Housing and Planning Bill

Written evidence submitted by the Council of Mortgage Lenders (HPB 39)

 

Introduction

1. The CML is the representative trade body for the first charge residential mortgage lending industry, which includes banks, building societies and specialist lenders. Our 132 members currently hold around 95% of the assets of the UK mortgage market. Additionally, in terms of commercial funding, CML members have invested over £70 billion in the housing association sector UK-wide for new build, repair and improvement of social and affordable housing.

2. Noting the very challenging deadline in which to respond to this call for evidence, it has not been possible to consult widely with our membership. We hope there will be further opportunities for stakeholders to provide maturing views, as the passage of the Bill progresses.

General comments

Starter Homes

3. In respect of Starter Homes, the Bill appears to be largely enabling in nature and therefore leaves a number of areas unclear, especially in relation to how the duty to promote Starter Homes will work with existing affordable housing provision requirements. Therefore, expediting supporting secondary legislation to clarify expectations as to how Starter Homes will interact with other affordable housing and open-market housing, is crucial, as this will have an impact on the wider housing market, given the scale of the initiative.

4. More generally, many of our members have concerns about the parameters of the Starter Homes scheme, and how the target of 200,000 homes by the end of the parliament can be met without creating significant housing market distortion. We are in discussion with DCLG officials directly on this.

Self build and Custom Housebuilding

5. The CML is supportive of efforts to reinvigorate this underserved part of the housing market and we welcome the additional duties placed on local authorities in respect of the planning system.

6. In relation to the definitions in Chapter 2, 8(1)(A1) and (A2) we query the terminology which relates to the building of ‘houses’. We believe that it would be more appropriate, and in keeping with the spirit of the legislation, to substitute ‘houses’ with ‘dwellings’ or an alternative which is inclusive of all types of housing.

Rogue Landlords and Letting Agents in England

7. It is important that rogue landlords and letting agents are properly held to account when their actions fall short of the standards expected of them. Doing this helps to protect tenants and gives them greater security of tenure and the confidence that they will be treated fairly.

8. We are, however, uncertain as to whether the proposals in the Bill are sufficiently rigorous to make a meaningful difference to standards in the private rented sector. If the database comprises only of landlords and agents who are the subject of a banning order this restricts its scope and therefore its usefulness.

9. While it is important to ensure that those who are the subject of a banning order are restricted in their ability to continue to trade it is likely that poor practice may continue as the ability for local authorities to enforce standards is constrained primarily by cost.

10. It may have been more effective, under the scope of the Bill, to create a more general database of all landlords which local authorities could enforce against. While landlord bodies, including lenders, have been opposed to this in the past the CML are now of the view that increasing the ability to enforce standards is to be welcomed as the sector has grown. Where possible CML members play a role by ensuring their mortgage lending criteria stipulates property conditions and places higher barriers to entry for first-time landlords.

11. More generally, a review of legislation relating to the private rented sector would be welcomed. We believe that sometimes rogue landlords do not set out to deliberately flout the rules but instead find it challenging to comprehend the rules as they are set out across several pieces of legislation. It becomes further complicated when local authorities overlay this with their own licensing rules.

Social Housing in England

12. Right to Buy: We are broadly comfortable at this time with the headline agreement to introduce RTB on a voluntary basis, subject to development of the detail in secondary legislation and guidance as required. We are engaged with DCLG officials and the National Housing Federation on key issues for lenders, and are keen to participate further on this via the appropriate DCLG group(s) once these have been established.

13. De-regulation: More detail will be needed on the package of deregulatory measures both to facilitate the voluntary RTB and to address the recent classification of the sector as "public non-financial" for accounting purposes. Again, the CML looks forward to engaging with DCLG officials on this, and we will be particularly keen to ensure that any deregulatory measures to push the sector back to a "private" classification do not substantially weaken or undermine the strength of economic regulation (governance and financial viability) which underpins the confidence of funders and investors in the sector.

Compulsory Purchase – advance payments

14. We note that the Bill proposes an insertion in the Land Compensation Act at section 52ZC at subsection 8. We note that the mortgagee will be required to repay an advance where the acquiring authority does not take possession. In practice, this may present some challenges in placing the mortgagee and the mortgagor back in the position they were previously, especially if the monies have been applied to remedy any arrears which exist. More detail on the mechanism of how the repayment will happen is needed.

In conclusion

15. The Housing and Planning Bill has a very wide reach and scope. We welcome the importance government attaches to housing, in bringing this comprehensive Bill forward. However, there are key areas of the proposed legislation, particularly Starter Homes, RTB and deregulation, where the detail will need to be absolutely right, in order to deliver the desired outcomes with no unintended consequences for lenders and the housing market more widely. The CML stands ready to engage with government on this important part of the new legislative programme.

November 2015

Prepared 17th November 2015