On 15th October 2015 the Bishop of St Albans, Rt Revd Alan Smith, led a debate in the House of Lords to ask the Government “how they plan to deliver a sustainable supply of affordable housing in rural communities, particularly in the light of the planned extension of the Right to Buy scheme.” The full text of the Bishop’s speech is below, as is the response from the Minister.
The Lord Bishop of St Albans: My Lords, I am very grateful to all those who have agreed to contribute to this debate, many of whom have huge experience in this area, and I am looking forward to what they have to say.
The provision of affordable housing is vital to the long-term sustainability of rural communities so that they continue to be places where a broad cross-section of people can live and work. It is all the more important, given that rural house prices are currently well beyond the means of many lower-income and middle-income people. Indeed, it is estimated that in 90% of rural authorities, the average home costs eight times the average salary. However, rural communities currently face a serious lack of affordable housing. Only 8% of rural housing stock is considered affordable, compared with 20% in urban areas. The amount of new affordable rural housing is also low. In 2013, only 2,886 affordable homes were built in rural areas out of nearly 40,000 affordable homes nationally.
Creating more affordable accommodation, particularly rented accommodation, must be a central aspect of any drive to create sustainability in rural communities. I would welcome an update from the Minister on what plans Her Majesty’s Government have to boost the supply of affordable rented accommodation, especially in rural areas. Given the current shortage of rural affordable housing, I am very concerned that Her Majesty’s Government in partnership with the National Housing Federation are, in effect, forcing a right-to-buy scheme on rural housing associations that may further endanger the supply of affordable rented accommodation in the countryside. I say “in effect” forcing because, while the overall majority of housing associations have agreed and signed up to the NHF deal, rural-specific housing associations raised some very serious concerns, with many of them abstaining from the agreement.
I welcome some aspects of the proposals as they may benefit some of the housing associations—not least, for example, the greater flexibility over how they invest the proceeds of sales. It is also to be welcomed that the deal specifies some circumstances in which housing associations will be exempt from the requirement to sell their housing stock: for example, in rural communities of fewer than 3,000 people and where developments are subject to clear restrictive covenants. I want to mention three areas of the proposals which raise concerns. First, it has been widely acknowledged that the current definition of “rural” used within the agreement is very narrow in scope. To restrict the definition of “rural” to settlements of fewer than 3,000 inhabitants is to exclude some market towns and villages that face exactly the same planning and development difficulties as smaller communities.
Under the current proposals, rural housing associations would be forced to sell off vital affordable housing stock in locations where they have little chance of providing like-for-like replacement, leading to a net loss in the availability of affordable rented accommodation in these rural areas. This is a concern shared by my ecumenical partners within the Methodist church, particularly Richard Teal, chairman of the Cumbria Methodist District. I know that the Hastoe Housing Association and the Campaign to Protect Rural England have written to the Secretary of State for CLG to propose a rural definition that allows for a larger rural communities at the discretion of the Secretary of State, and I hope that the Minister will look at this option very carefully.
Secondly, it is important to point out that the rural exemptions contained in the agreement are not exemptions placed on the tenant from the right to buy but exemptions placed on housing associations from the requirement to sell. That means that housing associations which operate across both rural and urban areas can choose to sell off their rural stock, which can be expensive and difficult to maintain, and use that money to build new affordable housing in cheaper urban areas where larger developments can sometimes prove more cost-effective. Such arrangements would again lead to a net loss in the availability of affordable rural housing, despite the safeguards that Ministers have rightly tried to put in place.
Two days ago, the Minister for Housing and Planning in the other place claimed that,
“for every home that is sold, an extra home will be built in that area”
Under the agreement as it stands he can provide no such assurances as there is currently no restriction on where housing associations choose to reinvest the proceeds of sales. This needs to be remedied.
Does the Minister recognise the problem and will she tell the House what safeguards will be introduced to prevent this happening? If Her Majesty’s Government will not accept the recommendation made by numerous rural housing associations that affordable housing in rural areas should be actively excluded from the right to buy, will the Minister inform the House whether the Government will consider working with the NHF to introduce a presumption into the right-to-buy agreement that rural housing stock sold under the right to buy will be replaced by housing stock in the same rural communities and that the money will not be invested somewhere else in other urban areas?
