is nothing more than a calculation on the balance sheet. They have zero interest in keeping the verges neat and tidy after they have gone. If they can make the bottom line look more attractive by getting in a management company, they will. They keep getting away with it because we let them. Why can we not start from the basic principle that the local council should be doing those jobs and that estate management companies are an unnecessary tax on homeowners? How many people are told of the implications of an estate management company or how much it costs?

What developers say to new buyers in the showroom and what is in the final contract are often very different. By the time the paperwork arrives, it is too late. People may have spent thousands on the move, never mind the psychological commitment they have made. What is said in the showroom often does not appear in any documentation. There is a classic example in my constituency where residents now look out on a 30-feet-high warehouse, which the developers conveniently forgot to mention already had planning permission when they sold buyers their homes. They are still waiting for the KFC that they were told was going to be there. Because that is just sales patter, there is no legal accountability for the lies that are told.

This is the biggest single purchase people will ever make. There needs to be far greater accountability for what developers say and what they build. At the moment, they seem to have a free pass. Developers with household names work across the country, moving from one project to the next, sometimes leaving behind problems that take years to resolve. Another development in my constituency has ended up in court, with one group of residents pitted against another and maintenance bills racking up in their thousands, because the developers did not do the paperwork or the job properly in the first place. I know that they are causing havoc elsewhere, because other hon. Members have told me. What can councils do? They have no grounds to refuse planning permission on the basis that the developer has been a poor performer elsewhere. How about a fit and proper person test for the directors of those companies?

In conclusion, I would like much greater political direction and oversight of the house building industry. After all, it will build the homes that we need, but at the moment it quite understandably organises affairs to maximise profits. Housing is a critical part of our infrastructure—having a roof over one’s head is fundamental—but it has been shown time and again that we cannot rely on the market alone to deliver that. Four and a half years on from Grenfell, we still have not really had a decision on who is liable for the defects that were created there, and there is clearly a reluctance in Government to grasp the nettle and take some ownership of the industry.

Photo of Theresa Villiers Theresa Villiers Conservative, Chipping Barnet 9:55 am, 5th January 2022

I start by declaring my interest as the owner of an investment property held on a long leasehold basis. I congratulate my hon. Friend David Johnston on securing this important debate.

I have concerns about the plight of owners of freehold homes, who often face unreasonable charges and sharp practices at the hands of developers. So-called “estate charges” for the maintenance of roads and common areas are often levied by the developer who built the estate in the first place. It is unfair that that type of homeowner cannot challenge the reasonableness of those charges, and that they have no access to dispute resolution or tribunals, meaning that they do not enjoy rights equivalent to those granted to long leaseholders under the current rules. I fear that that is allowing inappropriate practices to occur. One of my constituents has told me of his anger and unhappiness at the high level of charges to which he is subjected, with no effective means to dispute or resist them. The Government have indicated a willingness to legislate to give freehold owners some rights similar to those enjoyed by leaseholders, and I think it is time that they got on with it. I urge them to include some additional protections for freehold homeowners in the Leasehold Reform (Ground Rent) Bill.

As others have done, I strongly condemn abusive practices in relation to leaseholders. I very much support the work of the Competition and Markets Authority in investigating rip-off practices such as the doubling of ground rents every few years. As I said on Second Reading of the Leasehold Reform (Ground Rent) Bill, there is a case for allowing the continued use of ground rents in large apartment blocks. The complete exit of professional freeholders from the market, which is the expected consequence of the abolition of ground rents, would leave leaseholders moving into such buildings with extensive financial and legal responsibilities, so as the Bill goes through, it is worth considering whether some leaseholders in some new blocks might want the option of leaving the stewardship of their block to a professional freeholder.

I will turn to the planning system, which others have addressed with great insight. I have put on the record many times my concerns about the proposed reforms in the “Planning for the future” White Paper. I very much welcome the Secretary of State’s indication that he is willing to think again about those plans, and I look forward to a clear public statement about his views on the White Paper. I do not believe that the way to deliver the homes we need in this country is to strip people of their right to have a say in what is built in their neighbourhood.

There is a range of factors that slow down house building in this country but that have nothing to do with the planning system, and I will set out a few ideas on how we can ensure that the right homes are built in the right quantities in the right places. As a principle, any changes we make to the planning system should increase, not undermine, local democracy. They should strengthen and simplify the local planning processes to ensure that development is led by communities, not forced on them against their will. National housing targets should be advisory, not mandatory, and developers should not be able to use them to try to force local councils to agree to inappropriate development. Housing should sit within an integrated long-term development plan for urban regeneration to prioritise the Government’s levelling-up commitments.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

The right hon. Lady is speaking many words of wisdom. In my constituency of Strangford and across Northern Ireland, the council rules are a wee bit more stringent and strict. For instance, if a developer wants to develop a number of houses, they must make a financial commitment to infrastructure, including roads, and set land aside for leisure, shopping and education. That is all part of the integral planning regulations, and the requirements change as they go through each phase of the planning process. Does the right hon. Lady, whom I know has much knowledge of Northern Ireland, agree that when considering changes and how things can be done better, the Minister should look to Northern Ireland?

Photo of Theresa Villiers Theresa Villiers Conservative, Chipping Barnet

I am grateful to the hon. Gentleman for his intervention. There are certainly aspects of the Northern Ireland planning system that we could usefully learn from, but it has its drawbacks as well. However, I feel strongly that developer contributions should be ring-fenced for the local communities that are directly affected by the new homes. Too often—certainly in England—such contributions end up being distributed to a broader area and those who bear the burden of the new development do not necessarily get the benefit of the developer contributions.

We should use home building as a core part of efforts to regenerate cities and communities in the north and midlands. Many of those areas have seen population declines over the past 50 years, but new housing and infrastructure could help to reverse that trend.

