My Lords, I want to speak to government Amendment 45B. I was wondering if I should wait until the Minister had spoken to it but I think it is probably better that I speak now and that she hears what I have to say. If the Committee is happy for me to do that, I will.
The amendment proposes quite an extraordinarily far-reaching Henry VIII power. It simply says:
“Regulations under this section may amend this Chapter”.
That is as far-reaching as is possible. It suggests that the Government are not quite sure—perhaps it is stronger than that—whether they have got it right in this chapter on starter homes, and therefore that they want a provision to be able to change it in any way and at any time, subject to parliamentary approval. Of course, we keep being told that the House of Lords is not allowed to oppose these things, anyway.
In what ways can this chapter be amended, either as we go through this procedure in Committee now or in the future by regulations, to deal with the fundamental problem, which I keep banging on about, that housing markets are different in different places? There are parts of the country—not just in north-east Lancashire but in lots of other areas too—where the housing market is not buoyant but flat and fragile. In these places, the introduction of starter homes into the system could have serious unintended consequences which harm the market rather than boost it.
I want to give noble Lords the prices of three or four houses for sale at the moment. In so doing, I refer to the asking prices in the property supplement of the wonderful newspapers, the Nelson Leader and the Colne Times, published on Friday—so they are up to date. I have to say that in our area houses often go for less than the asking price; the idea of forcing prices up is not known to us.
I was taken by one of the featured properties at the beginning of this supplement because it is in the ward I represent, which is normally not featured. It is one of their top properties and a two-fronted terrace house. It is described as:
“Immaculately presented and substantial in size … dwelling has two reception rooms … three bedrooms”,
et cetera. It is obviously highly modernised. It continues:
“The garden has an area of hardstanding … and views toward Pendle Hill”.
What more does anybody want? An offer—and this is incredibly high for a terraced house in this part of Colne—of £110,000 is being sought by the owners.
12.15 pm
The auctioned houses are presumably being auctioned because they have been repossessed. From the look of them, they may well be repossessed buy-to-let landlords’ properties. Three of them are being sold: at £35,000, £40,000 and £50,000. They are all in Colne—and prices in Nelson and Brierfield are lower than in Colne. Good terraced houses in good condition, aimed perhaps at owner-occupiers, are being sold at £70,000 and £80,000. The one I have just mentioned is at the absolute top end: £110,000. I will refer to just one more. This is a new house. When I say that it is a new house, it was built about 10 years ago, so it is not brand new. I can confirm that it is a very nice property. The description is estate agent blurb. Nevertheless, it states:
“There are three good sized bedrooms and a family bathroom. Gas central heating … This beautiful family home offers both stylish and spacious living accommodation”.
And it is a nice house—a snip at £139,950.
The cost of putting a similar house on the market now would be about £150,000. There is a greenfield site which now has planning permission situated quite close to this house. That is the figure a house would be put on the market for. That is one reason why housing developers are not all queueing up to build lots of new houses, even on greenfield sites.
What effect will starter homes have? I asked the Minister three questions yesterday but she did not answer any of them. But I will no doubt get replies in due course. One of my questions was whether it would be possible for some purchasers of starter homes also to get the help-to-buy discount, which would then give them a 40% discount. This is just a factual question which I would like sorted out. But even if the figure is only 20%, a new house which is on the market for £150,000 would be sold for £120,000 as a starter home. In other words, it would seriously compete with, and undermine, the existing housing market. Therefore, good-quality terraced houses at the top of the range would be £110,000 or a bit more. Houses which have been built relatively recently would be at the same price, or not much different.
Brownfield development is simply not viable in this area—I will come to that on later amendments—and greenfield development is marginal and can take place only on the very best sites. The number of new completions each year in a borough of 90,000 people is in double figures. In fact, in one recent year it was in single figures. A couple of years ago the figure was under 100 and almost all the houses were properties which the local authority had built through its joint venture development company. The market is picking up a little bit but not very much. It will not surprise anybody to hear that the level of CIL which has been set locally is zero because, as soon as you introduce a CIL, everything becomes unviable, with all the other problems associated with that.
Making new housing much cheaper in a market such as this will probably result in more empty houses in the existing housing stock, particularly terraced housing, as people—not unreasonably—move up. A good-quality, fully modernised terraced house in a good location will cost £100,000, whereas a brand-new
starter home—certainly if it has two bedrooms—will cost not very much more than £100,000. Therefore, serious unintended consequences will come from the best of good intentions.
I tag what I have been saying on this amendment on to the Henry VIII amendment that the Government will be moving. I think that the Government need to think very hard indeed about how this legislation should be amended to take account of different housing markets in different places, whether they are rural areas, areas with lots of holiday accommodation, or—in my case and the areas that I am talking about—areas where house prices are really very low compared with the norm in a great deal of England.