Mind the gaps in the Housing Bill

Originally published on March 1 on Inside Edge 2, my blog for Inside Housing

For a piece of legislation that’s already faced hours of scrutiny from MPs and peers, there are still gaping holes at the heart of a Housing and Planning Bill that started life on the back of a fag packet and hasn’t moved much beyond it in several important respects.

Opposition demands for more detail about legislation are nothing new of course, but I’ve argued before that the lack of clarity here is deliberate in a bill that is designed to allow the government to do what it wants in future. To take one example, after stretching the definition of ‘affordable’ to breaking point to include £450,000 Starter Homes, the bill adds that the secretary of state ‘may by regulations amend this section so as to modify the definition of affordable housing’.

Many of the gaps were highlighted in the Commons late last year. The last two months have brought little further detail but now it’s crunch time: as peers debate a series of amendments, ministers are bound to come under increased pressures to say exactly what they mean.

The list of missing links is so long that I will inevitably miss some out. I’m also concentrating here on the measures that affect social and affordable housing. There is more missing detail that affects the parts of the bill covering planning (there has at least been a consultation on some of it) and private renting (see this ministerial letter).

The second and third days of the House of Lords committee stage are this week. See this parliamentary briefing by the Local Government Association for some of the key amendments that will be debated on Tuesday (Starter Homes) and Thursday (social housing). Here are six key areas where peers will be looking for more detail and for changes:

Starter Homes

Calls for more detail came from all sides of the House of Lords at second reading, including the Conservative benches, and there were more criticisms from the cross-party Lords Built Environment committee two weeks ago. Plans to hand the 20% discount to buyers after five years, rather than retaining it in perpetuity, are sure to come under more pressure.

Key missing detail also includes how many Starter Homes will be required on new housing sites, the types of development that will be exempt from having to provide Starter Homes and how much discretion local planning authorities will have in cases where they see other types of affordable housing as the priority. Peer after peer warned that landowners will not come forward with exceptions sites if they include homes that will not be affordable in perpetuity. Lord Cameron of Dillington, a crossbench peer who carried out an independent review for the government to ‘rural proof’ policy said simply: ‘This must not happen.’

Extension of the Right to Buy

Thanks to the voluntary deal, the bill does not cover this directly. However, the Communities and Local Government (CLG) Committee pressed for much more clarity in a report published last month. The issues raised included: what happens to associations that voted against; whether there should be explicit exemptions for rural areas and homes built with charitable funds; measures to stop homes sold ending up owned by private landlords; how it will be phased in and what the eligibility criteria will be for tenants; and how the regulator will monitor compliance by associations.

‘High-value’ council homes

Incredibly, the only detailed figures so far seen on what counts as ‘high value’ came in a Conservative press briefing during the election campaign and these have since been deleted from the party website. For all its powers to call witnesses and compel departments to produce evidence, the CLG Committee had to rely on a report in Inside Housing to find the numbers.

Other gaps include how much forced sales will raise and how the levy on local authorities will work. As I blogged in April, the sums simply do not stack up and others (including the Institute for Fiscal Studies) have come to the same conclusion. And if forced sales don’t add up, neither does the Right to Buy.

None of which is much compensation for the – still, technically, self-financing – local authorities faced with implementing the new system in 2016/17 after they’ve already set their budgets.

In written answer on Monday, Brandon Lewis said:

‘The high-value threshold will be informed by the data that local authorities have supplied regarding their council housing. This data is currently being validated. Further details will be available shortly.’

At second reading in the Lords, communities minister Baroness Williams said the government was ‘considering a number of types of housing that could be excluded when that is taken into account, and cases where housing will not be considered to have become vacant’.

Replacement homes

Zac Goldsmith’s amendment calls for two-for-one replacements for forced council sales in London, though it’s far from clear how that will work. A group of other Tory MPs in ‘high-value’ areas outside the capital are calling for similar provisions. Ministers say they’re listening but the more areas that get the Goldsmith treatment the less receipts will be available for replacements in ‘low-value’ areas and the more the whole rickety structure starts to fall apart.

Maybe, as the CLG Committee suggested, the government should fund Right to Buy discounts itself? Perhaps, as Lord Kerslake proposes following the committee’s report, the discount should be replaced by an equity loan?

Pay to Stay

We know that households with an income above £30,000 a year outside London and £40,000 in London will be charged market or near market rents. We know that there will be a taper to avoid cliff-edge effects so that an extra £1 of income does not mean thousands of pounds more in rent. We know (I think) that household income will be based on the income of the two highest earners in the household.

We don’t know how the taper will operate, how quickly higher rents will kick in or how the government will avoid creating huge disincentives to work. We don’t know what will count as income (potentially everything, not just earnings). We don’t know how the thresholds will be uprated (will it be in line with prices? Earnings? Or, as calculations in the impact assessment implied, will they not be uprated at all?). We don’t know how much of the increased rent local authorities will have to pay to the Treasury as we don’t know what costs will be allowable.

In a written answer last week, Baroness Williams said: ‘The government consulted in October 2015 on a proposal for a taper which, if introduced. would ensure that rent rises are affordable for those households above the thresholds and protect the incentive to find and keep work.’

Ending security of tenure for new council tenants

Combine this with Pay to Stay and we now know what the Conservatives meant in their 2010 manifesto by “we will respect the tenures and rents of social housing tenants”. By sneaking this into the bill on the final day of the committee stage in the Commons, ministers may have hoped to minimise scrutiny. As Kate Webb argues on Shelter’s blog last week, let’s hope it gets some in the Lords.

One point of detail is what happens to existing tenants who move. In a written answer last week, Brandon Lewis confirmed that tenants required to move by their landlord, for example to allow demolition work to take place, will have a tenancy with no less security. The position of existing tenants who seek a transfer will (you guessed it) be set out soon:

‘Where existing lifetime tenants seek to transfer, local authorities will retain a discretion to offer the tenant a further lifetime tenancy in their new home. We will set out the circumstances in which local authorities may exercise this discretion in regulations. We expect these will include where tenants downsize into a smaller home or move for work.’