We also need to address land banking. As my hon. Friend the Member for Wantage proposed, we could introduce a “use it or lose it” rule for land-banked permissions. An agreed start-by date could be imposed and permission could be withdrawn if that deadline was not met, and “start-by” should mean significant initial works and not digging a few holes or a trench. We could also impose end-by dates, after which council tax is payable on every home that is planned, regardless of whether it has been built or not. There is also a case for introducing a rule to limit the number of applications that can be made in relation to the same site, which would bring to an end the exasperating practice of developers coming back again and again, with multiple applications being turned down, which effectively turns the planning process into a war of attrition with planners and local residents.

There is a strong case for a character test in planning, so that if people have a poor track record in development or there are other reasons to doubt their ability to deliver, they can be blocked at the planning stage. I believe that sites that have been illegally prepared for building—for example, where tree felling has taken place illegally—should be made ineligible for future planning applications, and I would certainly like to see the penalties increase for illegal tree felling by developers.

Lastly, we could provide tax incentives for elderly homeowners to downsize, for example by reducing stamp duty.

As the Secretary of State contemplates which reforms to take forward and which to reject, I hope that he will listen carefully to the concerns that have been expressed in this debate. We must not let our rush for new homes compromise our environmental commitments or destroy our green and pleasant land, and we must not repeat the mistakes of the 1960s and 1970s, when poor quality high-rise housing blighted the lives of millions of people.

Photo of Clive Betts Clive Betts Chair, Levelling Up, Housing and Communities Committee, Chair, Levelling Up, Housing and Communities Committee

I must emphasise that speeches should last for no more than six minutes, please. Otherwise, other Members will not get as much time in which to speak.

Photo of Kate Green Kate Green Labour, Stretford and Urmston 10:03 am, 5th January 2022

A happy new year to you, Mr Betts, and to all colleagues.

I start by thanking David Johnston for securing this debate. In my constituency, we desperately need new homes for young families to buy or rent, but I absolutely echo the comments made by colleagues this morning about the way in which the dice are stacked against homebuyers and, indeed, local authorities.

I recognise the progress over the past two or three years, with measures such as the introduction of the new homes ombudsman and the Building Safety Bill, which is going through Parliament. However, the Bill will be of limited use in my constituency, where few buildings are over 18 metres high, and where we are still waiting for cladding to be removed and replaced on some that are, as it should be. I will just take this opportunity to ask the Minister whether he can update us on assistance with the cost of replacing defective cladding on buildings that are less than 18 metres high. That is an issue in my constituency and, along with all the other problems that we have heard leaseholders are experiencing, it is a very live one.

Today I will talk about some of the issues that homebuyers in my constituency have experienced in relation to defects in their new homes, which is a problem that has been alluded to by other hon. Members. I have spoken before in the House about Aura Court in Old Trafford and the risks faced by residents from unsafe cladding, staircases and walkways, which led to the Greater Manchester Fire and Rescue Service placing a prohibition notice on the block. Two years on, many of the issues that I raised are unresolved. Meanwhile, a few yards away at another development in East Union Street, residents await the completion of a sprinkler system and remediation of several other defects. Both those developments were undertaken by the same developer, Mr Jason Alexander, through his network of companies. I have spoken about him before in the House, too. He is notorious in the north-west for substandard developments and a failure to rectify defects once residents have moved in. Similar issues have been experienced in Renton Road in my constituency, where the developer is Mr Selcuk Pinarbasi, whom I have also spoken about before.

Those homes have now been sold on to private buyers and, as was mentioned by my hon. Friend Justin Madders, the council has therefore been advised that it needs to take enforcement action not against the developer but against those homeowners—the very parties aggrieved by failures in the system. It seems that developers can repeatedly take advantage of a planning and building control regime that creates conflicts of interest; that gives precedence to the interests of builders and warranty companies over building quality and safety; and that leaves leaseholders and often, as my hon. Friend pointed out, the local authority powerless to act.

That will continue even after the changes made by the Building Safety Bill, which does not mandate people undertaking building work to do so in accordance with plans that have been either submitted to and approved by a local authority or issued with a plans certificate by an approved inspector. The Bill provides a power to make future regulations in that regard, but we have not yet had a commitment from Ministers to bringing those forward. I urge the Minister to do so, given the widespread support for such a measure in response to the Government’s consultation. Meanwhile, if a registered building control approver appointed by the developer wrongly approves, gives a plans certificate or issues an initial notice or a final certificate, the local authority is effectively locked out of enforcement action. I recognise that the Bill creates new compliance and stop notice powers for local authorities in some circumstances, but they are hedged about with limitations.

Company law could be a useful tool in acting against unscrupulous developers and repeat offenders, but it repeatedly falls short. For example, Mr Alexander again and again sets up a new company for each development, which he then either liquidates, strips of its assets or allows to be struck off for non-compliance with registration and other requirements, leaving buyers with no body against which to pursue further action. It is pleasing to note the Bill’s inclusion of tougher provisions so that when an offence is committed by a corporate body with the connivance of a director, that director will commit the offence. However, we also need a more energetic approach to company law.

I would be grateful if the Minister supported me by using his good offices to press Ministers in the Department for Business, Energy and Industrial Strategy, as I have been doing, for a less dilatory response from the companies registrar to enforcement action, and indeed for a toughening up of company law, which I am aware Ministers in BEIS are considering to ensure that those who breach the obligations that we rightly expect of directors cannot continue to behave in this way.

I very much echo the comments on managing agents. Residents of Eden Square in Urmston have been battling their management company, Residential Management Group, for years for essential work to be undertaken, and have faced what look like excessive costs when anything is actually done. They are not alone. The Minister may have seen the report in The Sunday Times on 5 December relating to the mismanagement and greed of that organisation. Meanwhile, Mr Jason Alexander retains control of the management company for East Union Street and is trying to regain control of the management company for Aura Court, despite his long track record of failing to act.

