Examination of Witnesses (Questions
360-379)
MS INES
NEWMAN, MS
JANET SILLETT,
MR ADAM
SAMPSON AND
MR PATRICK
SOUTH
12 DECEMBER 2005
Q360 Martin Horwood: We have seen some
evidence that the level of private house building over the decades
has not been that different. The big difference is the loss of
social housing, but it is not about housing supply in the private
sector so much.
Mr Sampson: That is why our view
is that the most significant proportion of the additional 50,000
homes a year the government is seeking to build should be in the
social rented sector.
Q361 Anne Main: If the government goes
down the route of building a far greater number of houses, hopefully
to reduce the amount of house price inflation, do you have any
concerns that maybe people would just build a property portfolio
if the house prices are suppressed on an open market? If you do,
what would you suggest we do about it?
Ms Newman: Could you explain that
question? Are you thinking about people buying second homes?
Q362 Anne Main: If the market is an open
market, do you have concerns that people might just buy more of
these slightly cheaper houses or buy them for investment purposes?
If you do think that, what would you suggest we do about it?
Ms Sillett: The evidence is becoming
clear that that is, to some extent, happening. There has been
a huge expansion in the buying to let market. It is common sense
that if house prices were slightly lower there would be more incentive
for people to buy more. The LGIU probably differs slightly from
Shelter in what we were saying around the changes to planning.
We probably take your view slightly more about continuing concerns
about the changes in the planning for housing provision and the
new PPS3 about the balance shifting more to the market led approach.
We have enormous concerns about that.
Q363 Anne Main: You do say you might
increase wealth inequalities because we are looking at affordable
housing. You could be saying, "Affordable for who?"
because it might make it affordable for a different group of people
to what the government might be wanting to target.
Mr Sampson: We share the fear
about the impact of a totally free market, undirected approach
to who occupies the new housing. We have produced considerable
evidence recently of the way that home ownership has driven wealth
and spatial inequalities in this country where people who are
able to afford to get on the housing ladder increasingly occupy
greater amounts of space and accrue massive amounts of additional
wealth. There does need to be some mechanism for ensuring that
the new housing that is to be delivered is targeted properly at
people in the greatest housing need. That is the particular reason
why, although we do not take any tenure approach, social housing
seems to us to be the most efficient means of doing that.
Q364 John Cummings: It is obvious that
the government is of the opinion that the majority of householders
aspire to own their own properties and yet there are many tens
of thousands of people with dire housing need. What suggestions
do you have for the government in squaring the circle?
Mr Sampson: We need greater levels
of investment in social housing. As has been pointed out, the
area of the house building market that has fallen away has been
the directly government funded area. Successive governments over
the past 30 years have withdrawn from their responsibility in
investing in social housing and that is the key first step. The
other thing is to tackle the notion of owner occupation poverty.
There are lots of people who now are in owner occupation who are
nevertheless in poverty. There are roughly as many poor people
who are owner occupiers as there are people in socially rented
housing. There are considerable problems with disrepair in the
owner occupation sector. As recent research indicates, there is
a lot of evidence that some of those who are in owner occupation
are just hanging on by the skin of their teeth and it would not
take very much of an economic downturn to have a significant rise
in potential repossessions. It would also be important for government
to look at its offer to poor private home owners too. It is particularly
disappointing that the government rejected the home ownership
task force recommendation that it should look again at the safety
net for home owners in trouble.
Q365 Alison Seabeck: You talk about the
poor condition of private homes but this is not a new problem.
This has been in existence for as long as I can remember. You
are not saying the blame is at the door of affordable and supply
issues?
Mr Sampson: No, but as government
has pushed home ownership down or, as home ownership has gone
down towards lower income households, as has happened quite rapidly
over the past couple of decades, you have a situation where people
may be able less well to afford the upkeep on their houses.
Q366 Alison Seabeck: I take the point
you are making but do you have any evidence to prove that it is
those people who are finding it difficult as opposed to the elderly
home owner who traditionally has had trouble maintaining and repairing
their property?
Mr Sampson: It is a combination
of both. Undoubtedly part of the difficulty is to do with longevity
as people live longer and they become asset rich and income poor.
That we are familiar with. There are some indications in Janet
Ford's research for our recent publications that people stretch
themselves an awful long way just to get on the home ownership
ladder, that all their spare income goes on paying the mortgage
and they have nothing left over for upkeep. There are therefore
problems in that respect.
