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Mr. Ken Purchase (Wolverhampton, North-East) (Lab/Co-op): Would not the right to buy not matter so much if councils were still able and willing to build new housing to replace the stock lost?

Dr. Iddon: That is certainly an underlying theme of this debate.

Recent Shelter research, published in August last year, showed that housing affordability and a safe neighbourhood are valued considerably ahead of home ownership by British citizens. Britain's housing policies are transferring wealth upwards and widening the gap between the richest and poorest families, when what the country really needs is a redistribution of wealth downwards.

According to research from Sheffield university, if current trends continue, in 30 years the richest 10 per cent. of children will have access to more than 100 times more housing wealth than the poorest 10 per cent. My worry is that we are creating a situation that will badly stigmatise the poorest in our society, trapping them in residual social housing with high rents. Reliance on benefits prevents those tenants from escaping that trap, even if they want to work to support their families with dignity.

I look forward to the response from my hon. Friend the Minister.

7.16 pm

The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Jim Fitzpatrick): I congratulate my hon. Friend the Member for Bolton, South-East (Dr. Iddon) on securing this debate on the right-to-buy scheme and I acknowledge his experience in these matters. I will try to respond to the points he has raised.
 
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The Government want to offer as many people as possible the opportunity to own a home, provided that they can sustain the commitments that go with it. We have acted to help first-time buyers, including people living with family, key workers, and those renting privately or from social landlords. The right to buy is a key part of our strategy.

Our new HomeBuy scheme, due to commence in April 2006, will help some 100,000 households into home ownership by 2010, including 30,000 key workers. That will build on the success of our starter home initiative, which helped more than 10,000 key workers to find a home, and on our existing shared ownership and equity loan schemes. I should stress that, as my right hon. Friend the Deputy Prime Minister has said, we are committed to the principle of the right to buy. It has helped more than 1.7 million people to realise their aspirations to own their homes.

The right to buy has been a great benefit to individuals and their families, freeing them from a dependency mindset. It has brought wider social benefits too, by helping to create sustainable mixed-tenure communities, and it has generated more than £45 billion in capital receipts, which have been used to reduce local authorities' debt burden and free some resources to be ploughed back into social housing and other public spending.

But the right to buy has led to problems. The rules have been exploited by some tenants and by some companies. Other tenants have bought but have found the costs of home ownership burdensome. My hon. Friend refers to valuation of homes sold under the right to buy. Under section 127 of the Housing Act 1985, that is the price that the property would realise if sold on the open market by a willing vendor, disregarding any improvements made by the tenant. The market price depends on a number of factors, including the condition of the property, what the surrounding area is like and its location in relation to services. Improvements may add a lot of value in some areas, but much less in others.

The Government recognise that there are concerns about right-to-buy valuations, so we commissioned research from the College of Estate Management. This was published in 2004 and is available on the Office of the Deputy Prime Minister website. It recommended that guidance should be issued for those involved in right-to-buy valuations, so we convened a working group of practitioners led by the Royal Institution of Chartered Surveyors. The working group is preparing guidance, which will be published quite soon.

My hon. Friend referred to the cost floor, and suggested that it may not be working well. Under the cost floor, the right-to-buy discount should not reduce the price of a property below what the landlord spent on it during the previous 10 years. If my hon. Friend would like to send me more of the examples that he mentioned, our officials will look into the matter.

My hon. Friend also referred to the use of capital receipts. As he said, local authorities pay the Government 75 per cent. of their receipts from right-to-buy sales, which are taken into account when we determine the level of investment in housing that we will support, bearing in mind local needs. So pooling is a means of redistributing resources to areas where the need is greatest.
 
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Like my hon. Friend, many Members will have seen the leaflets pushed through doors on council estates, claiming that the Government are about to do away with the scheme and urging tenants to buy now, with a little help from the company that has issued the leaflets. Research published in March 2003 highlighted the motives of some companies: to persuade people to agree to sell the homes they bought under right to buy to the company, at the discounted price available to tenants. So those companies are able to buy up ex-council homes cheaply and then let them out at market rents, which are unaffordable for people in the greatest housing need. I am glad to say that the Government have made such exploitation a whole lot harder. We have also tackled another abuse, which endangered regeneration schemes by forcing councils to pay compulsory purchase compensation to people who had bought their homes at discounted prices knowing full well that they were scheduled for demolition.

My hon. Friend mentioned antisocial behaviour by tenants. We agree that eviction often simply moves the problem round the corner, so our respect action plan, published yesterday, sees eviction as a last resort. It emphasises managing antisocial behaviour through rehabilitation, family support, antisocial behaviour injunctions and of course antisocial behaviour orders. Furthermore, we have given landlords the power to suspend right-to-buy applications from tenants involved in antisocial behaviour.

In the Housing Act 2004, we tightened up the right-to-buy rules to make the scheme fairer to both landlords and tenants who are committed to their communities. As my hon. Friend noted, we had previously lowered the maximum right-to-buy discount available to tenants in 41 areas under the greatest housing pressure, in terms of high levels of homelessness and high house prices.