I support the concerns raised about the weakness of the regulatory regime in relation to developers and management agents. I very much hope that the Minister will work with colleagues in the House and in this debate on how we can continue to enhance and improve protections for homeowners.

Photo of Natalie Elphicke Natalie Elphicke Conservative, Dover 10:09 am, 5th January 2022

It is a pleasure to serve under your chairmanship, Mr Betts, and to speak on this important topic, which is very close to my heart. I draw attention to my entry in the Register of Members’ Financial Interests. In Dover and Deal, as in so many other constituencies, there have been good developments and downright awful developments. That needs to change. There needs to be an end to shoddy homes and poor customer service when buying a new home.

Before I became an MP, I was asked, as an independent expert in this area, to lead the practical work of designing, developing and then implementing major new reforms to provide those better standards and improved consumer redress for new homes. Those reforms consist of a new quasi-regulator, the New Homes Quality Board, which I chair, as set out in my entry in the register. It is a wholly independent, not-for-profit body. Under its constitution, builders and warrantee providers taken together can never form a majority on it. Consumer representation on the board is provided by Citizens Advice, and by an active consumer engagement panel, which is structured into its core design.

The New Homes Quality Board holds a register of developers. There is a new homes ombudsman to provide consumer redress, free to consumers, and a new code to set out much-needed standards and principles for developers, as we have heard today. Indeed, the new code, which it took nearly five years to develop, is so extensive and far-reaching that one major developer has said that its change management programme involves in excess of 40,000 changes to its business.

A full public consultation was carried out on the code, which I hope will go some way to meeting the concerns expressed by right hon. and hon. Members, but there are appalling situations. It may not surprise my hon. Friend David Johnston, given his experience, to hear that in the consultation, only 4% of new home buyers said that they thought that developers met all the fundamental principles set out in the new code, so 96% of industry clearly has more to do.

This is such important work that I am determined to see it through to its final operational launch in the coming weeks before I step back and hand over to my successor. It is, and has always been, cross-party work—indeed, cross-governmental work by the Administrations in England, Scotland, Wales and Northern Ireland. It started with the vital leadership of the all-party parliamentary group for excellence in the built environment. I am delighted that the Minister is present, and is shepherding in these far-reaching reforms through the Building Safety Bill and other measures, as he was the chair of the APPG, which set out the problems and solutions for new homes, including the need for a new homes ombudsman. That was in addition to your vital work, Mr Betts, in leading the Levelling Up, Housing and Communities Committee for many years.

On ensuring that a house is right the first time, the code specifies that a home must be complete. It prevents customers from being paid to move into an incomplete and shoddy home. It may sound absurd, but that was what was happening. People were paid to move into a house of two bathrooms and four bedrooms, say, where only one bathroom was working. Perhaps even the plumbing was not finished. The homeowner would have the job of their life trying to get things fixed after they had moved in and the builder had moved out.

It is also a requirement of the new code that the home meets all building safety, environmental and similar regulations. My hon. Friend the Member for Wantage and my right hon. Friend Theresa Villiers are quite right that building green homes and warm homes is central to building good homes. I am sure that the Minister has heard about environmental standards in the context of the upcoming planning reform. I hope that he will also consider the importance of water sustainability to the wider community architecture of cities, towns and villages in reducing and preventing flooding, and promoting better, sustainable water usage.

The establishment of the new building safety regulator is essential, because some of the safety situations for new homes have been shocking—none more so than that faced by my constituents in Sholden, where fire breaks were supposed to be in place but were not. Some of my constituents are still waiting to receive safety certificates, which they need in order to sell their homes, as well as for peace of mind in their home every day.

Finally, the new code requires builders to have an effective and standardised aftercare service. There will be fixed timeframes, as my hon. Friend the Member for Wantage recommended. The backstop to all of that is an independent new homes ombudsman service. Following a competitive, open procurement process over many months, the Dispute Service was chosen as a preferred new homes ombudsman partner. It has an impressive record across the four nations of the UK. All the arrangements will be paid for by the house building industry and access to the new homes ombudsman will be free to consumers. I hope that will begin to make a significant difference as we move forward.

I hope that, in the time available, I have given a flavour of the significant and necessary changes under way. If those changes do not go far enough, the Minister will find himself on a continuing journey with me to press for further change. Change is urgently needed, for home is where the heart is, and a person’s home is their castle.

Photo of Matt Western Matt Western Shadow Minister (Education) 10:15 am, 5th January 2022

It is a real pleasure to serve under your chairmanship, Mr Betts. I wish a happy new year to you and to all present. I congratulate David Johnston on securing the debate.

The lack of reference to local authorities and councils in the debate and its title is very telling. Although I understand that the focus is very much on developers and house builders, looking at the changes to the Department for Levelling Up, Housing and Communities—the former Ministry for Housing, Communities and Local Government, which no longer includes local government in its name—I am concerned about the future of the provision of housing.

As many have said, we need to look at the sector in the round. It is clear that, for many years, there has been too cosy a relationship between developers and certain preferred management companies and builders. The role of locally elected representatives and the voice of communities really matter in delivering housing, as does knowing what is required in the area. Good local authorities can absolutely help with that. Throughout the pandemic, it was local authorities that delivered and helped us through the challenges.

We have good planners in our local authorities and, with proper consultation, they can build the right mix of housing to meet the needs of local people, not the needs of developers. We need truly affordable housing—social housing—for young people who are so often priced out of their communities, whether they be in villages, towns or neighbourhoods. We also need provision for seniors, who may no longer need several bedrooms and may want or need to downsize. Retaining independence is critical to their mental health and wellbeing, and access to town centres and communal spaces is vital for them, but they are often left remote from the communities they have lived in their entire life; they are denied access to transport networks and it is not a short walk into the centre of their community.