Thirdly, on the issue about those areas where affordable housing developments have been built on land that has either been donated or sold at a very favourable price to housing associations by local landowners, very often this land is transferred on the condition that it is made available for affordable rental in perpetuity. A number of rural housing associations are deeply reliant on these arrangements. Indeed, I declare an interest as land and property belonging to a number of Christian denominations, not least the Church of England, has been transferred precisely under these conditions. I believe that the current right-to-buy agreement protects such development from forced sale but that has not been made clear by either the Government or the NHF. Indeed, I have heard of one landowner who has threatened to withdraw from an arrangement to provide land for affordable housing on the basis that those houses may in future be sold on at a profit. Can the Minister confirm that landowners will still be able to donate land or sell it at a clearly favourable price on the condition that those developments will be retained as affordable rented housing in perpetuity?
I want to finish with a comment on the Government’s proposals for starter homes, which are an excellent idea to help people on to the housing ladder. At 80% of the market rate they are not affordable for many families. I am therefore particularly concerned at the suggestion that starter homes could provide an alternative means for development to fulfil Section 106 requirements. Given that Section 106 regulations are one of the principal ways that new affordable homes are created in rural areas, the impact of such a change would undoubtedly be devastating. Taken alongside the current right-to-buy proposals they pose a threat to the future availability of rural affordable housing. So finally, will the Minister assure the House that Her Majesty’s Government will review this matter carefully?
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con): My Lords, I thank the right reverend Prelate for initiating this timely debate. I also pay tribute to the church and the work it has done in providing rural housing, and to all the other landlords who have done the same thing philanthropically to preserve and sustain their local communities. Perhaps I could start with the context; then, I am very keen to answer noble Lords’ specific questions.
In 2010 we inherited the lowest peacetime rate of housebuilding since the 1920s, a dysfunctional planning system and levels of housebuilding that were tumbling. Today, we are growing faster than any other major advanced economy and our job creation is the envy of the developed world. Now, we are meeting the aspirations of people to own their own homes.
On affordable rural housing, this Government believe that meeting the housing needs of rural communities is very important: since 2010, more than 85,000 affordable homes have been delivered in rural local authorities in England. Some communities have gone over and above their commitments. I pay tribute at this point to Willersey in Gloucestershire, which has done just this. But we know that more are needed and we are committed to delivering 275,000 affordable homes over this Parliament in rural and urban areas. The 2015 to 2018 affordable homes prospectus makes it clear that where a particular scheme, for example in a rural location, involves higher than average costs, the HCA will wherever possible seek to take account of such genuine comparators. Our intention is that bidders will not be systematically disadvantaged where there are some higher costs or higher grant bids within their proposed programme.
Local authorities should plan to reflect local needs, particularly for affordable housing, including through rural exception sites. They should also consider whether allowing some market housing would facilitate provision of significant additional affordable housing. Through the Rural Productivity Plan, we will review the planning and regulatory constraints facing rural businesses, including how permitted development rights can better support the provision of new homes, jobs and innovation.
The Government are committed to reforming the housing market and boosting the supply of much-needed housing. Housebuilding starts have more than doubled since 2009 and planning permission was granted for 242,000 houses in the year to June 2015. Almost 800,000 new homes have been delivered in England since 2009. Completions are up and housing starts are at their highest annual level since 2007. More than 260,000 affordable homes have been delivered since 2010 and, with nearly 186,000 affordable builds, we have exceeded our 2011-15 target by 16,000. Over this Parliament, we will ensure the fastest rate of affordable housebuilding in the last 20 years, with 275,000 new affordable homes by 2020.
The right reverend Prelate the Bishop of St Albans asked whether there should be a wider definition of rural. The Government would be willing to revisit the definition if evidence can be provided that this would convincingly increase new housing supply. He also made the point that many new starter homes will not be affordable to people in rural areas. A number of noble Lords also made the point that starter homes may be a threat to rural affordable housing supply. Starter homes are a new form of low-cost house ownership to help young first-time buyers on to the property ladder, including in rural areas. The definition of affordable housing will be expanded to include starter homes, and a consultation on that will take place shortly.
