Delighted to be here to address you today
This conference comes at an opportune moment.
Has the importance of housing ever been more in the news than it is at the moment? Whether it’s the on BBC, in the Times or the Guardian.
And I want to praise the CIH’s foreknowledge about the timing of the conference..!
Of course, there is a simple way we could get to 250,000 homes and more each year.
Government could take over the construction industry. It could appropriate land and then build lovely grey slabs of tower blocks in towns and cities and on our green belt.
That would certainly be one way of doing it.
A radical approach perhaps, but I guess - and hope - not a solution many in this room would advocate.
But there is a consensus on all sides in Parliament , and within the sector, that rates of house building have for many years been too low and that housing is rising up the agenda as one of the most critical issues our country faces.
I am a member of the Communities and Local Government Select Committee
which has done substantial work on the issue of housing in the last few years
We have held recent inquiries into localism,
the new planning system under the National Planning Policy Framework,
Financing of New Housing Supply,
& most recently into the private rented sector, which is due to report soon.
The report on our Financing New Housing Supply inquiry last year, a cross party report remember, came up with a key phrase in its summary
We said, and I quote, “there is no one ‘silver bullet’ with which the housing deficit can be removed”. It was, if you like, the “no silver bullet” report.
And that has got to be the starting point for this session today.
Whilst policies such as the provisions in the National Planning Policy Framework that make public sector land available, and improving mortgage availability are sound schemes, we just won’t get anywhere near building enough homes if any of these are considered in isolation.
No one policy will increase the rate at which new homes can be delivered.
There is no silver bullet.
Instead, what is needed is a broad, extensive range of policies that together
will achieve significant improvements.
And I believe that many of the measures this Gov has already brought forward
are a step in the right direction.
And we cannot forget the historical problem we face. In our inquiry into the Financing of New Housing Supply we heard some stark statistics in evidence sessions.
We heard that The UK will need, on average, 232,000 new homes every year until 2033 to cope with the rate of increase in households’ formation
Given that in 2009/10, housing completions fell to 103,000, the lowest peace time level since 1923/24, it is plainly obvious our country has much to do
if we are to house all our citizens effectively.
Initial comments re 250,000 homes
Of course should also at the outset consider the drivers toward the country’s increasing housing needs.
We need new homes as a consequence of both new household formation
& an ageing population.
New households arise through Immigration and family breakdowns.
It’s a simple and obvious point but when a family breaks up, at least for period of time, you need at least two houses instead of one.
Gov action on both of these issues can reduce the pressure on housing.
Link between housing and economic growth
Our drive to get to 250,000 new homes a year is derived from the need to accommodate our citizens, but if we do so it will also be good for our economy.
The previous Housing Minister remarked that every 100,000 homes build adds 1% to GDP.
And in terms of affordable housing the National Housing Federation state that
every affordable home built generates an additional £108,000 in the economy
and creates 2.3 jobs.
So Housing is of vital importance to our economy.
So how are we going to do it? How are we going to get to 230,250000 homes a year?
Will base my remarks around the following points:
i) The importance of planning to housing
ii) Government’s policies affecting the three housing sectors
i) The importance of planning to housing
In March 2012 the Government published its final version of the National Planning Policy Framework.
It is a significant document, not in its size but in status. It radically simplifies the planning system and makes planning a plan led system.
It brings in a presumption in favour of development. Developers are now in the position that, if they have a suitable application, they will be able to build
subject to an adopted core strategy.
Partly as a result of one of the 30 recommendations made by the Select Committee and accepted by Government, the NPPF has an explicit commitment to developing on Brownfield land first.
And that is right.
But the sheer extent of new housing that is needed means an alternative perspective on the greenbelt is necessary.
The planning Minister has recently said,
“Given a two million increase in our population over the last ten years, and historic under-provision of housing, we have to be realistic that not all the housing that we as a country need can be on brown field land.
In some places this may mean building on low quality, environmentally-uninteresting fields”.
I recognise the role for the greenbelt. It forms a valuable buffer between built up areas. But it is a matter of extent. If greenbelt has been identified that is unattractive, is it really appropriate to retain it as green belt indefinitely?