Too much has been left to the enterprise of the market, which has been shown not to work in the interests of people. The Government have, perhaps, been too giddy on the donations of developer donors to act and do what is right. The Government were predated by a coalition Government who so diluted building regulations and planning legislation that they delivered a developers’ charter, resulting in low-density housing developments, unsustainable housing with poor energy performance, and greater car dependency. In my constituency, there are estates with no community centres or shopping areas, although they have been promised.

Councils need greater power. As many have said across this Chamber, rather than emasculating councils, the Government need to empower them by giving them the tools and the authority to deliver what is needed in their localities. The number of applications approved by councils that remain unbuilt is striking. According to the Local Government Association, 1.1 million homes are yet to be built out, and there are a further 1 million for which developers are yet to seek planning permission. That is 2 million homes that could be built.

We have heard about the role of developers who are land banking and not building out—look at the Letwin review of some years ago and where that led. Although the review contained some decent findings, it was inconclusive and could have been much harder hitting, as I discussed with Sir Oliver Letwin when he was still in this place. The issue of the national planning policy framework and the Localism Act 2011 led to the question of viability, which is premised on the cost of land. Giving greater authority and power to local government would address that and change the dynamic between developers, builders and authorities.

Builders are sometimes linked or tied to developers. There are good ones and bad ones, and there are also subcontractors in the mix. When we talk about the quality of house building, it is often not the builders but the subbies who come in and do the work. There are then issues of legality and contractual responsibility in any subsequent claim.

On management companies, as we have heard, residents are locked into high annual fees. People are being bullied and exploited, and as we have heard—it is certainly true of my Warwick and Leamington constituency—many residents do not want to be named. They do not want to have information in the public arena about the estate they live on for fear of the impact on property values, and of course the developers and builders know that.

These estate management companies are exploiting residents; we have heard so much about that already. Developers are claiming that residents will get a discount on their council tax because of the management fees they pay for green spaces. It is complete nonsense that they are being promised. There are streets that refuse lorries cannot even go down.

We need to see what the actual housing need is. We have seen the output from the Government’s questionable algorithms over recent months. We need to deliver power to local authorities, and we need localised and regionalised planning to help deliver that. The infrastructure that comes with housing, such as transport, schools, GP provision and even shops, needs to be put in. On environmental standards, thousands of homes have been built in Warwick and Leamington, including some with solar panels on north-facing roofs, believe it or not. We have the future home standard, but it lacks ambition. In 2016, we were meant to have zero-carbon homes. We would have built 1 million homes to that standard by now if that had been allowed. We need greater consumer protections.

Finally, housing is too expensive in this country. So much of that is down to the cost of land. It is a huge economic cost, which is having huge impacts on our wider economy. We need to bring down the cost of housing.

Photo of Mark Francois Mark Francois Conservative, Rayleigh and Wickford 10:22 am, 5th January 2022

A very happy new year to you, Mr Betts. As we have limited time, I will make three points. First, I have served as an MP for over 20 years, and the whole issue of housing development and the associated infrastructure remains the most controversial issue in my constituency. One of the things I have learned from that is that in order to be accepted by local people, development must be done with people, rather than to people, but the major house builders rarely seem to understand that.

The legislative framework within which the house building industry has to operate is obviously fundamental, but we are still awaiting the publication of the Government’s much-delayed planning Bill. That has led to the iniquitous situation whereby the Department for Levelling Up, Housing and Communities continues to harry local authorities to finalise their local plans, despite holding back legislation that, once enacted, might mean that local councils have to revise or even substantially rewrite the plans that many of them have just spent literally years working on. It is becoming a bit like “Waiting for Godot”. To put it another way, the Department should remove the plank from its own eye. I humbly ask the Minister: when can we expect the publication of the planning Bill, and when is Second Reading likely to be?

Secondly, the UK housing market is now effectively an example of near market failure. It is completely dominated by half a dozen or so major house builders, some of whom have grown over the years by absorbing competitors. That restricts choice, and, even more importantly, artificially restricts housing supply. That is done deliberately to keep prices up. Liam Halligan, economics editor of the Sunday Telegraph and now a popular TV presenter, explored the problem in great detail in his very good 2019 book, “Home Truths: The UK's chronic housing shortage”, in which he exposes the adverse effects of the dominance of the volume house builders on the housing market.

For instance, as Liam Halligan points out, since the Office of Fair Trading’s investigation into the housing sector in 2008, the market share of the volume house builders has more than doubled, from 31% to 59%—not far off two thirds of the entire market. Covid is likely to have made that serious market anomaly worse by increasing the pressure on smaller builders, many of whom have limited financial reserves.

As Liam Halligan argues,

“An oligopolistic house building sector, deliberately restricting the supply of new homes to keep profits high, is anathema to free markets.”

But it is even worse than that. The paradigm that the Government appear to be working in is one where house building is held back by nimby local authorities, despite the best efforts of house builders to build new homes. In fact, the reverse is true. As the Local Government Association pointed out in February 2020, there are over 1 million extant planning permissions for new properties, but these have not been built out. In October 2020, the Campaign to Protect Rural England produced a report highlighting that over half a million of these plots alone are on brownfield sites. A former chief executive of Persimmon Homes stood down after getting his £75 million bonus—a bonus so profane that it embarrassed not just his company but the rest of the industry. Perhaps he was untroubled by these facts. Nevertheless, some of the practices we have heard about from colleagues this morning still go on. Where, one has to ask, are Ministers—and, indeed, the Competition and Markets Authority—in all of this?

I come to my third point. Let me give a practical example of how truly arrogant some of these companies have become. Bloor Homes, one of the largest privately owned developers in Britain, was so desperate to secure planning permission for a highly controversial site off Ashingdon Road in my constituency that it resorted to trying to interfere with the composition of the development control committee of Rochford District Council, which was due to consider the application last June. Bloor having lost—the committee turned it down—Bloor’s political consultant sent a series of highly intemperate, even offensive, texts late at night to the leader of the council. It is the sheer arrogance of these tactics, which I have not previously encountered in over 30 years of public life as a councillor and then as an MP, that I find deeply shocking. This is the sad reality of house building in Britain today. We have limited time, Mr Betts, so I will not read all the communications into the record. Perhaps I will have the opportunity to do on Second Reading of the planning Bill, so that Ministers, parliamentary colleagues, the media and others in the house building industry can learn how Bloor Homes really behaves.

