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Let us consider the knock-on effect. In the past few years, many people have overstretched themselves massively. It is important to ensure that steps are in place to protect them, as they face difficulties repaying their mortgages. The recent court case that found that
repossession orders after two missed payments were justified was very worrying. Do we need to give guidance to courts saying that repossession should be a last resort, or do we need primary legislation and regulation? What can we do to make it clearer that mortgage terms can be renegotiated to prevent people from having their houses repossessed?
What are the Government doing to regulate sale and leaseback, which is a resort that people often look to, but which they do not really understand? It is not properly regulated and could leave people in an even worse situation. What are the Government doing to develop schemes to staircase down? The focus remains on helping people to staircase up into home ownership, but there is no clarity about what can be done to help people to staircase down, which provides amazing opportunities for registered social landlords to pepper-pot, to prevent people from losing their homes and to increase the supply of affordable rented housing. What can the Minister do to drive forward that agenda?
My other concern about those who face such difficulties is the differing regional impact. A colleague told me that repossessions in Kingston are down. We expect the trend to be upwards, but that problem does yet not appear to be feeding through, which is surprising given that so much of the slump is focusing on the financial services sector. We would expect the London area to be hardest hit, but of course we are talking about people with relatively higher incomes and bigger reserves to fall back on. Perhaps the bump will come later. In Cornwall, however, we see quite a lot of distressed home owners and repossession orders in the courts. What is the Ministers understanding of the regional impact?
What advice is available to people in difficulty? Demand is far outstripping the supply of support. Forty per cent. of citizens advice bureaux calls go unanswered, because they cannot cope with the number of people asking for help, although that is not just on housing mattersperhaps on rent arrears and so on. However, what can the Government do to ensure a clear route for those in financial difficulty, so that they can receive the necessary support and advice? So much remains dependent on the voluntary and charitable sector. It was struggling to deal with numbers before, but things look like getting worse.
Matthew Taylor: There is a massive crisis in CABsat least in rural communities, although I cannot speak for urban areasespecially in recruitment and funding. I hope that Ministers will consider that, because at the time when CABs are most needed, they are most threatened.
The concern is that events in the mortgage market are having a knock-on effect in the social and private rented markets. Some of the most distressed selling is in the buy-to-let market. Again, there is more uncertainty in private rented tenancies. Are the Government monitoring repossessions on the basis of whether they involve owner-occupied or buy-to-let properties? That might offer an explanation. One would imagine a surge in the supply of private rented accommodation, but rental prices do no appear to be falling. Is the Ministers Department monitoring that?
The social rented sector is the key issue. Even if the Government were steadily hitting their target of 50,000 new homes a year, it would allow them only to keep pace with the problem. We could be facing a massive surge in demand for social rented housing, and it is not clear exactly how the Government will respond. Some 1.7 million people are on the waiting list, and in many places, the number of people on waiting lists is greater than the stock of social housing.
The Governments announcements are not enough. The key problem is that social house building has reinforced the cycle. In the boom times, it reinforced the boom, but now we are in the bust, nothing is being introduced under section 106 of the Town and Country Planning Act 1990. Many registered social landlords depend on private sales to fund their social housing. That is also reinforcing the bust. We must break out of that cycle, and the Government have not done enough to do that. Figures were announced yesterday on the clearing house deal, which is supposed to help to free up affordable rented housing for social use in areas in which it is needed most.
Following a scheme that was announced in May, 1,531 homes have been purchased for social-rent use. If we consider the areas of greatest need, however, only 18 homes have been purchased for social-rent use. In all the areas in which the demand is greatest, the least is being done. That brings us back to the fundamental issue of what happens to housing revenue account subsidy. Tackling that is important, as is allowing councils to borrow. Councils are sensitive to the problems, but they do not have the flexibility to deal with them.
I have lots more to say, but I will close by highlighting the good work that is going on locally to tackle some of the problems. Councils such as Oldham are expanding their equity loan schemes to try to get empty properties back into use and to encourage the owners of those properties to get them back into use.
Forums are being set up with local mortgage lenders. Some councils are keen to get into leaseback and rent-back schemes and social mortgage schemes. Will the Minister tell us what his Department is doing to connect with local communities, which best understand their own needs and are proactive in proposing solutions? Should the Department not see its responsibility as supporting local solutions, rather than sitting on high and coming up with bigger packages that do not hit the intended targets? Areas of most critical need are not seeing the benefit of the measures. I hope the Minister will address those issues.
Mr. Stewart Jackson (Peterborough) (Con): It is a pleasure to serve under your chairmanship for the first time, Mrs. Dean. I congratulate the hon. Member for Sheffield, Attercliffe (Mr. Betts) on securing this important debate.