The August 2015 rural productivity plan announced that starter homes will be encouraged through the use of rural exception sites to help villages thrive. Young first-time buyers face significant affordability pressures in many rural areas, so we want the development of starter homes to make a significant contribution to housebuilding in those areas.
The right reverend Prelate also asked what safeguards are in place to ensure one-for-one replacements locally. Under the agreement with the National Housing Federation, there is a clear commitment to all properties sold being replaced with an additional home. Rural areas will benefit from that and there is a clear exemption for rural housing under the agreement, whereby housing associations can decide not to sell those homes.
Both the right reverend Prelate and the noble Lord, Lord Taylor, asked about situations where landlords donate land and want it kept for the specific purposes for which they originally intended it. The agreement we have in place includes examples of types of property that associations may decide they do not want to sell to the tenant, including supported housing, historic legacy stock and homes in rural areas. It also includes rural properties that are protected by clear restrictive covenants in existing residence contracts. That should give a good basis for housing associations to engage with local landowners and their wishes on the issue.
The right reverend Prelate also asked what the Government will do to deliver affordable rented accommodation in rural areas. That is a very good point. Affordable rent was introduced in 2011, and rents can be set at 80% of local market rents. More than 260,000 affordable homes have been delivered since 2010, as I said, of which 85,000 have been provided in England in 2014-15. I cannot provide more specific figures because of the spending review.
The noble Baroness, Lady Hayter, asked about community land trusts being excluded. They are included in the agreement and are one category where properties can be exempted. She does not look convinced, but perhaps I can meet her afterwards.
My noble friend Lady Gardner of Parkes asked for the definition of affordable housing. It is set out in the National Planning Policy Framework and the Housing and Regeneration Act 2008. The NPPF defines it as:
“Social rented, affordable rented and intermediate housing, provided to eligible households whose needs are not met by the market. Eligibility is determined with regard to local incomes and local house prices. Affordable housing should include provisions to remain at an affordable price for future eligible households or for the subsidy to be recycled for alternative affordable housing provision”.
The Housing and Regeneration Act 2008 defines social housing as “low cost rental accommodation” and “low cost home ownership accommodation”. In the Act, a low-cost rent is simply defined as below market rate. Low-cost home ownership is defined by availability for occupation on a shared ownership or equity percentage basis.
My noble friend also asked about sinking funds. Registered providers are generally required to make provision for a sinking fund, for example to meet future costs in shared ownership developments.
The noble Lord, Lord Taylor, asked about landowners selling land above market price. It has to be at discount of market price, otherwise they will not qualify. He also asked about the 10 units limit on Section 106 orders—we discussed this last night—the small sites threshold. A judgment was issued on 31 July this year quashing the Section 106 small sites threshold. Increasing the number of homes is a top priority, and our policy was aimed at securing it by helping small builders and developers to contribute. Section 106 requirements can be very burdensome and prevent developments actually being built. We now have permission to appeal against the judge’s decision.
The noble Baroness, Lady Hayter, said that this was being forced through and was a waste of money. The Government had a clear manifesto commitment to extend right to buy, and we are very pleased that the sector has come forward with a voluntary offer, rather than needing to legislate. The policy will boost not only new home ownership but supply through replacement.
The noble Lord, Lord Best, asked about the impact of high-value council sales in rural areas. We are legislating to require local authorities to pay the Secretary of State a sum in line with the anticipated receipt from the sale of high-value council housing. Councils will be able to retain some of that fund to support new housebuilding in their area.
The noble Lords, Lord Taylor and Lord Kennedy, talked about house prices versus wages in rural areas. It is a particular problem in rural areas; we recognise that there can be that gap. That is why we allocated £1.4 billion through the 2015-18 affordable homes programme in both rural and non-rural areas.
In conclusion, we want to support people who aspire to buy their own homes, and to support young families who sign up for a starter home. As much as possible, we want to support their aspirations by building homes in every part of this country.
Lord Kennedy of Southwark: Obviously, I asked a number of questions that the noble Baroness has not responded to. I assume she will write to me and perhaps place a copy in the House.
Baroness Williams of Trafford: I was about to conclude by saying that I recognise I have not covered everybody’s points, and I will write to them in due course.