In summary, the UK house building sector is deeply troubled, bordering on dysfunctional. Many ordinary families are struggling to buy a home, while some of the major house builders ruthlessly exploit their agony to maintain their already generous profit margins. They blame everyone but themselves: Government, MPs, local authorities or concerned local residents—anyone but the greedy companies that are at the heart of the problem. If Ministers really want to boost housing supply, let us have a full inquiry by the Competition and Markets Authority on over-concentration in the UK house building industry, and let us have it now.

Photo of Clive Betts Clive Betts Chair, Levelling Up, Housing and Communities Committee, Chair, Levelling Up, Housing and Communities Committee

As I want to call the Front-Bench speakers at 10.38 am, the last two speakers will have five minutes each.

Photo of Holly Lynch Holly Lynch Shadow Minister (Home Office) 10:28 am, 5th January 2022

It is a pleasure to serve under your chairship, Mr Betts. I thank David Johnston for securing this debate and for his powerful opening contribution.

Any plan for future house building must come with an assessment of where the system is currently failing. As has been demonstrated by all the contributions so far, issues with new and more recently built homes are becoming increasingly significant in MPs’ case loads. Issues with properties not completed to the promised standard and poor maintenance are a real source of cost and frustration for so many people, with poor communication and barriers to these issues being fixed further exacerbating the problem.

One such example is Greenside Gardens in Sowerby Bridge in my constituency. The original developer of the site went bankrupt before the properties were finished, and the site was subsequently bought by another developer. The second developer was able to complete the vast majority of the development, but the access road to the site was still left in an appalling state. Materials had simply been abandoned and residents had to take it upon themselves to clear the site. They had to hire skips to clear much of the rubbish, which took several weeks to complete. Having spoken to the council on residents’ behalf, I was informed that it could take no action against the developer in relation to the road, as it had been advised that it could not compel the developer to complete the road to the required standard for adoption, and nor did it have the appropriate funds available to carry out the works as the highways authority.

It is clear from this instance that there is a serious lack of accountability and transparency in the process. The way our system is currently designed does not effectively allow residents to raise concerns and seek appropriate redress, if required. The new homes ombudsman is certainly a welcome step, but we are still awaiting the details of when it will come into force, so I would appreciate it if the Minister could confirm that the ombudsman will allow for historical complaints to be determined so that my constituents are able to receive any compensation or redress to which they should be entitled.

Another example from my constituency that I wish to highlight relates to Harron Homes and the Moorside Lea development in Northowram. The properties built were not cheap—they are usually four or five-bedroom homes. I have been contacted by seven residents, who have all mentioned homes being finished to a poor standard and countless snagging issues, many of which are still not resolved or fixed, years after completion. It is completely unacceptable, not least because the houses were advertised and sold as luxury homes. One of my constituents who has been deeply affected is Dr Rani Khatib, who has worked as an NHS doctor on the frontline throughout the pandemic. Given the issues with his property, he has been forced to take multiple days off for contractors to attend his home, only for them not to show up. In one of his emails, he said:

“When the world is uniting to help front line NHS workers to deal with COVID-19, on my shift I am having to worry about constantly chasing Harron Homes about the safety of my children due to the rubbish they left in my garage, the outstanding work they never completed and the many issues they have still not addressed.”

We have managed to have two meetings with Harron Homes, so progress has been made, but there seems to be what can only be described as churn in staff. When someone moves on, letters, calls and emails from me and constituents have gone unanswered for months at a time, and I have had to resort to asking to meet the managing director to attempt to resolve the multiple cases that my office is trying to manage. Although there has been some progress more recently with Harron Homes, it has been a fraught journey, and one that I am afraid to say is far from over.

In conclusion, we know that good-quality, affordable housing has to be a focus if we are to meet this country’s needs, but unless we introduce true accountability into house building expectations, with consequences for not meeting those expectations, we stand only to compound the problems. As demonstrated by the local examples at Moorside Lea and Greenside Gardens, it should be the role of the developer and house builder to fix what needs to be repaired and ensure that properties are habitable and safe as an absolute minimum. As things stand, the system is unfair, unjust and deeply biased towards those who can afford advice and representation. A new homes ombudsman should be introduced as an independent empowered body, to hold developers and house builders accountable. Enough of the delays. It is time for the Government to deliver on what they have promised, because for far too many the dream of owning a new home has far too quickly become a nightmare.

Photo of Robbie Moore Robbie Moore Conservative, Keighley 10:33 am, 5th January 2022

It is a pleasure to serve under your chairmanship, Mr Betts. May I wish all Members a happy new year and thank my hon. Friend David Johnston for securing this important debate? The debate is important because it allows us to discuss the role that house builders play not just before houses are built, but when ensuring that homes are fit for purpose once they are finished.

Buying a home is probably the most important and expensive purchase that any of us will make. With that in mind, I wish to raise the case of a specific development within my constituency, the High Banks development in Silsden, which sadly has witnessed mismanagement by its construction company, Harron Homes. It is perfect timing that I am following Holly Lynch, who spent most of her speech talking about Harron Homes, as I intend to do the same. The High Banks development was constructed and finished back in 2020, and it consists of about 50 properties. I have been contacted by the residents about this. Indeed, the local councillor, Rebecca Whittaker, who represents the Craven ward, has been contacted by about 30 of the 50 residents.