We cannot look at this issue without analysing the Governments lamentable record on housingno one else has said that, so it is worth while mentioning it. The moral of the story is that the top-down approach has failed since 1997. Under Labour, about 148,000 homes have been built each year, compared with 171,000 between 1979 and 1996. Some 1.6 million people are on the social housing register. We have seen a rise of 54 per
cent. between 1996 and 2006. In the hon. Gentlemans own region of Yorkshire and the Humber, that number has gone from 173,000 to 270,000 in the past 10 years.
I agree very much with the sentiments expressed by the hon. Member for Great Grimsby (Mr. Mitchell): the number of homes built by local authorities is pitiful. It collapsed in 2006 to 283 units. Conservative councils, such as Dover, are taking the lead and building new council homes. As someone who has had a long-standing interest in housing, he is right to challenge the Government on the review of housing revenue and right-to-buy receipts. We will address that issue when we produce a housing Green Paper next year.
Mr. Betts: Considering the history of the situation, will the hon. Gentleman reflect on the fact that when right to buy came inI think that there is a case now for suspending the right to buy for certain properties in certain areas where the pressure is enormouswe were given a commitment by the Government that 100 per cent. of the receipts from right-to-buy sales could be used by individual councils to improve their housing stock and replace the houses that were sold? That promise was not delivered by the last Conservative Government. If we are discussing failed promises, that was certainly a big one.
Mr. Jackson: We are considering the record of the Labour Government in their 12th year. Frankly, we face this lamentable failure in housing policy following a period of benign economic circumstances. In 2007, 53 per cent. of dwellings were houses, which is down from 80 per cent. in 2001. I agree with the hon. Member for Truro and St. Austell (Matthew Taylor) that we must get the housing mix correct. The current situation comes about as a result of a top-down regional spatial strategy approach that dictates how many thousands of homes are forced into different regions. That point was raised by the hon. Member for Cheltenham (Martin Horwood) as well. Social mobility has seized up, too.
The HomeBuy Direct scheme was initially considering 120,000 units. In the middle of last year, we were looking at 207. Home information packs have done nothing to add to the viability of the housing market. The Governments own trials, which cost £5 million, have shown that they have largely failed to add to the viability of the wider market.
The dithering over stamp duty, which the hon. Member for Falmouth and Camborne (Julia Goldsworthy) mentioned, had a demonstrably negative effect on the housing market. One had only to talk to the National Association of Estate Agents to confirm such a view. Eco-towns are a prime example of the Governments short-termism and a discredited failure. If such a policy were a pet budgie, one would take it to the vet and have it put down. The Minister for Housing is to pull the plug on the scheme and kill it off gracefully, as only she can. She is doing that after admitting that her predecessor misled the House on whether such projects would be built on greenfield or brownfield sites. The Government are still fiddling the planning process to squeeze out
local decision makerselected councillorsfrom such decisions. Where does that leave us?
Our Prime Minister, the great helmsman, announced some incredibly ambitious, but massively unrealistic, house building targets in June 2007. Were such targets an ambition or a policy? The Government are not singing from the same hymn sheet in that respect.
The Royal Institution of Chartered Surveyors expects the number of new-built homes to be fewer than 100,000 units. The Governments limited attempts to kick-start the housing market, which we have supported, seem doomed to fail because they lack ambition. The HomeBuy Direct scheme will work only if the 70 per cent. that the homebuyers have to find is lent by lenders, but such buyers are considered sub-prime mortgage holders and they will have grave difficulty in securing that funding, and we will be no further forward.
The wider picture shows that just 33,000 loans for new properties were approved in September. The latest figure from the National House-Building Council shows that newly registered homes are down 68 per cent. in the 12 months to October 2008. Average daily sales are down 22 per cent. in the same 12-month period.
As other hon. Members have said, the Government have failed on housing supply in a decade of boom. Now that we are at the beginning of the bust, they are unable to meet demand. The housing market is seizing up and developments are collapsing. Therefore, what should we consider in the immediate term? The hon. Member for Cheltenham talked about the use of greenfield and brownfield sites. The Government are not doing everything that they can about the remediation of brownfield sites and are not assisting developers to get that tenure mix correct by helping them to develop such sites in a timely way.
If the Conservatives were in power, we would take direct action on stamp duty. We would scrap home information packs and regional spatial strategy housing targets because we are committed to localism. We believe that local people will deliver if they are given an incentive and provided with the infrastructure to make it feasible and viable to develop. There is not a great chasm between us and the Liberal Democrats in that respect. Moreover, we would consider new initiatives such as community land trusts. I am glad that the Government have moved closer to our position on that since we debated primary legislation earlier this year.
In addition, we must look at section 106 agreements, and we have to work with people locally. I agree with the hon. Member for Truro and St. Austell on that, and I commend him for his report. There were many ideas in it that we would seek to put into practice in government, although not all of them. He has done a good job, particularly in focusing on the crisis in rural housing.