Q367 Alison Seabeck: You would be in
favour, if we are looking at shared home ownership or shared equity
packages, of having some form of sinking fund or maintenance fund
built into how that policy, that mortgage, is sold?
Mr Sampson: I do not think we
are necessarily endorsing that particular proposal.
Ms Newman: The idea is that we
do not particularly want to see money going into expanding the
numbers of home owners at this point. The combined view is that,
if there is money for the home ownership sector, there should
be some money going into existing home owners who are struggling
to maintain their houses which is a serious issue. There should
be some attempt to make people realise that, partly why people
aspire to home ownership—this has come out of Shelter's
work—is the capital gain they think they will get on their
house. If you look abroad where that capital gain has not traditionally
been so much, this aspiration for home ownership is not so embedded
in society. To some extent, we have to get to a situation where
people are not pushed into situations where home ownership is
unsustainable and where, in the long run, they will be struggling
to repair their homes.
Q368 Alison Seabeck: We are not talking
about home ownership in a lot of these things; it is sort of shared
renting, is it not? If you have 12.5% interest only, the bulk
of what you are doing is renting.
Ms Newman: Yes.
Q369 Lyn Brown: I represent an area that
is about to see a huge increase in the numbers of houses. I understand
I am going to have a city the size of Portsmouth within my constituency
boundary so it is fairly huge. One of the issues for our constituents
is people getting access to the housing that is going to be built
for them or in their area. I am not sure that the younger population
who are looking to access that property are necessarily doing
it because they see it as an asset gain. They are seeing it as
an opportunity for them to control their own destiny and for them
to be able to impact upon their own lives. Their parents are seeing
it as an opportunity for the family to stay together. In the 1980s,
the London Dockland Development Corporation, whom I had a number
of difficulties with in terms of their policy, did use public
money in the first tranche to subsidise local people for their
access to housing in my borough. Would you say that was good use
of public money? Do you think it is something that we should play
with and perhaps see replicated?
Ms Sillett: It depends on where
you are. There must be some cases in some communities where it
is a relatively good use of public money to enable people to have
an equity share in a property. I do not know what borough you
are but there may be some London boroughs where they have a very
high %age of local authority or social housing where it might
make sense in terms of mixed tenure and so on or changing gradually
the profile of communities, where that seems to be a reasonable
use of public money. Overall, where there are huge housing needs,
the balance should be in favour of public subsidy going into rented
housing for housing association, possibly local authorities and
ALMOs. In some cases, it would make sense but it does not make
sense as the overriding driver of government housing policy is
to increase home ownership or part home ownership at all costs.
Q370 Mr Betts: You have argued very strongly
that the government should be doing a lot more to increase their
social rented housing. Is there not a case for doing a bit more
to increase partial home ownership or helping people who are currently
in social rented housing to be able to buy in the private sector
and therefore free up social rented housing for somebody else
who cannot afford to buy?
Mr South: It is much better to
target those resources on people in social housing because you
free up a letting than it is to subsidise, say, first time buyers.
We would agree with that. It is not that we are against shared
ownership schemes; quite the contrary. It is about targeting that
subsidy on the right people.
Q371 Lyn Brown: Part of the problem with
shared ownership in London is that it is unaffordable and inaccessible
for many of the people for whom one would hope it would be accessible
because of the price. Do you accept that that is an issue? Is
there any way around that that does not go back to renting?
Mr South: We are talking a lot
here about social housing and owner occupation. What the government
do not appear to have a strategy on which could help here is the
private rented sector because an expanded, high quality private
rented sector could meet the needs of a lot more young people
and that is appropriate. For people starting out in life, maybe
in their first jobs, the private rented sector ought to be a good
option.
Q372 Mr Betts: To come back to subsidising
people in any form to buy into the private sector as home owners,
whether it be people who are currently socially renting tenants
or people who have been given the ability to part-buy their homes,
people are chasing the number of houses in the private sector
and it pushes house prices up.
Mr Sampson: Absolutely. I know
the Committee is going to be looking at low cost home ownership
schemes in future. If you look at those and examine the impact
of where the subsidy goes, very often the subsidy immediately
disappears off in fuelling house price inflation, but you can
target subsidy effectively for a whole different number of reasons.
The reason you articulated about in order to win over the local
population to convince them that there is something in it for
them to support housing development is a perfectly reasonable
way of doing it. We know that people oppose housing development
because there is nothing in it for them, because of concerns about
infrastructure, because of concerns about the environment. All
of those are perfectly legitimate concerns. They do need to be
addressed if we are going to overcome the opposition to house
building and see the uplifting in building that we need.