The manner in which the High Banks development has been finished and the snagging issues are, quite frankly, shocking. I have visited the site many times. As soon as I arrived, it became quite clear why residents have contacted me and Councillor Whitaker. The road is in a shocking state. The sewerage system is still not connected to the mains, and a tanker comes in on a weekly basis to empty the development’s tanks. Many house owners have contacted me about cracks in their walls appearing, plumbing systems in their houses not being connected or finished, floorboards creaking, gardens not being properly landscaped or finished, and boundary fences not being finished. This situation is not satisfactory at all. One constituent told me that they had waited so long for many of these issues to be sorted that they carried out the work themselves, only for the developer to say, “You finished it; we’re not coming in to sort it out.” That is not good enough.

I know that High Banks is not the only Harron Homes development to face these issues. The hon. Member for Halifax already raised her case, and I know that there are similar cases in Dewsbury and Colne Valley. Communication is a big concern with this particular developer. On the back of constituents raising these concerns with me, I tried to have a meeting with the managing director. I requested the meeting in the summer of last year, and we were able to secure a meeting with him on site only in October.

Harron Homes promised to keep up communications with many of its residents. Indeed, on the back of a meeting with Tony Lee, the managing director, and Andy Hall, the construction director, I was promised six-weekly updates. I have not received any update since the meeting with them in October, and the residents have received only one communication. Again, that is not good enough. As a result, I continue to receive correspondence from constituents in High Banks saying that Harron Homes has done absolutely nothing—since I met them or, indeed, since 2020, when it finished the development—to improve the site.

The company has not kept its promises to those who bought their homes. Where do we go from here? I call on Harron Homes again to respect its contractual relationship with its purchasers and not to blame issues on its subcontractors. The responsibility lies solely with the developer, Harron Homes. The snagging issues have to be resolved within a respectful timeframe, without the pandemic being used as an excuse, as I have heard from Harron Homes before.

There also has to be an auditing process in place. When a developer hands over a completed house to a purchaser, it surely has a responsibility to go back to the purchaser and say, “Has the home been completed to the standard that you expected?” That surely has to happen after six months and then potentially after a year. Harron Homes has done none of that.

Like my hon. Friend the Member for Wantage, I would like to see a much tougher regime for the quality of house building, with a fixed-term timeframe for completion and with possible penalties if homes are not completed.

Photo of Clive Betts Clive Betts Chair, Levelling Up, Housing and Communities Committee, Chair, Levelling Up, Housing and Communities Committee

I thank hon. Members for keeping to time limits; it is appreciated. We move to the Front Benchers. There will be 10 minutes for the two Front Benchers and then a short time for the mover of the motion to wind up.

Photo of Matthew Pennycook Matthew Pennycook Shadow Minister (Levelling Up, Housing, Communities and Local Government) 10:38 am, 5th January 2022

It is a pleasure to serve with you in the Chair, Mr Betts. I wish all hon. Members and staff present a happy new year, and add my congratulations to David Johnston on securing this important debate, and on his comprehensive and extremely well-judged introductory remarks.

As expected, given the subject, this has been a wide-ranging debate, with a series of thoughtful contributions informed by the experiences of hon. Members on both sides with new build developments in their respective constituencies. I highlight, in particular, the contributions made by my hon. Friends the Members for Ellesmere Port and Neston (Justin Madders) and for Warwick and Leamington (Matt Western), who spoke of the importance of local authorities in housing and planning and the imbalance of power between councils and developers, and the constraints that the former therefore face when it comes to meeting the needs of their populations.

My hon. Friends the Members for Stretford and Urmston (Kate Green) and for Halifax (Holly Lynch) spoke powerfully about cases of unscrupulous developers in their own constituencies, as did Robbie Moore in relation to Harron Homes, and the lack of accountability, at least in the current system, for redress for the serious defects that people face.

In the time available, I would like to expand on three issues that have featured in the debate this morning and that the hon. Member for Wantage touched on in his introductory remarks. First, what is the quality of new homes being built? Secondly, as well as building new homes, do we have a system that supports the creation of sustainable communities where individuals and families can not just live but thrive? Thirdly, are buyers of new build homes getting a fair deal?

I turn first to quality. It manifestly remains the case, despite the problem being both of long standing and widely understood, that a significant proportion of those buying recent new builds in England find, having moved into their new home, that their property has serious defects. As has been made clear today by cases from across the country, to which I could add a great many from my own constituency, we are talking here not about minor snagging issues but about major defects, whether that be in relation to the fabric of the building, unfinished fittings, or faults with utilities.

The fundamental reason why standards remain too low is simple: the housing market is broken and the planning system is in crisis. As Mr Francois argued, the housing market does not have sufficient diversity of supply, and it is not one in which—aside from a minority of homes at the very top end of the market—quality of product is rewarded by price. A decade of planning deregulation has exacerbated that situation, and the relaxation of permitted development is the most egregious example of decisions taken by this Conservative Government that will increase the amount of substandard housing being delivered across the country, with all the negative impacts on health and life chances that flow from that. For all the rhetoric about beauty and the various initiatives announced in the wake of the Building Better, Building Beautiful commission, the present system still overwhelmingly produces, as extensive analysis by the Place Alliance has shown, “mediocre” or “poor” outcomes when it comes to build quality and design.

We of course must robustly challenge developers and house builders to improve their performance, and call out those choosing not to build better-quality housing or using the planning appeals process to force through schemes with the lowest design quality, but there is much more that the Government could do to drive up standards. The establishment of the new homes ombudsman is of course welcome, although the Minister will know the concerns that Opposition Members have about the scheme’s membership. Likewise, we welcome the publication of the new homes quality code. However, given its nature and the fact that it relies on compliance with national standards that currently, I argue, fall far short, we have little confidence that it will lead to the needed step change in developer behaviour. The fact is that until the Government act to ensure that we have a planning system fit for purpose and make greater progress on diversifying the housing industry and delivering a marked increase in output, including in terms of genuinely affordable homes, the numbers seeking redress for serious defects are unlikely to fall significantly.

