LARGER INSTITUTIONAL INVESTMENT
303. Further significant increases in supply in the
private rented sector will require large institutional investors
to be attracted back to the sector. During oral evidence, the
British Property Federation (BPF) told us that the several separate
areas of regulation act as a disincentive to institutional investment.[493]
However, giving further supplementary evidence, the BPF later
acknowledged that:
The perception by the private sector is that
Government has over regulated rented housing, which in reality
may not be the case. However implementation of regulation such
as HMO licensing is very variable across the country and local
authorities need to coordinate their efforts better.[494]
304. Complaints about the burden of regulation
on investment in the private rented sector are understandable,
but we are not convinced that the effect of regulation is to disadvantage
larger institutions, either by comparison with other investors
or by comparison with alternative investment possibilities. Nonetheless
we recommend that, when reviewing the future of regulation of
the private rented sector, the Government investigate the potential
for improvements to the regulatory process to encourage further
investment from larger institutions to improve supply.
TAX REFORM
305. The private sector considers that improvements
in supply through more institutional investment will also require
further tax reforms.[495]
One of the main issues raised by potential investors is the effect
of aggregating the stamp duty of all properties, rather than applying
the tax separately to properties, which acts as a disincentive
for larger investors.[496]
Another fiscal disincentive is the application of VAT to repairs
and maintenance.[497]
306. Given
that one of the main problems with the private rented sector is
the relatively poor standard of repair (the sector has the largest
proportion of non-decent homes), taxing an activity which so badly
needs to be carried out appears perverse. Complaints about VAT
are not the sole preserve of profit-maximising private firms:
it is also an obstacle for community ownership and management
organisations.[498]
We discussed the disincentive represented by the application
of full-rate VAT to refurbishment, renovation and other improvement
of homes in our recent Report Existing Housing and Climate
Change, recommending that the Government seek to remove this
anomaly.[499]
307. The Riverside Group, the parent body for several
housing associations in England, told us of a further way in which
the tax system could be acting as a disincentive to housing developers
in developing affordable homes. The group noted that when housing
associations dispose of land to private developers, to cross-subsidise
the construction of new homes for example, any receipts (in cash
or in kind) are subject to corporation tax, reducing the affordable
housing outputs achievable.[500]
By contrast, any surplus that housing associations or ALMOs
make in the course of their core business is mainly untaxed.[501]
We have also highlighted the need to review the application
of VAT to management services offered by providers of social housing.[502]
308. The tax system should not impede or deter
any housing provider from taking the steps necessary to improve
the supply of rented housing. We recommend that CLG investigate,
in cooperation with the Department for Business, Enterprise and
Regulatory Reform and the Treasury, reforming the taxation system
and introducing other measures:
- to promote greater institutional
investment in the private rented sector;
- to encourage higher standards of maintenance
and responsible management of homes;
- to promote greater investment in energy efficiency;
and
- to enable the greatest possible amount of
money to be available for improvement of the supply of rented
housing, including abolishing corporation tax on cross-subsidy
deals by housing associations where it can be demonstrated that
the proceeds are being used for the provision of affordable housing.
