My Lords, mention of the community infrastructure levy in this amendment gives me an opportunity—of which I have given my noble friends on the Front Bench notice—to raise an issue that was discussed with my noble friend Lady Hanham when she met the representatives of a very interesting small company called Pocket Living Ltd. This company aims to provide housing that is within the reach of people who can currently only afford to rent, and yet are above the level to qualify for social housing. Pocket Living Ltd has recently published a very splendid brochure, Pocket: Powered by the Mayor of London.
This concerns the mayor’s housing covenant fund, but the company is very much a thriving one that fills a hugely important gap in housing provision, not just in London but potentially elsewhere as well.
The question is: what is the definition of affordable housing that would qualify for relief from a community infrastructure levy? When we debated Clause 6 we had a new definition of the affordable housing requirement, and I am told this is the first time that the words “affordable housing” have appeared in any statutory definition. The definition as it stands serves the limited purposes of that clause, but it adds to a plethora of overlapping definitions in this area that have grown up over the years for different purposes. Not only are these confusing, they can sometimes be downright contradictory. This is important because, as we have discussed, the need for genuinely affordable housing has never been greater.
I support the Bill’s objective of ensuring that the new housing developments we need are not held back by unreasonable and unviable demands for affordable housing. However, we must do everything we can to ensure that those who want to deliver genuinely affordable housing—of which I gave a brief outline at the beginning of my speech—have every incentive to do so, and are not held back by the unforeseen consequences of statutory definitions that may have been fit for purpose at the time, but in retrospect turned out to be too restrictive. I am afraid this is what has happened in the case of the regulations implementing the CIL. The regulations quite rightly recognise that we should not increase the burden on those with low or modest incomes, who are already struggling to find a home they can afford, by adding what would be a sizeable additional tax. However, the definitions of relief are so tightly drawn that we now find they do not cover some of the new and inventive models of affordable housing that are emerging.
I have mentioned that I was recently approached by a young company that found a very clever way to build smart new flats in central parts of London that young singles and couples can buy outright, even if they are on a modest income. The company wanted to build a small block of flats in Wandsworth for sale at around £200,000 each. The council wanted them, the Mayor of London wanted them, and they had a waiting list of 13,000 would-be buyers who desperately wanted them. However, as noble Lords may know, Wandsworth was one of the first London boroughs to implement the new levy, and when these people did their sums, they worked out that this would add some £10,000 to the cost of each flat. For a young couple on perhaps £30,000 or £40,000 a year, who have already been saving for perhaps seven or eight years for a deposit and have to pay London rents, £10,000 is an awful lot of money. The company reluctantly had to conclude that the scheme was unviable, and the plans were dropped.
These were genuinely affordable homes. They were available only to people who could prove that their salary was below the mayor’s limit for affordable housing. They were for sale at 20% below the open-market value, with a maximum price of £225,000. They could only ever be sold to other buyers who qualified for
affordable homes. They would remain affordable homes, however many hands they went through. In fact, they satisfied every condition that my noble friend’s department sets out in the National Planning Policy Framework to qualify for affordable housing. Council planners say that they are affordable houses. The company had built five blocks of them already before the CIL came into effect. The Mayor of London agrees that they are affordable houses. DCLG says that they qualify for the affordable housing enhancement for the new homes bonus—so one part of the department seems to recognise this while the other does not. However, when it comes to the community infrastructure levy, they are treated in exactly the same way as if they were homes for millionaires. That really cannot be right. The only reason for it is that, when the regulations were drawn up in 2008, that type of home did not exist, so it was not included within the narrow definition for affordable housing.
As I have said, I am extremely grateful to my noble friend and my honourable friend Nick Boles who met with me and the representatives of this company. They listened very sympathetically as we put the problem to them. The company came away from that meeting encouraged by Ministers’ recognition of the problem. I know that Ministers have conceded that the CIL regulations are not perfect. One piece of sticking plaster was already applied just a couple of months ago, but I understand that a consultation paper will shortly be issued with some more proposals for change. Can my noble friend give the Committee some assurance that a priority will be to ensure that relief from CIL will be extended to cover all types of genuinely affordable housing, including the kind of housing scheme that was described to my noble friend and her honourable friend, and that the definition will be broad enough that we do not have to come back to it again within four or five years?
I was very struck by the story that this company told, and I think that Ministers were, too. I hope that we may get a sympathetic response to this plea.