Yesterday the Housing and Planning Bill had its Second Reading in the House of Commons. I had planned to speak but due to the level of interest among MPs in contributing to the debate, I was not able to get in. I paste below the speech I had intended to make and will now plan to speak at Report Stage instead. The Bill hopes to tackle road blocks in the planning system and introduces plans to allow housing association tenants to buy their homes.
As any Honourable Member representing an inner London seat will tell you, concerns about the affordability and availability of decent housing dominate our postbags. I therefore welcome any efforts to boost supply to tackle what has become an emergency situation for our capital city. Research by the City of London Corporation found that even the cheapest 10% of London’s houses are only affordable for the highest-earning 25% of workers and businesses now believe housing supply and costs are a significant risk to the capital’s economy. It is increasingly apparent to me that London needs its own specific solutions when it comes to tackling our housing crisis and I hope that it can capitalise on the enthusiasm towards devolution in this regard. What works for the rest of the UK does not necessarily make sense in this global metropolis, and I should like to share with the Minister the thoughts of the two local authorities in my constituency in the hope that we can start to carve out a proper London housing policy.
Westminster City Council welcomes many of the provisions in this Bill, particularly the additional powers to deal with rogue landlords and letting agents; reforms of the compulsory purchase order system and changes to the neighbourhood planning system. However it is concerned about the impact of this legislation on intermediate housing and homelessness.
In almost every speech I have made in this House on the subject of housing, I have lamented the increasing polarisation of Central London, where those on middle – and even reasonably high incomes – have increasingly been pushed out to cater for the now global super rich and those who qualify for precious social housing. Westminster City Council has always shared those concerns and tried to build up the intermediate housing sector as a result.
There is concern, however, that the requirement for a proportion of Starter Homes on certain sites may lead to a reduction in “conventional” affordable supply which meets the needs of local people as the discount is funded by the developer not having to pay section 106 and CIL contributions. It could also lead to local authorities having less ability to prescribe the type of affordable housing that is developed. The council is therefore keen to ensure that the requirement to secure Starter Homes through the planning system is set at a level that will allow local authorities to keep the flexibility to respond to a variety of needs. They also fear that if “Pay to Stay” provisions apply to intermediate rent tenants, there is a risk that it could undermine the role of the product, especially in parts of central London where £40k household income is simply not enough to access market products. They support a tapered approach that increases rents as incomes grow to prevent excessive rent increases in high value areas, which would result in tenants becoming eligible for housing benefit.
I think it would be fair to say that the plans to allow housing association tenants the right to buy their homes came as a rabbit out of hat during April’s General Election campaign. I appreciate the aspiration to roll out home ownership to as many people as possible, but I do have a number of concerns about the impact of these plans. On a philosophical level, I must confess I am uneasy about the forced sale of properties built or bought with private, philanthropic donations and no government grant. In the case of Peabody, a major social housing provider in my constituency, this will disregard the intention with which their founder, George Peabody, made his original charitable endowment in the late 1800s which saw 10,772 Peabody homes built with no government grant. I accept we crossed the Rubicon with leasehold reform legislation over the past thirty years, but I worry about the precedents we are setting. It has already been mooted by the Opposition benches that buy-to-let landlords should be forced to sell homes to their tenants.
Indeed this touches upon the inherent ‘fairness’ of the policy. Let me take the Secretary of State for a walk down Memory Lane. As the former councillor for Warwick ward, he will recall the stucco-fronted homes of Cumberland Street in Pimlico. On the one side are L&Q tenants who pay perhaps £100 per week in rent for their flats, whereas on the other side, private renters are paying upwards of £350 per week. Already in a financially advantageous position, the former group will now get a discount on the purchase price of these properties and then be able potentially to rent them out later down the line. I question the fairness of giving such a huge advantage to those already in secure housing and giving no such equivalent to those in the private rented sector, who are dedicating ever more of their monthly salaries to keeping a roof over their heads.
It should also be noted that in London, the biggest housing associations are responsible for 40% of the pipeline of new homes but that they use their central London properties as security against borrowing for building. The less stable their asset base and income stream, the more expensive it will become for housing associations to borrow and the less they will be able to build the new homes London so desperately needs.
The agreement between government and housing associations will see right to buy implemented on a voluntary basis and HAs will not be required to replace homes which are sold in the same area or with the same tenure. However this could lead to a reduction in social supply in Westminster and London for homeless households, who will increasingly be accommodated in expensive temporary accommodation. The right to buy extension is funded through an annual cash payment from local authorities to government, which is based on the sale of high value local authority voids. This could similarly reduce social housing supply in Westminster, as it will be difficult to replace these homes in high value areas where there is a shortage of land.
Against this background Westminster City Council is keen to ensure that steps are taken to ensure that links are kept between the places where housing associations sell social homes and those where the homes are re-provided. This will be essential for places like Westminster with high need, but where replacement homes will be expensive. These links should either take the form of physical re-provision in the borough where the sale took place or local authority nomination rights to the replacement home equivalent. There should be scope for authorities to work together to connect places with resources but scarce land and those with more plentiful land and scarce resources to provide larger numbers of homes for the money available – and to agree nomination rights between them.
Vitally, the proceeds of disposals in Greater London should also be retained in London to meet the high (and growing) housing needs here.
Finally, I should like to end on a positive note. Meeting the housing needs of the capital requires the commitment and action of all local authorities. In order to help address the shortage, the City of London Corporation has committed to build 3,700 new homes by 2025—its biggest house-building programme since the completion of the Barbican estate in 1976. 700 of the new homes will be built on the Corporation’s existing housing estates—located across seven London boroughs—by increasing their density. This programme will be funded through planning gain receipts, grant funding, borrowing within the Housing Revenue Account and cross subsidy from market sale of some new homes.
London’s local authorities know only too well that our city will only function successfully if we all start thinking creatively and working together to address the housing crisis. They stand ready to help the government deliver and they will be able to do that more successfully if we have a tailored London housing policy. Some of the issues that have constrained housing supply, however, can only be addressed at a national level. These include infrastructure investment to connect brownfield sites to economic centres, planning policy, skills and material shortages, and site ownership and control. Many local authorities with ambition to develop homes are also constrained by borrowing caps imposed by government, the impact of the right to buy and the proposed reduction in the level of social rents. I welcome the thrust of the government’s Housing & Planning Bill and the ambitions that drive it, but if it is to be a success, we must now ensure that the concerns being raised by London’s local authorities are fully responded to as this legislation moves through parliament.