321 HC Deb, 29 January 1998, Col 316WS. Back
322
DETR (2000), Quality and Choice: A Decent Home for All-The Housing
Green Paper, para 7.10. Back
323
Ev 176 (CLG) Back
324
Treasury press notice 69/07, 21 June 2007. Back
325
Para 127ff. Back
326
Every Tenant Matters, para 5.74. Back
327
Q 418 Back
328
ODPM, Guidance on Arms Length Management of Local Authority Housing-2004
Edition, page 19. Back
329
Ev 68 (Audit Commission) Back
330
Q 356 Back
331
Every Tenant Matters, para. 5.68. Back
332
Ends and means, p169. Back
333
Q 290 Back
334
Q 296 Back
335
Q 212 Back
336
HC (2006-07) 1038-i, Q 50. Back
337
Ev (HC 457) 98 (City West Homes) Back
338
Ev (HC 457) 130 (National Federation of ALMOs) Back
339
Ev 111 (National Housing Federation) and Q 357-Q 358. Back
340
Housing and Regeneration Bill Committee, 13 December 2007, Q 142. Back
341
Qq 204-206 Back
342
Housing and Regeneration Bill Committee, 11 December 2007, Q 104. Back
343
Every Tenant Matters, para 5.9. Back
344
Every Tenant Matters, para 5.71. Back
345
Housing and Regeneration Bill Committee, 11 December 2007, H&R2
and Q 56. Back
346
Housing and Regeneration Bill Committee, 29 January 2008, col
631. Back
347
Housing and Regeneration Bill Committee, 29 January 2008, col
633. Back
348
Housing and Regeneration Bill, Clause 88 (Fundamental objectives),
subsection 11(a). Back
349
Explanatory Notes to the Housing and Regeneration Bill, page 29. Back
350
Every tenant matters, page 97. Back
351
CLG (2007), Delivering Housing and Regeneration, paras 7.28-7.29. Back
352
HC Deb, 15 October 2007, 47-8WS. Back
353
Housing and Regeneration Bill, clause 124 (Complaints). Back
354
CLG (Live Table 244) Back
355
Ev 5 (LGIU); Ev 151 (Defend Council Housing; Ev (HC 457) 131 (National
Federation of ALMOs); Ev 45 (North West Housing Forum); Ev (HC
457) 136 (Sheffield City Council and Sheffield Homes Ltd). Back
356
Ev 66 (Audit Commission); Q 221 Back
357
Ev 33 (Cheshire Housing Alliance) Back
358
Q 530 Back
359
Ev 143 (Chartered Institute of Housing) Back
360
Q 213 Back
361
Homes for the future, page 109. Back
362
Homes for the future, pages 109-111. Back
363
Q 530 Back
364
Ev (HC 457) 138 (Sheffield Homes Ltd) Back
365
Q 49 Back
366
Ev 175 (CLG) Back
367
CLG (2006), Strong and Prosperous Communities - The Local Government
White Paper: see e.g. para 7.13. Back
368
Ev 11 (Northern Housing Consortium) Back
369
Q 40 Back
370
Ev 67 (Audit Commission) Back
371
Sir Michael Lyons, Place-shaping: a shared ambition for the future
of local government, London: The Stationery Office, March 2007. Back
372
HC Deb, 20 April 2007, Col 790W. Back
373
Housing Corporation, Public Attitudes to Housing, 2006, page 7;
Ends and means, page 70. Back
374
Based on dwelling stock rather than inhabitants. Back
375
Every Tenant Matters, para 2.53. Back
376
Ev 169 (CLG) Back
377
Ev 64 (Audit Commission) Back
378
Q 145 Back
379
Ev (HC 457) 99 (CityWest Homes), 133 (Sheffield City Council and
Sheffield Homes Ltd). Back
380
CLG (2008) Self-financing of council housing services: Summary
of findings of a modelling exercise, page 10. Back
381
Communities and Local Government Committee, 29 October 2007, HC
1093-ii, Q 184. Back
382
Ev 66 (Audit Commission) Back
383
Ev 144 (CIH) Back
384
HC (2006-07) 1038-i, Q 50. Back
385
Housing and Regeneration Bill Committee, 13 December 2007, Q 232. Back
386
HC (2006-07) 1093-ii, Q 184. Back
387
HC Deb, 12 December 2007, cols 34-5WS. Back
388
CLG (2008), Self-financing of council housing services: Summary
of findings of a modelling exercise, page 57. Back
389
Ev 144 (CIH) Back
390
Ev 162 (Prof Crook et al) Back
391
Endsandmeans,page182. Back
392
Q 400 Back
393
Ev 152 (Defend Council Housing) Back
394
Q 42 Back
395
Q 250 Back
396
Q 161 Back
397
Ev (HC 457) 99 (City West Homes) Back
398
Ev 170 (CLG) Back
399
Ev 188 (Housing Corporation) Back
400
Office of the Deputy Prime Minister (July 2004), Three-year
review of rent restructuring. Back
401
Q 419 Back
402
Housing and Regeneration Bill Committee, 11 December 2007, Q116. Back
403
Every Tenant Matters, para. 2.62. Back
404
