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Westminster Hall

Wednesday 4 February 2009

[Mr. Eric Illsley in the Chair]

Community Land Trusts

Motion made, and Question proposed, That the sitting be now adjourned.—(Barbara Keeley.)

9.30 am

Linda Gilroy (Plymouth, Sutton) (Lab/Co-op): As the House will be aware, there is a growing interest in my constituency and up and down the country in the potential contribution of community land trusts to increasing the supply of affordable housing. The Government have encouraged the development of policy on CLTs in the past two years by funding, through the Housing Corporation, which is now the Homes and Communities Agency, the national pilot study of 14 CLT projects.

My hon. Friend the Minister has made his interest in the potential of CLTs clear by issuing a consultation paper. The deadline for responses was the end of December, and I hope that when he replies to the debate, he can announce when the Government’s response to submissions will be published.

In my constituency and elsewhere, interest in CLTs has been stimulated by the growing demand for access to a decent, affordable home. CLTs are means by which communities can come together and work to find ways of securing land and other property as community-owned assets to help sustain them. Meeting affordable housing need within a community is a common driving motivation for establishing a CLT.

Although housing is central, it is not the sole motivation or interest: sustainability embraces social, economic and environmental dimensions. That is shown in the Devonport CLT, which is in my constituency and that of my hon. Friend the Member for Plymouth, Devonport (Alison Seabeck). The trust is as much motivated by the need for premises where new businesses can start up as by the need to increase the supply of affordable housing.

David Taylor (North-West Leicestershire) (Lab/Co-op): It is good to see so many Co-op MPs in the Chamber today, because the co-operative model underpins the working of CLTs and, indeed, other social enterprises. I represent a former coalfield seat. Three of the larger villages in my constituency have had community enterprises with an economic brief for quite some time. Does my hon. Friend agree that it is crucial to have a professional, paid person at the heart of a CLT, alongside an array of volunteers? I hope that the Government recognise that, and ensure that there is appropriate training and models that CLTs can draw on to be successful when the brief is widened—rightly—to affordable housing, as she described.

Linda Gilroy: My hon. Friend makes a good point that will sit well with the work of the new Homes and Communities Agency, which is looking not only at housing regeneration but at the management of jobs and everything that goes to make a sustainable community.

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I want to pay tribute to David Rodgers. He works with the Co-operative party nationally, but he has made his expertise available to me and others in Plymouth over the past few years as we sought to understand what is happening in housing and the innovative models that are available to address the growing challenges we have been facing. My hon. Friend the Member for Stroud (Mr. Drew) has also worked with David Rodgers, who has had a career in co-operative housing since 1972. Since 1979 he has been executive director of CDS Co-operatives, which is now the largest secondary housing co-operative in England—it manages some 3,000 homes. As befits someone steeped in the co-operative movement, David Rodgers—in addition to his experience on the board of governors of the Co-operative college and a track record in the Co-operative Housing Finance Society, of which he was a founding member in 1997—has international strings to his bow. He is the UK’s representative on the housing board of the International Co-operative Alliance, and is recognised as an international expert on community ownership and residence control.

I have been following the evolution of David Rodgers’s advocacy of CLTs for a good few years. The Co-op party pamphlet, “New foundations: unlocking the potential for affordable homes”, which was launched last week, takes the thinking on the subject in an innovative direction. That thinking could help the Government to rise to the challenge of restoring lending and trust to a banking system that is beset with uncertainty, and a lack of trust and confidence, stemming from the “ninja”—no income, no jobs, no assets—mortgages in the American sub-prime market. That has been like a pandemic disease.

Alison Seabeck (Plymouth, Devonport) (Lab): I congratulate my hon. Friend on securing this debate—she is an expert on the subject in her own right. Does she accept that it is right to consider the CLT option, which keeps land in collective ownership and supports and sustains business, in the current economic climate? We should encourage the Government and the HCA to give it full support.

Linda Gilroy: I agree with my hon. Friend. The time of the CLT model of housing has come. The ideas that are espoused in the Co-op pamphlet—David Rodgers is its prime mover—deserve serious and urgent attention, and I hope that this debate will play a small part in counteracting the pandemic with a dose of co-operative common sense and values.

I acknowledge the work of the hon. Member for Truro and St. Austell (Matthew Taylor) who last year published a report entitled, “Living Working Countryside”. I believe that he saw a role for CLTs in addressing rural housing needs. Recommendation 21 of the report, which was commissioned by the Prime Minister, states:

The Campaign to Protect Rural England, in its submission to the Minister’s consultation, also makes the case for CLTs in rural settings. It says that in seeking to meet the aspirations for a decent home and a sustainable community, it is crucial to engage local communities in developing constructive solutions, and to take into account the capacity of the environment to accommodate development.