Where Greenbelt is less significant and of poor quality it may be that our urgent need for homes becomes an even greater priority.
And the opportunity to reduce the footprint of our town centres can provide land and existing buildings for new housing. If internet shopping takes up 13% of retail sales, which it now does, then on the face of it any communities shopping centre would need to be 13% smaller.
An alternative would be for that community to increase its population by 13%.
And of course that means providing more homes.
In addition measures such as permitting the conversion of empty shops and offices into homes can contribute to new housing supply
However I didn’t support the Government on its introduction of such a change of use as a right of permitted development. There should be a presumption in favour but this is a role for local planning authorities to consider the impact of such change.
Which is the same view I took on the change to permitted development rights on home extensions. It is desirable, but should be subject to the usual deliberations of the planning authority.
A need for progressive councils
There is a need for planning authorities to respond positively to development proposals. The NPPF relies on progressive local councils.
If we are to get anywhere near 250,000 homes we need progressive local authorities. Many more who are going to support development.
I’m not being biased, but frankly we need more local authorities like mine in Rugby.
Rugby Borough Council adopted its local plan early. It has a clear strategy of where it wants to be in five years time and how it is going to get there.
It has made land available and it has already agreed to sizeable developments.
On the Select Committee, at the beginning of our inquiries into the Localism
and the NPPF, I assumed my council was similar to most others in taking a positive view of new development
Sadly that is not the case.
Planning has an impact on all three tenures but there are specific issues for each, and I now want to take each one in turn.
ii) Government’s policies affecting the three housing sectors
So firstly, owner occupation.
Houses for purchase will only be built if there is a demand for them
and I am glad to say the Government is focussing on both the supply and demand side of the sector.
On the supply side, I have already referred to bringing land forward through adopted local plans.
The NPPF established that house building should be viewed as sustainable development and put a duty on councils to make land available.
A far cry from the days of top down regional spatial strategies that simply weren’t working.
In the year since the NPPF came into force the amount of land coming forward in planning permissions is 20% higher than before.
But in some instances a further push is necessary,
The Communities and Local Government department has identified a small number of big sites where it will look to speed up the delivery.
As part of the £474 million Local Infrastructure Fund a £225 million pot has been set aside specifically to ‘unlock stalled sites’ and bring forward development that might otherwise be delayed
A potential such site is in my constituency with proposals for 6,200 new homes and I know the developers have been greatly encouraged by the renewed interest the Gov is giving to the site.
So the Government is committed to improving the supply for potential housing. But we mustn’t forget developers will only build if they know they’re going to sell the houses.
That’s why Government initiatives like Help to Buy and Funding for Lending are so important.
Help to Buy was announced by the Chancellor earlier this year. It won’t surprise you to hear that as a Conservative I place a great deal of value on home ownership. The Help to Buy scheme extends this aspiration to people who would not have been able to do so before now.
But don’t just take my word for it: an article in the Financial Times two weeks ago pointed to new figures from the Home Builders Federation showing that Help to Buy has already beaten expectations with 4,000 new homes sold since its introduction in March.
In the same article, and this may indeed be related, Glenigan construction has reported housing starts increased by 32% from 1,270 to 1,680 between April and May this year compared to last year.
And the Funding for Lending scheme is helping to make mortgages more accessible. The Bank of England’s Credit Conditions Survey published on 3 January 2013 found that lenders were intending to increase their mortgage lending “significantly” in the first few months of 2013 thanks to the funds they can now borrow under the scheme.
Indeed, a 22nd January 2013 BBC news article on the scheme pointed out that house sales had risen to their highest level in five years – suggesting loans are getting easier to come by.
Recent Labour proposals
And on the issue of demand I want to briefly comment on the recent Opposition proposal on development. Their proposal is to force developers to develop or they will lose their land.
I believe this misses the point.
Because developers make money when they develop.
To suggest they are waiting for the land to increase in value Is not what’s going to get us building more homes.
The idea of giving local councils ‘use it or lose it’ powers, as they advocate,
Isn’t getting to the crux of the point. Because it is only if development is commercially viable that developers will develop.