Ev 152 (Defend Council Housing) Back
405
Q 360 Back
406
Housing Corporation (February 2007), Unlocking the door: delivering
more homes from the comprehensive spending review 2007. Back
407
Ev (HC 457) 158 (CLG) Back
408
Ev 188 (Housing Corporation) and Housing Corporation (October
2006), Neighbourhoods and Communities strategy. Back
409
Ev 62 (Sunderland Housing Group) Back
410
Ev 45 (North West Housing Forum) Back
411
Housing Corporation, Regulatory and Statistical Returns Survey
(RSR) 2006, Table 18. Back
412
Ev 62 (Sunderland Housing Group) Back
413
Ev 139-140 (Places for People); Ev 59 (Sunderland Housing Group) Back
414
Regulatory and Statistical Returns Survey (RSR) 2007, Table 1. Back
415
Ev (HC 457) 123 (British Property Federation) Back
416
Ev 139 (Places for People) Back
417
Qq 364-365 Back
418
Housing and Regeneration Bill Committee, 11 December 2007, Q 110. Back
419
Housing and Regeneration Bill Committee, 11 December 2007, Q 147. Back
420
Paras 139-144 Back
421
Q 394 Back
422
Work and Pensions Committee, Third Report of Session 2006-07,
The Government's Employment Strategy, HC 63-I, Ev 330. Back
423
HC Deb, 22 Nov 2007, col 1084W. Back
424
Rt Hon. Caroline Flint MP, Address to the Fabian Society, 5 February
2008. Back
425
Para 118 Back
426
Ev (HC 457) 113 (JRF) Back
427
Q 389 Back
428
HSSA 2006. Back
429
Ev (HC 457) 159 (CLG) Back
430
Ends and means, page 163. Back
431
CLG (2006), Housing Research Summary 231: Monitoring the longer-term
impact of Choice-based lettings. Back
432
Q 389 Back
433
Ev (HC 457) 134 (Sheffield City Council and Sheffield Homes Ltd) Back
434
Q 395 Back
435
HC Deb, 16 March 2005, col 281W. Back
436
Ev (HC 457) 158 (CLG) Back
437
HC Deb, 12 December 2007, col 35-7WS. Back
438
ODPM (2005), Sustainable Communities: Homes for All, page 41. Back
439
Q 549 Back
440
Ev 79 (National Landlords Association) Back
441
Q 133 Back
442
Ev 155 (NEHB) Back
443
Ev 107 (NHF) Back
444
Ev 118 (Shelter) Back
445
Ev 107 (NHF) Back
446
Ev 59 (Sunderland Housing Group), Ev (HC 457) 134 (Sheffield City
Council and Sheffield Homes Ltd), Ev 9 (Northern Housing Consortium)
and Ev 50 (the Riverside Group). Back
447
Ev 26 (Karen Buck MP) Back
448
Ends and Means, page 64. Back
449
Ends and Means, page 114, Table 11.3. Back
450
Ev 13 (Northern Housing Consortium) Back
451
Ev 58 (TRG) Back
452
Ev 77 (GLA); Ends and Means, page 117. Back
453
Q 392 Back
454
Ev 42 (PLUS Housing Group) Back
455
Ev 115 Back
456
Ev (HC 457) 154 (DWP) Back
457
Ev 165 (Daventry District Council) Back
458
Ev 173 (CLG); Ev 78 (National Landlords' Association). Back
459
Ev 35 (Cheshire Housing Alliance) Back
460
Ev 172 (CLG) Back
461
DWP (2006), Housing Benefit and Council Tax Benefit Report. Back
462
CLG Live Table 625 Back
463
Ev 146 (CIH) Back
464
Ev 148 (Barking and Dagenham) Back
465
Ev 194 (Blackpool Council) Back
466
Ev 62 (Sunderland Housing Group) Back
467
Ev 173 (CLG) Back
468
Ev 121 (Shelter) Back
469
Ev (HC 457) 153 (DWP) Back
470
CLG Live Table 625 Back
471
CLG Live Table 625 Back
472
Ev 70 (Audit Commission) Back
473
Ev (HC 457) 154 (DWP) Back
474
Q 439 Back
475
Ev (HC 457) 153 (DWP) Back
476
Q 72 Back
477
Ev 178 (CLG) Back
478
Ev (HC 457) 156 (CLG) Back
479
Ev 26 (Karen Buck MP); Ev 102 (Westminster City Council and CityWest
Homes). Back
480
Ev (HC 457) 146 (Local Space) Back
481
Q 437 Back
482
Q 446 Back
483
Q 439 Back
484
Q 449 Back
485
Q 438 Back
486
Q 72 and Q 493-Q 494 Back
487
Q 444 Back
488
Ev (HC 457) 154 (DWP) Back
489
Ev (HC 457) 154 (DWP) Back
490
Ev (HC 457) 153 (DWP) Back
491
Q 443 Back
492
ARLA (2006), Buy to let: The revolution-10 years on, page i. Back
493
Q 349 Back
494
Ev (HC 457) 123 (British Property Federation) Back
495
Ev (HC 457) 119-120 (British Property Federation) Back
496
Ev 40 (BURA) Back
497
Q 339 Back
498
Ev (HC 457) 110 (Confederation of Co-operative Housing) Back
499
Communities and Local Government Committee, Seventh Report of
2007-08, Existing Housing and Climate Change, HC 432, paras
47-51. Back
500
Ev 52 (TRG) Back
501
Every Tenant Matters, para 4.4. Back
502
Paras 247-248. Back