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Mr. Oliver Letwin (West Dorset) (Con): One of the best features of CLTs is that they command the confidence of people on both sides of the House and all parties. On the hon. Lady’s last point, CLTs offer the potential for communities to welcome housing, rather than setting up machine gun nests to prevent it.

Linda Gilroy: The right hon. Gentleman makes a good point. I hope to make some remarks on that aspect of the CLT model.

Shelter published an excellent pamphlet last December entitled, “Building Blocks”. It promotes debate on solutions to maintaining the momentum on affordable housing generally, and mentions the potential of the CLT model. It states that the model has the capacity to capture the

I am pleased that the Conservatives are developing their interest in CLTs and their potential to contribute to the supply of affordable housing. I understand that the hon. Member for Welwyn Hatfield (Grant Shapps) recently established a community land taskforce—it had its first meeting last week. I look forward to hearing his views in this debate, and when the taskforce concludes its deliberations later this year.

What is a community land trust? Through the wisdom of the Government accepting an amendment tabled in another place by my noble Friend, the Labour and Co-operative peer, Lord Graham of Edmonton, we now have a legal definition of section 79 of the Housing and Regeneration Act 2008. It defines a community land trust as a corporate body


David Taylor: Where CLTs are set up in rural areas, it is likely that already elected parish councillors will be responsible for the community. It seems inevitable that in some cases the views, hopes and plans of the parish council will not necessarily be in accord with those of the community land trust. There could be tensions; let us not shy away from that. How does my hon. Friend think those problems can be overcome and those tensions removed from an important area of parish life?

Linda Gilroy: Again, my hon. Friend makes a good point. Community land trusts have been seen as part of the answer to rural housing. Representing an urban constituency as I do, I believe that they are also a part of that, and I am sure that the tensions that he discussed will show themselves as we go forward. However,
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community land trusts have the capacity to involve their members. I hope that through the learning process of managing, the Homes and Communities Agency, to which I referred earlier, will develop national vocational qualifications that will help the people involved. It is the old co-operative ideal of education. I hope that it will help them to foresee things and relate to their communities appropriately.

My interest in the potential of community land trusts was given fresh impetus by a housing inquiry that I carried out in Plymouth last year and the report that came out of it, “Homes for the Future: 21st-Century Solutions for Plymouth—Putting rungs back on the bottom of the housing ladder”. That inquiry started as a result of my meeting a constituent with a young family who had been asked to move five times in five years by a number of different private landlords. She was not a bad tenant, just the victim of insecure short-term housing. Some of her neighbours had other housing challenges that I wanted to understand, as I realised how much the housing market in my city was changing.

I had two specific aims in the housing inquiry. The first was to ensure that we in Plymouth go as far and as fast as we can to provide housing that meets demand, especially in respect of affordability. The second was to inform continuing development of national policy legislation and regulation. My inquiry resulted in several specific recommendations, all of which are directed at maximising the availability of housing across all tenures in Plymouth. The advent of the Homes and Communities Agency, set up under the Housing and Regeneration Act 2008, has created an environment in which many of those recommendations can be pursued. Many of the provisions in the Local Democracy, Economic Development and Construction Bill announced in the Queen’s Speech will also help to carry forward improvements, particularly in the rented sector.

One of the key findings of my housing inquiry was that there was a significant gap in housing supply and affordability between those housed by the city council, by housing associations or by registered social landlords because of priority housing needs, and those who find their own housing through renting from private landlords or buying on the open housing market. Of course it is important that private landlords are encouraged to provide good-quality, well-managed homes for rent in the private sector, and my inquiry report outlined how that sector might be encouraged and improved further, but for many in housing need, neither the private rented sector nor buying on the open market is an affordable option. My report concluded that we need to put rungs back on the bottom of the housing ladder.

Since last summer, when my report was published, there have been significant falls in the housing market. Even so, the ratio between house prices and average earnings in Plymouth, which was one of the worst in the country, remains high. In 2008, the average house price in the city of Plymouth was eight times average earnings. Notwithstanding the downturn in the housing market, the national housing and planning advice unit predicts that affordability in Plymouth and the south-west will continue to worsen until 2026 unless there is an increase of affordable housing supply to meet the demand arising, as we know, from demographic changes affecting the UK and the rest of the developed world. Supply is out of kilter with demand.

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To many, of course, the fall in house prices is welcome, as it brings the possibility of buying or part-buying a home within reach. However, I am advised that house prices in Plymouth would have to drop by more than 50 per cent. before many hard-working households aspiring to home ownership could fulfil their dreams. Heaven forbid that that should happen, as it would bring all sorts of other mayhem in train, but the pressure on social housing and the private rented sector will remain great and must be addressed.