And we need to get the conditions right. The reasons that developers have not been developing is for reasons such as access to finance and lack of confidence, not because developers are sitting back and seeing their land increase in value.
Private Rented Sector
Many of the Government’s policies have been geared toward owner occupation. And as a predominantly Conservative administration, this may come as little surprise due to the importance we place on home ownership.
But given that owner occupation makes up 55% of the housing sector, nearly half of our citizens reside in either the Private Rented Sector or the Social housing sector. We need to pay particular attention to this.
Our Select Committee’s report into the Financing of New Housing Supply made recommendations on the Private Rented Sector.
We said the Government should focus on helping small private landlords expand their portfolios and invest in new build housing.
We have just completed a long inquiry into the Private Rented Sector and we continue to prepare our report. – which will focus on standard of accommodation and a more professional relationship between landlord and tenant.
But I’m afraid you’ll have to wait for publication to see the full recommendations in the report.
It should be noted that the PRS cannot be seen as a poor cousin to home ownership anymore.
For many people, renting privately has become a preferred choice as they want the flexibility that the sector provides. Next to owner occupation and social renting, the PRS has become an accepted and effective third form of occupying a home.
Private renting is becoming the new normal. Over 8 million people in England now rent from a private landlord, an increase of 69% over the last ten years.
And renting is no longer the preserve of students and young professionals. Professor Michael Ball’s 2010 report for the Joseph Rowntree Foundation showed 52% of renters were under 25, with 48% over 25 – and we can expect this proportion to increase
Shelter points out there are now more than 1 million families with children renting privately. And many of these families are renting by choice.
The need to attract institutional investment into the rented sector is absolutely critical to ensuring there is the much needed supply. And I do believe there may be a way to attract such investment.
We need to understand why institutions have not historically been investing in the rental sector: One reason is the cost and time spent in management of the stock.
Particularly, by comparison, institutions investing in commercial buildings
have much lower management costs. For instance, they only need send out a rent demand once a quarter and repairing and maintenance obligations are often passed on to tenants
So investors have been put off ploughing the money in that will get houses being built.
But, one body who are very good at managing rental accommodation are those involved in the social rented sector.
We should be saying to these bodies, “you have the skills in managing residential, you have the experience. Here is an opportunity for you to create new business for yourselves based on these skills”. I think we’d see more institutional investment if this happens and, in turn, more houses being built.
Build to Let
And out of the Montague Report, the Government’s commitment to Build to Let is also highly welcome. A DCLG press release on the 20th December last year from the Housing Minister launched a new £200 million fund to boost the construction of new homes specifically for private rent.
This commitment is very welcome as we look to get to 250,000 homes a year.
Social Housing sector
On the 12 March this year, the Government announced it was investing
£19.5 billion of public and private money to build 170,000 new affordable homes. Whilst the details of this project have not been announced as yet, this is a significant move by the Government.
In our Financing of New Housing Supply report, the Committee said we were encouraged with the Governments’ work on Affordable Housing delivery.
This commitment of 170,000 new affordable homes is an increase from the 150,000 they originally estimated.
And in our inquiry we took evidence from the former Chief Executive of the Homes Communities Agency, Pat Ritchie, who assured us the HCA expect to deliver 35,000 completions a year.
These figures are welcome.
Because we can’t forget the situation we are in at the moment. At a time when the Chancellor has announced £11.5bn worth of savings, it is welcome that there remain such substantial grants in the sector.
They may not be as large as the sector would like, but in the present climate there is no department receiving as much from the Chancellor as it would like.
Like it or not, this is the new reality and one I sense is more broadly accepted.
As I’ve said, the main Government proposals on housing are predominantly focussed on delivering new homes for home ownership but I welcome that, even in these difficult times, the Government is committed to continue to investing millions of pounds in our social housing sector.
So I would remind delegates about my comments from the Select Committee report into financing the new housing supply. There is no one measure alone,
no silver bullet, that will get the UK building the amount of homes we need to build each and every year.
But I believe the measures outlined above show this Government is committed to, and already improving, the supply and demand for new homes.
The secure future of our economy and for younger generations depends on doing exactly that.