Housing and Regeneration Bill

The amendments have important implications. I shall break the golden rule that seems to have been adopted today and speak at a little greater length than has been the case to explain the background and implications of the clauses and the amendments. The amendments are technical and deal with a complex issue. I stress that we share the objectives that they underpin. In response to the question whether Clause 34 should stand part of the Bill, I say that the effect of the clause is to ensure that low-cost rental accommodation provided as a condition of Homes and Communities Agency funding, infrastructure provision, land disposal or direct provision is owned by a relevant provider—which means a registered provider of social housing, an English local housing authority or a county council in England—when it is made available for rent. The clause ensures also that, where the landlord is not a local authority, the tenants and the stock are protected by the stock being subject to regulation by the regulator of social housing. That is a bald statement of what the clause does. Perhaps I may define low-cost rental accommodation, because it is important to provide a context to the rest of what I am going to say. The noble Lord, Lord Greaves, asked what the definition was. It is set out in Part 2 of the Bill, in Clause 70, and includes not just rent being below the market rate but refers also to the other defining characteristics of social housing; that is, that it, "““is made available in accordance with rules designed to ensure that it is made available to people whose social needs are not adequately served by the commercial housing market””." He is right that the value of homes and the market rate vary a lot according to which part of the country one is in, but that definition essentially serves the purposes of all forms of low-cost rental housing, irrespective of the relative differences in the market. The noble Lord raised general issues concerning what is required in decent rented accommodation. He argued that decent rented homes are needed and I take his point entirely, which is why we are increasing the number of affordable homes that will be available over the next few years. We have made a commitment to do that, and a large proportion of them will be social homes for rent. However, I should like to read what the noble Lord said in that general debate and think about some of the issues that he raised, because they certainly go wider than the amendment per se. Amendment No. 78, together with amendments to Clauses 71 and 191 which address regulations, deals with complex issues. Essentially, our joint objective is that everyone who provides low-cost homes is encouraged to do so—not dissuaded—within a regulatory framework that is absolutely appropriate. Together, the amendments seek to achieve what has been described as a level playing field for private providers and RSLs in the provision of low-cost home ownership accommodation. They change the definition of social housing—the noble Lord spent some time talking about the significance of the change in definition—so that a different subset of low-cost home ownership accommodation becomes subject to regulation. They do that by requiring the HCA, first, to ensure that, once the Bill is in force, any new low-cost home ownership accommodation intended for elderly or vulnerable purchasers is owned by a registered provider and, secondly, to ensure that other new low-cost home ownership accommodation, provided after commencement of the Bill, is not subject to regulation. I listened closely to what the noble Lord, Lord Best, said, and it is worth setting out the current position before I respond because, as I said, this is a complex matter. At present, all homes owned by housing associations are subject to regulation by the Housing Corporation. As we know, increasingly many housing associations provide both rented accommodation and LCHO but, in practice, the great majority is rented. Rightly, the corporation has taken a much closer interest in rented homes than in low-cost home ownership schemes. For the latter, it simply oversees the sales process, which sets the terms of the relationship between the purchaser and provider, and ensures that purchasers have access to the Housing Ombudsman scheme. Therefore, my first point is that there has always been a practical recognition that the two sectors need a different weight of regulation, reflecting different circumstances. In future, the regulator will have explicit powers to set standards, and these will be limited to social housing, as defined in Clause 69. Social housing may be either for low-cost rent—““social rent””—or for low-cost home ownership. This means that low-cost home ownership accommodation owned by registered providers will also be subject to the regulator’s standards. My second point is that the regulator also has powers to set different standards for different types of accommodation and therefore, following the traditional practice, we would expect the regulator to set much lighter standards for LCHO than for low-cost rental. If necessary, this expectation could be reinforced by the Secretary of State through her objective-setting power. Those objectives could, for example, emphasise the importance of the ability of registered providers to provide low-cost home ownership products at competitive prices to meet growing demand. Therefore, although I take the point made by the noble Lord, Lord Best, I think he will agree that there is already some flexibility in the system. I was asked why we did not take the opportunity to take LCHO away from the full regulation framework. We considered that as a possibility but the vast majority of homes are existing stock. Their regulation can be achieved only through the regulator and we could not retrospectively impose contractual terms. That was obviously a problem, as is recognised in the amendments tabled by noble Lords. But, as several noble Lords have said, low-cost home ownership has already been provided in recent years by the profit-making housebuilding sector—many well known housebuilders, such as Persimmon, Taylor and Wimpey. In the current funding round, Bellway Homes has accepted grants to both build and retain ownership of low-cost home ownership properties on the condition that the company accepts contractual terms that replicate the key features of LCHO regulation. The Committee knows that we are not requiring the profit-making sector to register with the regulator unless the companies concerned provide rental accommodation. When funding new low-cost rental accommodation, the HCA is logically required to ensure that the landlord is a rental provider—either a registered provider of social housing or a local authority. The same, by definition, is not true for low-cost home ownership, which can be provided by an unregistered provider. The reason is logical. Given that there is successful established practice in the field, given that in the area of ownership more people are able to exercise choice and given that we want to expand to help meet national needs—but also to provide mixed communities, so that some people may rent and some people may own and you will not be able to tell the difference in tenure—we believe that there are sensible grounds for continuing with the light-touch regulation that is now required for low-cost home ownership and which could continue to be replicated through contractual arrangements with the HCA. We think that would provide sufficient protection for purchasers in the vast majority of cases. It does not mean lower standards or fewer controls; it simply means that this is an alternative—and, we think, appropriate—route for the delivery of similar standards. I recognise, however, that there has been a wide debate about this in the sector, and there are concerns in the RSL sector about the implications. We do not want in any sense to disadvantage registered providers. We recognise that by recycling the profits from their low-cost home ownership into social housing, the housing associations make an invaluable contribution to the expansion of social housing. We do not want to jeopardise that and I am satisfied that the Bill does not do so, for the reasons I have set out. I have, however, asked officials to see what might be done to address the concerns that have been expressed by the stakeholders and have been raised by the amendments. I will look hard at this issue and come back to the House on Report, and hopefully we will have something to offer in that context.