John Battle (Leeds, West) (Lab): I understand the rules for Adjournment debates, so I appreciate my hon. Friend allowing me to intervene. I am also grateful to my hon. Friend the Member for Bolton, South-East (Dr. Iddon) for securing the debate.

In the light of my hon. Friend's comments about the gap that is emerging between people who can buy and the poorest who cannot, does my hon. Friend the Minister accept that there will be a real problem when the best family housing has been sold off? We are facing a crisis of hidden homelessness. People who have to rent can never get a job because they would come off housing benefit and would be unable to pay their rent. At the bottom end of the market, the gap is too great for people to get on the ladder to buy. We need more homes that people can afford to rent.

Jim Fitzpatrick: My hon. Friend makes a powerful point, which was appropriately emphasised by my hon. Friend the Member for Bolton, South-East.

We have also made it easier for social landlords in rural areas to restrict the resale of ex-council homes to local people, to help them to stay in the areas where they were born and brought up, if they want to do so. We have modernised right to buy as part of our programme to encourage the development of sustainable mixed communities.
 
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Exploitation is not the only concern, however. As my hon. Friend the Member for Bolton, South-East said, some people who bought their homes have since found it difficult to afford the cost of maintaining them. Some of them may not have thought far enough ahead; some have been the victims of unforeseen life chances, while others may not have had access to information about the implications of home ownership.

Several Members have contacted my ministerial colleagues to inform them that some of their constituents who have bought flats are finding it hard to pay service charges for major works such as putting a new roof on the block. The bills for such work come all at once and can be large, sometimes as much as £40,000 or more.

Such a bill can be daunting, but we should remember that the leaseholder will have bought their property at a significant discount. Over time, its value will have grown, and the major works are likely to increase its value even further. Often the problem is one of cash flow, rather than being unable to pay. However, we have acted to ensure that information about the costs of home ownership is available to tenants who want to own their homes. A range of options is already in place to help leaseholders to pay service charge bills.

On information, buying their home is the biggest purchase most people will ever make, so they should be able to balance the costs against the obvious benefits. Our booklet for tenants, "Your Right to Buy your home", contains sections on things to consider before buying, on the costs of buying and on other regular costs of home ownership.

Under the Housing Act 2004, landlords must give tenants both a written explanation of the key features of the right-to-buy scheme and information about the costs involved. They must be told about stamp duty, survey fees, paying off a mortgage, buying annual insurance and paying for gas, water and electricity. They must also be told about the costs of maintaining their homes, which crucially includes the service charges that the owners of leasehold flats must pay to their landlords.

Besides having a right to information before they buy, leaseholders have a long-standing statutory right to be consulted about major works and long-term agreements, to see the documents showing service charge costs and to challenge the reasonableness of any charge or the standard of the service or work involved.

Leaseholders can be helped to pay off large service charge bills. Landlords can offer them low-cost loans. They can extend the repayment period, or delay repayment until the property is sold. The Government meet 35 per cent. of the cost of their doing so where it exceeds £50,000 in a year. Finally, where major works are funded from specified central Government programmes, service charges must be reduced to no more than £10,000 in any five-year period.

Leaseholders can also get free advice on the options open to them from the Leasehold Advisory Service, known as LEASE, which is an independent advice agency grant-aided by the Office of the Deputy Prime Minister. So a lot of help is available to leaseholders.

We have commissioned research into the impact on service charge bills of local authorities spending on ensuring that all their housing stock meets the decent homes standard by 2010. The report is being finalised
 
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and will be published in due course. We are looking into the issues that have been raised about leaseholder service charges.

On the future, as a Government we are committed to encouraging owner occupation. The right to buy is a key element in our strategy. Where is the right to buy going? Conservative Members have called for it to be given to housing association tenants, 1 million of whom—more than half—already have the right to buy or a preserved right to buy because they have transferred with their homes from local authorities. Also to extend the right to buy to all housing association tenants would be costly—up to £300 million a year—and we have no plans to do so.

Some people have called for right-to-buy discounts to be increased, to help even more tenants, but more generosity to tenants means more cost to the taxpayer, who must meet the difference between the price that the property would fetch on the open market and the discounted price that the tenant pays, as my hon. Friend the Member for Bolton, South-East has mentioned.

The Government's aim is to strike a reasonable balance between helping tenants, ensuring value for money for taxpayers and helping those who are homeless or are living in overcrowded accommodation.
 
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That is why we changed the discount rules in 1999 and in 2003, when we lowered the maximum limits in London and a few other areas in the south-east of England. Some people want us to go further and lower maximum right-to-buy discounts in other areas. My hon. Friend recently asked us to do so in areas of high demand. My hon. Friend the Minister for Housing and Planning replied that the Government are keeping the position on maximum right-to-buy discounts generally under review, and I reaffirm that today. We do not rule out further changes, but they must be proportionate.

We recognise that the right to buy does not work for everyone. For some people, part-ownership is a long-term solution to their housing needs. That is why we are introducing HomeBuy—an improved range of low-cost home ownership schemes—to go alongside the right to buy and the right to acquire, thus building on the success of what we have already done in partnership with the housing association sector.

I hope that I have responded to all my hon. Friend's points. If I have not done so, I assure him that I will write to him in due course.

Question put and agreed to.


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