Examination of Witnesses (Questions 40
- 45)
TUESDAY 12 DECEMBER 2006
LORD BEST
OBE AND MR
ANDREW BARNETT
Q40 Dr Pugh:
Do you see a downside if they become providers of new build again?
Lord Best: It is unrealistic to
expect councils, with public expenditure constraints, to know
how to spend really big sums of what would be labelled public
money and get back into housing big time.
Q41 Dr Pugh:
That is not the question I asked you. I asked whether you see
a downside of it. The Chancellor sees a downside of it, we know
that, but do you see a downside of it?
Lord Best: Most local authorities
have lost the capacity for imaginative and exciting new development.
This has been a 20-year process of winding down their capacity.
It would take a lot to get them revved up and to employ the kind
of talent that they would need to get back in the business now.
Q42 Sir Paul Beresford:
Some of the local authorities with 1950s and 1960s blocks in particular
are using their imagination to build within the estates they already
have; vacant areas, empty areas, disused places. What can you
do to encourage that?
Lord Best: Two things about that.
That gives you then, instead of that bit of town being where the
council tenants go and it becoming stigmatised and you are labelled
because if you live there you must be a poor person, that does
give you some social mix and the use of that land can be a creative
way of changing it. I would go a bit further though and I would
say slightly dramatically, that the local authority with their
tower block should consider, after refurbishing it, selling vacant
properties in that block—not to the existing occupiers—so
that there is a mix of tenure and ownership within the existing
old block. When you have that little plot for 26 houses that are
brand new, that look completely different, we should be in there
purchasing some of those for rent so that we get a real mix on
that estate, otherwise you still have the old tower block but
in its shadow these smart little homes for first-time buyers down
below that look entirely different. We want to get both; we want
to get the whole. At the Joseph Rowntree Housing Trust we have
1,000 homes in the old village of New Earswick. We do not have
any right to buy because we are a housing trust, a charity, and
we have a mono-tenure. We have nobody as home owners and everybody
who is sent to us, homeless families in particular of course,
on low incomes or on housing benefit, we have a policy of sales
of alternate vacant properties; we sell alternately. If a property
becomes vacant, we sell one, we rent one, we sell one, we rent
and we replace every home that we sell because we now get enough
from the sale of the vacant property, with the extra loans we
can take on and repay out of rents, to replace every home that
we have sold. What we are getting is a mix of people within that
estate on different incomes all in the same place instead of having
just those people who, I fear, then become residualised, stigmatised,
treated by the rest of the community as losers in society instead
of a place that is a healthy vibrant community, which we are restoring
it to be.
Sir Paul Beresford: I remember doing
that and trying to explain it to the district auditor.
Q43 Emily Thornberry:
I want to hear what you have to say about Shelter's thing on intermediate
housing. We have heard criticism from them about intermediate
housing, about this idea that one of the ways in which you could
get into intermediate housing would be to be a social housing
tenant and that would be an access point.
Lord Best: Yes, that moves you
out then of the rented apartment and frees it up for somebody
else. The Rowntree research done by your adviser, Professor Wilcox,
for us, extremely important research, shows that this group of
people, the people who are stuck in the middle, who fall between
being council housing association tenants and being able to buy,
this is becoming the biggest group in some areas of the under
40s. This is the big issue. These are the people who, as I say,
do not mind being private tenants for a while but they are not
going to be very happy to retire in 35 years' time from their
jobs, continuing to be privately rented tenants, discovering their
income falls but their rent keeps rising. We have a culture, but
we also have a financial arrangement in UK society that expects
you to pay off a mortgage and be debt free when you retire, not
facing your rent going up and up and up when your income has dropped
dramatically. If we are going to change that, we had better let
people know and people are not going to be very comfortable with
that.
Q44 Emily Thornberry:
But to keep to a tight definition of who should get intermediate
housing, this would be one way of tightening up the definition.
Lord Best: Yes. The tightness
of the definition is dependent on how much subsidy is going in.
If we can devise the ways in which some other parties, perhaps
those people who are piling in to buy to let, which may have some
downsides to it, if some of those investors were putting their
money into the equity loans so they have a stake in the property,
they would get some of its increase in value but not become private
landlords and the occupier would be the owner and hold the other
part. If we get equity investment it may be we do not need all
or so much public subsidy going in and if this becomes a market
transaction, then we can be less precious about whom we choose
and how we select and allocate. It is more a market mechanism.
It is something that suits the people in the middle at the moment.
Q45 Chair: On
that issue, do you think that real estate investment trusts would
actually further fuel the market and drive prices up or would
they be positive?
Lord Best: We do not think the
real estate investment trusts are going to make very much difference
in our world, mostly for technical reasons. We have not found
much of an appetite for people to use that particular mechanism.
It requires you to register on the Stock Exchange and be quite
a substantial enterprise and we do not see that. The investment
at the moment is by private individuals and there are mountains
of money. We do not at the moment need to encourage any more:
£85 billion has gone in to buy to let. It is absolutely extraordinary.
It is twice as much as the housing associations have had from
private investors in the last 25 years; twice as much has gone
in to buy to let in the last seven years. We do not need any more
mechanisms. The mechanisms do not really suit terribly well the
kind of market forces, so we are not expecting too much of REITs.
Chair: Thank you very much indeed.
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