I turn next to the question of how we ensure that the construction of new homes creates sustainable and thriving communities. As things stand, far too many new build developments are not being delivered with the necessary key amenities and social and physical infrastructure to provide for such communities, and we have heard a great many examples this morning. That is because the present housing and planning framework is simply not conducive to effective place making. Of course, that is not a new phenomenon—indeed, it was remarked upon as far back as the 2007 Callcutt review. But the problem has become more acute in recent years, as a direct result of this Government’s commitment to deregulating the planning system, with the relaxation of permitted development rights in particular preventing councils—the skills, morale and capacity of whose planning departments are at an all-time low after a decade of budget cuts—from co-ordinating development or planning vital infrastructure and services.

The situation is having a direct impact on the provision of environmentally sustainable development—for example, in terms of the relationship between relatively inaccessible development sites and rates of sustainable transport use, or buildings that are constructed on sites without due regard to climate resilience. Again, the fundamental problem is a development model that is geared primarily towards the wants of developers, as opposed to one whose primary purpose is securing what is in the public interest.

When it comes to enabling effective place making, the Government must, as a minimum, rescind the damaging relaxation of permitted development rights and return those powers to local government. Ministers should then turn their attention to what more the Government must do to encourage the creation of thriving communities that support the health and wellbeing of their residents, not least by implementing comprehensive national housing standards so that developers—particularly the volume housebuilders—have no choice but to deliver in core place making.

Lastly, turning to whether those people buying new homes are getting a fair deal, the answer in far too many cases is clearly no, particularly for leaseholders. That is most obvious in the topical issue of ground rents for new leasehold homes. The House will know that the Opposition welcome the Leasehold Reform (Ground Rent) Bill but remain of the view that onerous ground rents must be tackled for existing long residential leases, not just new homes, and we urge the Government once again to reconsider their position on the matter.

With regard to existing long residential leases, we welcome the commitment given by Taylor Wimpey to the Competition and Markets Authority to remove onerous ground rent terms from its existing contracts. The imposition of those terms was wholly unjustified, and it is obviously right that the relevant clauses will be removed. Other developers and freehold investors must also do the right thing and abandon escalation clauses in their leasehold contracts. When he responds, I would welcome the Minister making it clear, for the record, that that is what the Government now expect them to do.

However, the issue of ground rents is not the only way in which those buying new leasehold homes are getting a bad deal. There are a range of issues, from soaring service charges to the unregulated nature of managing agents, that all point to the need not only for measures to address specific problems, but for wider leasehold reform and reform of the current framework for resident control of estate management—issues that I have no doubt Ministers and I will return to on many future occasions.

On protecting the owners of new homes from abuse and poor service at the hands of disreputable management companies, I ask the Minister to tell the House whether the Government intend to implement the recommendations of the regulation of property agents working group, chaired by the noble Lord Best. What progress has been made on that, given that the final report was published back in July 2019?

To conclude, this has been a valuable debate and a welcome opportunity to hear the concerns of hon. Members from across the House regarding new homes. However, it is taking place after almost 12 years of Conservative-led Government, with numerous changes to housing and planning legislation in that time. Yet when it comes to new homes, the outcomes for people and communities, on the whole, have not only not improved but noticeably deteriorated in a number of key areas.

It is self-evident that more must be done to drive up quality and design standards across the industry, to enable and support more effective place making, and to ensure that those buying new homes get a fair deal. I look forward to hearing from the Minister, not least in relation to the planning legislation that we are told the Government remain committed to introducing and on what the Government will do differently to ensure that real progress is made on these objectives.

Photo of Clive Betts Clive Betts Chair, Levelling Up, Housing and Communities Committee, Chair, Levelling Up, Housing and Communities Committee

I call the Minister. If he could allow a brief period at the end for the mover of the motion to wind up, that would be appreciated.

Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities) 10:48 am, 5th January 2022

Thank you, Mr Betts. It is a pleasure to serve under your chairmanship. I congratulate my hon. Friend David Johnston on securing the debate. From the contributions that have been made, we can see that this is a topic that promotes passion on the part of not just those right hon. and hon. Members who have contributed, but their constituents.

I welcome Matthew Pennycook to his place. I wish him a happy—but obviously not too successful—new year. Regarding future legislation, particularly on leasehold reform, I look forward to discussing that with him, and with other Members, to ensure that we get the legislation in a good place before it is brought forward.

I understand how important it is that infrastructure comes with new housing. Indeed, my hon. Friend the Member for Wantage is a one-man campaign machine in working to secure infrastructure for his constituents along with housing. As he says, they are not NIMBYs; they just understand that houses must come with the infrastructure they require. Section 106 agreements of around £1 billion towards infrastructure were agreed in 2018-19. That includes contributions to transport, open spaces, the environment, education and medical facilities.

The community infrastructure levy also allows local authorities to obtain the funds needed to deliver infrastructure such as roads, schools, health facilities and flood defences. Currently, around 50% of local authorities charge CIL. It is estimated that the liability for new planning permissions amounts to roughly £1 billion since 2018-19. The housing infrastructure fund provides £4.3 billion so that improved transport connectivity, healthcare services and other infrastructure can be put in place before housing is built.

We have already made changes to reduce the renegotiation of affordable housing in infrastructure commitments made through section 106 agreements. To reduce renegotiation, the Government require local authorities to have clear policy requirements in their local plans so that landowners and site purchasers are aware of likely costs up front and can take them into consideration when agreeing land transactions. The Government have also set out clear guidance on how viability assessments should be undertaken and made public to ensure consistency and transparency.

The Government recognise, however, that the existing system of developer contributions can sometimes be costly and complex, and can delay developments and reduce certainty for communities, which is why we are exploring the introduction of a new infrastructure levy to replace the current system of developer contributions. That levy will seek to deliver at least as much value and on-site affordable housing as at present. To reduce the renegotiation issues to which section 106 agreements are prone, we propose making the levy a non-negotiable charge on a fixed proportion of the development value. Our intention is that the proceeds from the levy will be collected and spent locally, and that councils will have flexibility in that spending.

