Housing and Planning Bill — House of Lords, 2016-05-04
Topic: Housing
Richard Best (Crossbench, Unknown): My Lords, I shall speak to Motion A. First, I thank the Minister for the series of concessions that relate to rural areas, some of which are subject to further negotiations, always knowing that there is an affirmative resolution required, giving this House a chance to do some more work if we do not reach agreement in the discussions that will follow. I am very grateful for a number of concessions that relate to starter homes and rural areas I moved the amendment about repayment of discounts for starter homes, which was agreed by a very large majority on Report and has subsequently been rejected by the other place. My concern was that, to cover the cost of discounts for those purchasing starter homes, funding was to be taken from the housing programmes for those on lower incomes for whom affordable renting was the only option. The Government estimate that starter homes 20% discounts will cost on average around £43,000 each. They want to see 200,000 of these homes sold by the end of this Parliament, so the total cost of the discounts will be some £8.6 billion. Since starter homes represent a manifesto commitment, the Lords amendment did not attempt to undermine the Government’s policy but instead to require a proportion of the 20% discount, on a diminishing taper, to be repaid when the lucky buyer sells their starter home. The amendment passed by your Lordships would require a simple repayment of the discount, reduced by one-20th for each year of occupation. So if a first-time buyer stayed there for 20 years, the discount—£43,000 on average—would be retained in full, but if they left after 10 years they would repay half the discount, or £21,500 on average. If they moved after five years, as might be quite typical, they would repay a sum equivalent to three-quarters of the discount—£32,000. My point was that, after giving the first-time buyer a leg up when they sold, a worth-while proportion of the cash would be repaid and available for recycling into genuinely affordable housing The Government’s original proposal was an all-or-nothing arrangement whereby the buyer had to repay 100% of the discount if they left within five years but could keep 100% of it if they sold after five years. This could represent a significant windfall for the buyer. In London, for example, discounts could be worth as much as £110,000, contributed by the taxpayer in respect of the buyer’s means. Ministers have been persuaded that this cliff-edge would not work. It would probably mean that the vast majority of buyers would stay for five years and then sell to maximise their gains, creating big distortions in the market. So the principle was accepted during the Lords stages of the Bill that a taper should be introduced to spread the benefits of the discount more gradually over a number of years Under the Government’s original scheme, the next buyer would then acquire the home with a tapered discount, which the Government’s consultation paper suggested would be over eight years. So the first-time buyer who left after eight years would keep all the discount, but if they sold after four years the next buyer would get half the discount—that is, they would purchase with a 10% discount. If they left after six years, the discount for the next buyer would be 5%, and so on. A bureaucratic process would have to be put in place to value the property at each subsequent sale and ensure that it was at the correct reduced discount, to ensure that the new purchaser was another first-time buyer under the age of 40, and so on. All this seemed very cumbersome and meant that money from the original discount would never be repaid or returned I am grateful to the Minister in the other place, Brandon Lewis, for listening patiently to the arguments against these arrangements and accepting the merits of the alternative concepts embodied in our earlier amendment. He has proved willing to place the taper approach in the Bill and to commit to a system for repayment of the discount so that the funds—hard cash—can be recycled for new affordable housing. Whether the tapering runs in equal instalments over eight years or over a longer period—perhaps even over 20 years, as in the earlier amendment agreed by your Lordships—remains for further negotiation, but the principles here seem to be agreed With a taper, and with funds going back into the affordable housing pot, either via the local authority or through the Homes and Communities Agency and the Greater London Authority, there should be a recycling of a serious proportion of the £8.6 billion to be spent on starter homes discounts. If first-time buyers tend to move after an average of five years, and if Ministers are agreeable to the taper being for 10 years, then half the money should come back into affordable housing provision under the new deal. That means restoring £4.3 billion to the affordable housing project. So with appreciation to the Ministers concerned, I for one am very willing to accept the amendments in lieu of the Lords amendment. I look forward to working with Ministers on the details in the negotiations, and I believe that we have much improved the process.