Ms Newman: For a lot of those
people, if they could access a very nice, new council house that
was not stigmatised on an estate, that would be a very popular
option too. In the 1940s and 1950s in particular council housing
was built which was attractive to a much wider range of people.
Part of what we have done over the last few decades is residualise
that housing. I still think the emphasis should be on trying to
make social housing an attractive option as well.
Q373 Mr Betts: There will still be quite
a lot of funding needed from somewhere to achieve all this. We
have had discussions with other witnesses about whether section
106 works, whether the planning gain is better or whether the
government should be simply putting money in. Do you have any
views on that?
Ms Sillett: I think most of us
would say there is a need for additional investment. Whatever
tricks and so on you get to, in terms of the kinds of degree of
housing need that we have, the levels of homelessness—I
know there were good figures out today—the levels of people
in temporary accommodation and so on, there still is a need for
additional investment. Nothing can get away from that. Whatever
that investment is going into, we want it to be value for money
and targeted properly, producing the right homes in the right
places for the right people.
Q374 Mr Betts: That is straightforward
government funding?
Ms Sillett: Yes. I am not saying
you do not have everything else additional to that but there is
still a gap and in the next spending review it needs to be clearly
said. There needs to be more funding if we want more people to
be better housed.
Q375 Martin Horwood: We accept that you
say there is a need for more subsidy and it must be targeted to
the right people, but some of the targeting you are talking about
is pretty subtle stuff. It is one group of first time buyers as
opposed to another, who are the ones who are stepping out of rented
accommodation. Can you suggest a precise policy tool or mechanism
that might help us to deliver that? Can you give us a practical
suggestion? If section 106 will not do it, what will?
Mr Sampson: More can be got out
of section 106. We do not yet know how the planning gain supplement,
if it comes off, is going to interact with section 106. There
are some concerns about that but section 106 as applied by good
local authorities gets an awful lot out of it. We can give a figure.
We are talking about an additional billion and a quarter.
Q376 Martin Horwood: I am asking about
the mechanism.
Mr Sampson: Some of the mechanisms
the government is playing around with at the moment in relation
to the social home buy scheme, if they can get the modelling to
work—there is a big "if" there—may be a
very interesting way of freeing up social tenancies at relatively
nugatory costs without fuelling house price inflation.
Q377 Alison Seabeck: We have talked about
funding and levering in new funding from a government stream.
Have any of you looked at investment from the private sector,
something like the asset trust housing? They seem to be quite
effective not only in levering funding but also allowing for 100%
local authority nomination rights and doing it without any social
housing grant. Do you have a view on what they are doing?
Mr Sampson: We have heard of schemes
like that but we have not looked at them in any detail. We understand
that schemes like that can work but they tend to work in particular
sets of market conditions where the precise balance between land
price, availability and return works effectively. Your general
point is well made. It brings us back to Patrick's point about
the private rented sector. We believe there is considerable potential
for getting increased levels of institutional, private investment
in the creation of an expanded private rented sector. If the Government
can tie in incentives to private investors to come on board with
that, with added management standards, increased quality and look
at security of tenure issues, you may have a recipe there which
will not solve the problem but will relieve some of the pressure
in the intermediate and low markets.
Ms Sillett: We do not disagree
with any of that or with any innovative ways of levering in investment.
We need to go back to basics and why local authorities and housing
associations are not able to meet the gaps in terms of affordable
housing. I do not know if you have had witnesses from housing
associations but there are still concerns about the changes that
were made to social housing grant. Local authorities would say—and
I have some sympathy with them—that the pooling of capital
receipts and so on means that there is very little available funding
for housing associations. We would say that the government has
just said there will be some scope for high performing local authorities
and ALMOs to start to build. We want to see what they mean by
that but why not? Let us get back to promoting the most effective,
direct and efficient way of providing social housing through local
authorities and housing associations.
Q378 Anne Main: You touched on people
being more marginalised. With a possible 80% or maybe higher aspiration
target for home ownership, are you concerned that we truly will
end up with a sub-class of people who are possibly marginalised
into very poor accommodation if we go down that route? Do you
have any views on lending people five or six times their salaries,
possibly leaving them standing very much on tiptoe, maybe because
there just is not the investment in the housing you are talking
about?
Ms Newman: Absolutely. I agree.
That is why you need to think about making the council housing,
social housing and housing association offer more attractive to
a wider range of people.
Q379 Anne Main: A target to buy would
be quite a socially regressive step, as far as you are concerned?
Ms Newman: Yes.
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