That reality led to two of the report’s key recommendations. There is a pressing need to restore some rungs at the bottom of the housing ladder by creating a supply of permanently affordable housing in the intermediate housing market. A permanently available supply of homes at a price between the cost of social rented housing and open market purchased housing is desperately needed to create a greater range of affordable housing choices for those in need of a decent home.

It is desirable in Plymouth to develop, in addition to current homebuy products, a range of affordable intermediate housing market products that will remain permanently affordable. That will help to create communities that are sustainable in the longer term, as it will enable many households currently excluded from the open market to finance part of the value of their homes and to own a property asset. That will allow them to do that in a way that will remain affordable from one generation of occupants to the next.

Community land trusts could play a large part in responding to those conclusions. They can take land out of the market, capture the uplift in value for a local community and harness that community’s talents through an openly governed and accountable democratic organisation. That contributes to increasing housing supply in a way designed to be permanently affordable and sustainable. CLTs can do so on their own or, as I recommended in my report, in partnership with a local housing company.

A partnership being developed in Plymouth between the local housing company and the local community through a community land trust could help to ensure that the additional homes produced by the local housing company are not sub-market with the potential to become unaffordable and destined to move quickly into the open market, but are genuinely affordable, in compliance with the definition of affordable housing set out in the Government’s supplementary guidance to planning authorities in planning policy statement 3.

Developing new forms of permanently affordable intermediate market housing is not easy. It is never easy to float new ideas, particularly at a time when the global economy is facing major challenges due to the volatility in the financial markets, but it is precisely because we face major challenges that new ways of increasing the supply of affordable housing and maintaining activity in the construction sector of the economy are needed.

Last week, the Co-operative party, of which I am proud to be a member, launched a pamphlet in its “Politics for People” series that made the case for a new form of co-operative intermediate market tenure. The pamphlet is entitled “New Foundations: unlocking the potential for affordable homes”. It proposes the development of mutual home ownership on land owned by community land trusts. As in a unit mutual property trust, members of the mutual own equity shares in the
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property in which they live. The more they earn, the more rent they pay and the more equity shares they own.

The Co-operative party’s case is based on three central propositions. The first is that the global financial crisis has fundamentally changed the world in which we must work to meet the affordable housing needs of our nation. Gone are the days when mortgage finance from high street lenders was readily available. The loss of £1,800 billion—there would be nine noughts after the 1,800 if the figure were put out in full—in the global financial crisis means that, for the foreseeable future, mortgage finance will be in shorter supply. Commercial lenders will, of necessity, return to the old canons, lending to low-risk borrowers buying on the open market, who can afford a deposit of at least 15 per cent. of the property’s value. I was talking to someone who works in that sector at a Federation of Small Businesses dinner last night and he suggested that buyers could be more commonly asked to provide a deposit of 25 to 27 per cent. of the property’s value.

Secondly, because of the financial crisis, if we are to meet the demand for affordable homes and to maintain activity in the house building sector of the economy, including the associated manufacturing industries and their skills bases, we need to find new sources of finance for affordable housing development. The Co-operative party’s pamphlet explains how co-operative mutual home ownership has the unique potential to be an attractive investment for pension funds. That is because it can be structured to guarantee long-term investors a fixed annual yield on their investment to match their liabilities and it is also designed to remain permanently affordable, from one generation of occupants to the next.

Thirdly, mutual home ownership treats a home not as a speculative investment but as a consumer durable. Like a car or a washing machine, a home has a value that is consumed over its useful life. In the case of a house, I am told that that useful life is about 65 to 70 years. The view expressed in the Co-operative party’s pamphlet is that one of the consequences of the global financial crisis is that the days of speculative house inflation, driven by unwise and badly regulated lending practices along with easily available cheap loans, have passed.

Adopting the Co-operative party’s proposals in “New foundations: Unlocking the potential for affordable homes”, which provide the basis for co-operative mutual home ownership on land owned by community land trusts would be a win for the Government, because it would increase the supply of affordable housing and maintain activity in the construction sector of the economy. It would be a win for pension funds and other long-term investors, because it would offer them a fixed annual yield on their investments, irrespective of inflation and secured on the value of the housing that they invest in. It would also be a win for communities in need of affordable housing, giving them an opportunity to contribute their energies and efforts to secure its provision. Finally, it would be a win for the environment, because environmentally sustainable elements of design and construction can be financed over the full 60-year term of the investment in the mutual homes, rather than needing to generate a short-term return for each individual owner.

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