Mr (Christchurch)
(Con)
I beg to move,
That leave be given to bring in a Bill to make provision for
affordable home ownership; to require the inclusion of rent
to buy homes in the definition of affordable housing; to make
provision for a minimum proportion of new affordable housing
to be available on affordable rent to buy terms; to provide
relief from stamp duty when an affordable rent to buy home is
purchased; and for connected purposes.
It is beyond dispute that home ownership is by far and away
the most popular and desirable form of housing tenure. This
is confirmed by the British social attitudes survey, which
shows that 86% of people aspire to own a home. Home ownership
lies at the heart of a true property-owning democracy, in
which young and old alike are enabled to take responsibility
for their own lives. Home ownership facilitates flexibility
in the size and location of accommodation, taking into
account changes in a place of employment or additions to the
family. Home ownership also encourages long-term financial
independence from the state and, therefore, from taxpayer
subsidies.
With home ownership so popular and so manifestly in the
public interest, one is bound to ask why it has been allowed
to decline—it is now at a 30-year low of only 63%. The answer
is lack of affordability. In most parts of the country, the
price of houses has been increasing far faster than earnings.
The greatest impact has been on younger buyers. In the 1980s,
six out of 10 of those aged under 40 were homeowners; now,
fewer than four out of 10 are.
To her credit, the Prime Minister clearly wishes to correct
this public policy failure, which is having such an adverse
impact on the next generation of aspiring homeowners. The
proposals in the Affordable Home Ownership Bill should
therefore be particularly appealing to the Government—not
least because they do not add to the nation’s debt, but rely
instead on ensuring that some of the land set aside under
section 106 planning agreements for affordable housing is
earmarked for homes built for affordable rent to buy. My Bill
requires the Government to put beyond legal doubt that local
authorities must treat affordable rent to buy on a par with
affordable rent, and it requires local authorities to
specifically include affordable rent to buy schemes in their
development plans.
For those not familiar with affordable rent to buy, this is
how it works. It provides an accessible route to home
ownership for those who cannot immediately afford a deposit.
In that respect, it has an advantage over other low-cost home
ownership schemes, which still require substantial up-front
funding. Under affordable rent to buy, families take out a
fixed five-year renewable assured shorthold tenancy and agree
to pay an affordable rent—80% of the market rate,
normally—for five, 10, 15 or 20 years. By paying an
affordable rent, families are able to start saving towards a
deposit.
In addition, under the scheme, which is being pioneered by a
small number of imaginative local authorities, the tenants
receive 10% of the property’s market value as a gifted
deposit to add to their savings and reduce their mortgage
costs at the point of purchase. On becoming 100% homeowners
after five, 10, 15 or 20 years, tenants can access a wide
range of mortgage products utilising the credit worthiness
they will have developed during their time as tenants. The
essential element of security of tenure also enables families
to develop roots in their local community.
The model to which I refer is wholly funded by institutional
investors. Substantial funds have already been forthcoming,
but a further £40 billion will be available under this system
for new affordable homes, at no cost to the Exchequer. That
could provide homes at £200,000 each, and that could provide
200,000 such homes—a significant way of addressing the
problem we have with housing.
However, that is all subject to one caveat, which it is the
purpose of the Bill to address. Currently, affordable rent to
buy does not come clearly within the definition of affordable
housing, and the Bill requires that it should so do. There
needs to be an explicit reference to affordable rent to buy
in the national planning policy framework definition of
affordable housing. Such clarity would enable many more local
authorities to take forward these innovative schemes.
There should be no problem with clarifying the definition,
because, in a typical affordable rent to buy scheme, one in
three purchasers is moving directly from the social rented
sector, and almost all the others are from the housing
waiting list.
The House of Commons Library briefing paper published in late
August states:
“There is no all-encompassing statutory definition of
affordable housing in England. Indeed, there is a good deal
of ambiguity in the way the term ‘affordable’ is used in
relation to housing.”
It is to help fill that vacuum that I brought forward this
Bill, which will provide a definition of affordable rent to
buy. Subject to consultation, this would be the definition:
“Affordable rent-to-buy housing is housing that is made
available at a rent level which is at least 20% below market
rent, including service charges where applicable, and later
made available to the tenant living at the property to buy at
a cost which may be less than market value. Provision should
be made for receipts or a proportion thereof to be recycled
for alternative affordable housing provision if the subsidy
is withdrawn. Eligibility is determined with regard to local
incomes and local house prices.”
I hope that the Minister for Housing and Planning, my hon.
Friend the Member for Reading West (Alok Sharma), who I am
delighted to see in his place on the Treasury Bench, will
embrace that, or a very similar, definition. Unfortunately,
despite parliamentary questions and letters from a number of
colleagues, many of whom are co-sponsors of the Bill, we are
still waiting for a result. It may be that we are waiting for
the announcement to be made not by my hon. Friend but by the
Chancellor of the Exchequer on 22 November. However, whether
it be now or on 22 November, something must be done about
this, because we need to open up the £40 billion of private
institutional investment in our housing that we so
desperately need.
If one looks, as some of us may, at the Government website on
affordable home ownership schemes, it is a depressing sight.
Indeed, there is hardly anything on it, and certainly no
reference to anything as imaginative as the schemes to which
I have referred. I will save anybody interested in looking at
the website the need to do so by quoting from it. It has an
overview saying how people can get
“help with savings, through a Help to Buy ISA”
or
“a home through shared ownership”.
It goes on to say:
“The Help to Buy mortgage guarantee scheme closed at the end
of 2016.”
It then talks about Help to Buy equity loans and so on.
However, it does not address the real problem: that so many
people in this country want to embark on a road to home
ownership but cannot afford even to save for a deposit
because they are paying full market rent rather than an
affordable rent. I therefore hope that the Government will
take seriously the issues raised in this Bill.
One of the most significant fiscal changes affecting housing
in the last 30 years has been the policy of the Treasury to
treat stamp duty as a cash cow. Stamp duty is now a
significant burden for those moving into home ownership. It
is a transaction tax, which, like all such taxes, has had the
consequence of reducing the number of transactions. My Bill
would enable the Government to give special relief from the
burden of stamp duty, in line with avowed Government policy
to promote home ownership among first-time buyers. I hope
that we will hear more about that in the Budget.
This Bill should enjoy the support of everybody in this House
because it works with the grain of public opinion and would
enable more people to reach their aspiration of becoming home
owners in the United Kingdom.
Question put and agreed to.
Ordered,
That Mr , Mr , , , Mr , Mr , , , , and Sir present the Bill.
Mr accordingly
presented the Bill.
Bill read the First time; to be read a Second time on Friday
3 November and to be printed (Bill 115).