Unfortunately, I do not have much to add on planning reforms. The Secretary of State took control of the newly empowered Department in September, and he has an awful lot in his in-tray to work through, but he is committed to looking at planning reform and fulfilling the Government’s levelling-up ambitions by carefully considering what reforms to the system are needed and how they are best taken forward. An announcement will be made in due course.

Photo of Mark Francois Mark Francois Conservative, Rayleigh and Wickford

It is disappointing that the Minister cannot give any timings on when the planning Bill is coming, because some of us would like to know before we retire. He has heard 10 very good Back-Bench contributions in this debate, all of which have been, in one way or another, highly critical of the housebuilding industry in this country. When will the Government support a Competition and Markets Authority inquiry into the UK housebuilding industry?

Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

As I have set out, the Government are already working closely with the CMA to push forward their ambitions. There are some ongoing court cases, so it would be inappropriate to comment except to say that we are enthusiastic in our support. I put on the record that the Secretary of State read my right hon. Friend’s book over Christmas, and I think he has been in touch with him to say how good a read it was.

Photo of Mark Francois Mark Francois Conservative, Rayleigh and Wickford

He has, but I was told I could not plug it in the debate. [Laughter.]

Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

Briefly, as I am running out of time, a number of Members have highlighted that for net zero, we need to build homes that are as environmentally sound and low carbon in their production as possible. People are concerned about the transition to the new legislation. Just before Christmas, we introduced part L of the building regulations to improve the energy efficiency of homes. For a developer to make use of the transitional arrangements, they must have submitted an initial notice, a building notice or a full planning application to the local authority prior to the new regulations coming into effect in June 2022. They must then have commenced work on an individual building to which they want to apply the previous standards before June 2023.

Members referred to the idea of simply digging a trench in order to have started work on a site, but we are going to be more stringent with the application of the arrangements. For the previous regulations to apply, developers must have started the foundations of a building, for example. Those transitional arrangements mean that developers can no longer build to out-of-date energy standards over several years as sites are developed. Unless construction has actually commenced, they will need to build to current regulations. A full technical consultation with regard to the future homes standard is planned for spring 2023. As part of that, we will consider what transitional arrangements are appropriate for that legislation.

Several Members mentioned management companies and, in many cases, their bad practice. Put simply, the current situation is unfair to freeholders, and we are committed to introducing legislation to right that wrong. We intend to create a new statutory regime for freeholders based on the rights enjoyed by leaseholders. This would ensure that maintenance charges must be reasonably incurred, and that the services provided are of an acceptable standard, and would include a right to challenge the reasonableness of the charges at a property tribunal. Freeholders would have a right to change the provider of maintenance services by applying to the tribunal to appoint a new manager. That may be especially helpful for freeholders dissatisfied with the services they currently receive. The Government intend to introduce legislation to implement those changes as soon as parliamentary time allows.

The build-out rate was also raised. The Government are clear that new homes should be built out as soon as possible once planning permission is granted. Sir Oliver Letwin’s independent review of build-out rates found no evidence that speculative land banking is part of the business model of major house builders, nor that it is a driver of slow build-out rates. None the less, we note that build-out is important to communities and are exploring further options. In our “Planning for the future” White Paper, which was referenced earlier, we have been clear that we will explore those further options to support faster build-out rates as part of our proposed planning reform.

My hon. Friend Robbie Moore and Holly Lynch raised concerns about Harron Homes. I would be happy to meet them to discuss their concerns to see if there is anything that we can advise. Obviously, we cannot intervene in particular cases, but there might be some advice that we can give. With regard to the Building Safety Bill, the Secretary of State is working closely with Lord Greenhalgh to see what else can be done. I hope that an announcement will be made in the not-too-distant future.

We have had an excellent debate. I am grateful for the opportunity to contribute to and respond to it. I look forward to bumping into Members in the corridor to discuss the issues that they have raised today.

Photo of David Johnston David Johnston Conservative, Wantage 10:57 am, 5th January 2022

I thank the shadow Minister, Matthew Pennycook, and the Minister for their comments. There is a lot of agreement beyond the party political arguments.

A constituent said to me that buying a new home had been a terrible experience that they would not repeat, which is an indictment of how the current system operates. Holly Lynch and my hon. Friend Robbie Moore gave powerful examples of the impact on constituents, including on their mental health, because it is in their minds at all times. The hon. Members for Ellesmere Port and Neston (Justin Madders) and for Warwick and Leamington (Matt Western) were right about the system working in the interest of developers, not local people. As the Member for Ellesmere Port and Neston said, “What is the incentive to come back and fix a problem?”. At the moment, there is none.

My right hon. Friend Theresa Villiers and Kate Green had interesting ideas about how we might use company law and character tests. We all know who the bad companies and individuals are. We should not keep letting them build more and more homes. My right hon. Friend Mr Francois was bang on about the near market failure. I have read some of Liam Halligan’s work. He found that just three companies owned 90% of the million-plus permissions that are not built on. If that is not an example of near market failure, I am not sure what is.

My hon. Friend Mrs Elphicke was very encouraging about the forthcoming new code. The scale of the problem is pretty clear if only 4% of homeowners think that their developers are meeting the code or one business is changing 40,000 aspects of its practices in order to meet it.

As the chief executive of one of my local housing associations said to me, “They are building something to walk away from, and we are buying something we need to maintain for people to live in for 50 to 100 years.” That is at the core of the problem. I know that the Minister worked on this area before he became a Minister and is very committed to it. I hope that we will see the full weight of government behind this, because a home should be a sanctuary, not a place of great stress. I will continue to keep campaigning on the issue, and I know that other Members will, too. I thank you, Mr Betts, for chairing the debate.

Motion lapsed (Standing Order No. 10(6)).