The Government need to trust local communities and their elected representatives. We need incentives, infrastructure and the right type of housing in the right place. This Government have run out of ideas, they have run out of policies and soon they will have run out of time. We need a new Government committed to localism, with new ideas to revitalise the housing market fully. A Conservative Government would do that, as they have in the past.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Iain Wright): It is a pleasure to serve again under your chairmanship, Mrs. Dean. I congratulate my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) on securing this timely and important debate. I agreed with virtually everything he said. His analysis was astute and knowledgeable, and his expertise in the housing sector came out strongly. In fact, the whole debate has been knowledgeable, and I have agreed with an awful lot of what has been said, with the exception of the remarks of the hon. Member for Cheltenham (Martin Horwood); I do not think that I agreed with anything that he said.
I was also disappointed with the hon. Member for Peterborough (Mr. Jackson). Given that we are facing immense difficulties and that hard-working families out there are frightened about their housing situation, I thought that his contribution was somewhat backward-looking and introspective, and I was not surprised that in the midst of the biggest global financial turbulence since the first world war and with a dire need to recapitalise the banks balance sheets, the Conservatives one tangible solution is to scrap home information packs. They will need a bit more than that to become a viable Opposition.
I am conscious of time. We could spend a great many hours debating this important issue, but I will focus on three matters. I will summarise the housing market challenge that we face, which has been eloquently articulated by my hon. Friend and others; describe how we will prepare for the upturn and support the construction sector and hard-working families who fear a housing shortage or repossession; and discuss the role of local authorities and the Homes and Communities Agency, and how the relationship between them will be key as we move forward through the current turbulence towards the upturn.
I will be up front. I am not going to shy away from the challenges that we face in the housing market. The Government recognise the massive challenges in housing due to turbulence in the global financial markets. As has been articulated well in the debate, house prices have fallen, people are finding it harder to get a suitable mortgage and house builders are experiencing very challenging business conditions. Housing associations, as a result of stresses on their business model with regard to section 106 agreements, are finding it difficult to provide the finance to build houses for rent.
Most peoples homes are worth far more than when they bought them, and mortgage rates are low by historical standards, but I do not want to be complacent about that and rest on my laurels, as it would be a wrong approach. These are undoubtedly difficult times for the housing market. Demand indicators have weakened and are forecast to remain weak. Buyer inquiries to the Royal Institution of Chartered Surveyors have fallen every month since the beginning of 2007, and unsold stock figures are poor.
The basis for current circumstances is exceptional instability in the international financial markets. That is where we have taken the most urgent and radical action. The Prime Minister and the Chancellor should be commended on their work to help to recapitalise the banks. They have taken extraordinary measures for extraordinary times. That should help to address the
underlying lack of liquidity and credit that has created a more risk-averse approach to lending among financial institutions and frozen the mortgage markets. It will take time, as has been said, but the housing market will start to see the benefit. It is encouraging that thanks to political pressure, not least by my right hon. Friend the Chief Secretary to the Treasury, the Bank of Englands 1.5 per cent. cut last week has been passed on. There is still work to be done, but the Government are putting pressure on the banks in that respect.
Although the crisis is global in origin and nature, the Government are committed to taking direct action to alleviate pressures in the domestic housing market. This Government do not think that the current correction is a natural feature of free markets and that we should ride the storm. This Government are not a Government who say that the price is well worth paying or that if it is not hurting, it is not working. We are keen to ensure, and are committed to ensuring, that we take action and work day and night to address peoples fears about repossessions and housing shortages, and to put policies and actions in place to help to mitigate those risks.
Mr. Stewart Jackson: If we are being candid about the crisis, surely the Minister will admit that it was his Governments regulatory framework that allowed sub-prime lending to continue and presided over £1.3 trillion of personal debt, which is hugely greater than in most European countries and will exacerbate the difficulties in the housing market.
Mr. Wright: I do not want to get into that debate, but I seem to recall that the Conservative party argued that there was far too much regulation in the financial markets, and that the City of London was at risk of losing its status as the premier financial centre in the world as a result. The Conservatives cannot have everything, I am afraid.
House prices have risen in recent years as a result of benign economic conditions and peoples feeling of security in their jobs, but also as a function of the relationship between demand and supply. We have not built enough homes in this country for a generation. I take great issue with the hon. Member for Cheltenham. Supply is an important factor. It is not the sole factor, but it is important, and it is something that we need to address.
you might start out with an intention to build X in an area and two years down the line what has happened in the market has suggested to you that X was too big and you should cut the target.
Mr. Wright: People in this country are living longer, and the way that they live is changing. I suggest that as we face an economic downturn, greater stress on households may result in family break-ups, which will put even more pressure on housing. This is my key message: despite the short-term turbulence, which we recognise, acknowledge and are taking steps to act on, we need to have sight of long-term factors.
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