HOME OWNERSHIP

HC Deb 22 December 1971 vol 828 cc1525-50

12.50 p.m.

Mr. Martin McLaren (Bristol, North-West)

From machine tools, we pass to discuss the progress of home ownership. I hope that the House will feel that this is a suitable subject for the day of the Christmas Adjournment. Today we go home. At this time of the year, we think of those who are homeless or inadequately housed and of others who hope to own their homes whom we should like to help.

In my election address, I said: We will help more people to own their own homes. Young couples should be able to get mortgages on reasonable terms. It is partly in fulfilment of that pledge that I raise this subject today. I shall do so only briefly as I think that there are other hon. Members who wish to take part in the debate.

The Ministerial responsibility here lies in the Department of the Environment, which supervises the work of housing authorities and has an influence over building societies which are easily the largest source of house purchase finance. Naturally, in an Adjournment debate, I can discuss only matters of administration. If I refer incidentally to matters requiring legislation, I hope that that will be permitted under the Standing Order.

I recognise that home ownership is going well. I want it to go still better. A rough measure of the progress that we have achieved is that in the year 1914, when the First World War broke out, only 10 per cent. of the houses in the country were owner-occupied. After the Second World War, the figure had gone up to about 25 per cent. Today, the figure stands at about 50 per cent., or half. There are 9 million houses owner-ocupied. However, this percentage of 50 has been easily exceeded in Australia, New Zealand, Canada and the United States of America, and I should like to see us getting up to anything between 60 and 70 per cent. One point not to be neglected is that home ownership assists mobility of labour, as it is very difficult for tenants to move and find other tenancies in new areas where they want to work.

I come now to ways in which the Government might give further help. They have done much already, and I congratulate them. It is not necessary to repeat the various steps already taken, but I should like to explore further avenues of progress. It always comes down to the fact that houses must be available for sale, and mortgage finance must be available on terms which borrowers can meet. We are mainly concerned with the less well-off borrowers, since the better-off have bought their homes already if they have wanted to. It is pleasing to see that no fewer than 90,000 advances have already been made to people with incomes of less than £1,400 a year, and the recent reduction in mortgage interest rates naturally has helped.

I come, then, to some suggestions. First, I hope that the Department will continue to encourage local authorities to sell council houses to sitting tenants at generous discounts. I know that it has issued a general consent to sell at a discount of 20 per cent. off the market value. My own local authority proposes a discount of 30 per cent. That is a good offer which I hope will be sanctioned and widely taken up. It is disappointing that a number of councils now controlled by Labour—and there are some controlled by Conservatives—have abandoned schemes for selling, and I hope that they will be persuaded to change their minds. Most people will agree that it is desirable that council tenants should be given the opportunity to buy their homes if they wish. I think that we can expect that the introduction of fair rents will encourage more to do so.

Second, local authorities should be persuaded to release more land for housing development, and some houses should be reserved to enable lower income groups to become home owners.

Third, I make honourable mention o^ the scheme sponsored recently by the Alliance Building Society, by which there are low initial payments during the first five years of a mortgage covering only interest on the amount borrowed and with no element of repayment. That caters very well for the younger man who has prospects of promotion in his work and of a higher income as the years go by.

Mr. Ernest G. Perry (Battersea, South)

The hon. Gentleman has just made a very interesting point about the scheme introduced by the Alliance Building Society. However, I do not think that he pointed out that the scheme operates at a reduced rate of interest as well, which is probably the most important feature of it.

Mr. McLaren

As I understand it, during the first years one pays a reduced rate of interest because there is no element of repayment of the capital sum. One is paying interest only on the sum borrowed.

Fourth, it would help matters if banks could be encouraged to lend money for the purchase of furniture and fittings with which to equip a house. The owner has to think not only of the cost of his house but of what should go inside it.

Fifth, I should like to see older borrowers given more latitude and en- couragement, especially if there is some younger member of the family such as a grown-up son or daughter who may be willing to join in the mortgage. It is sad to hear people say that they ought to have bought their homes before but that they have left it too late.

Sixth, mortgages should be spread over longer periods.

Seventh, conveyancing charges should be reduced, bearing in mind that a lot of the work of conveyancing is of a repetitive and routine nature. Not long ago. I was concerned in buying a house. I am a member of the Bar, but I have never done any serious conveyancing. I thought that I would like to avoid solicitors' charges, so I did it on a "do-it-yourself" basis. I knew nothing about it, but I found it child's play. There was nothing to it. I understand that my noble Friend the Lord Chancellor is taking action in this direction.

Eighth, I should like to see the threshold of stamp duty on house purchase further raised in these days of increasing house prices.

Ninth, we might think about the system prevailing in Australia by which the savings of a house purchaser are matched by a grant of Government money to enable the deposit to be found.

Tenth, we should continue to give encouragement to local authorities to pay tenants' legal and removal expenses on moving out of a council house to become owner-occupiers, so liberating a council house for someone else who needs one.

All these are different ways in which the Government can encourage and assist. I know that today the cost of land is a problem and a hurdle. In itself, it is a symptom of the good demand for house purchase.

I end with this thought. The House has in its history often been concerned with noble moral causes, such as the abolition of the slave trade or the restriction on hours of work of women and children in mines and factories. In our day, I can think of no better or more rewarding cause than that we in Parliament and others who are members of local authorities should give our help to the many people who have the ambition and the dream that they may one day live in a house of their own.

1.2 p.m.

Mr. Ernest G. Perry (Battersea, South)

I congratulate the hon. Member for Bristol, North-West (Mr. McLaren) on selecting this subject for discussion. In all his statements he tried to be non-controversial. Even when he mentioned council tenants purchasing their own houses, he went on to say that many Tory and Labour councils have withdrawn the offer of the sale of council houses to tenants. There may be a reason for that. It may be because houses are in short supply in these areas. Some Tory and Labour councils may have had to say that they cannot sell their houses because they have housing problems. I congratulate the hon. Gentleman on selecting and discussing this subject in such a helpful way.

The hon. Gentleman mentioned 10 different points which we might consider to try to help people to purchase their own houses. Each point should be looked at carefully by the Government, or any future Government, in considering how to help people to purchase their own homes.

When I was in the insurance business I tried to sell house-purchase policies. This is a most welcome way to enable people to obtain the finance to buy their own houses. I was pleased to read that now over 53 per cent. of people in this country own their own homes. This is something to be valued, to be treasured and to be increased. Owning one's home provides a continuing asset as well as providing a place in which to live. This is important for ordinary people.

It is the middle and lower income groups who we want to see safely assured of a place of their own. The Labour Government tried to help people to purchase their own homes through the option mortgage scheme. It is strange that, to some extent, that idea has been adopted by the Alliance Building Society, to which the hon. Gentleman referred, and at a reduced rate of interest. There is plenty of scope along these lines to encourage the middle and lower income groups to purchase their own homes.

I particularly wish to deal with London, because I know that the Minister is concerned about the situation in London. We should realise that the growth of home ownership in London has spread over the last century from the old housing associations like Peabody and the Guinness Trust. They led the way for local authorities to try to develop council estates in the early part of the 20th century.

We are seeing the growth of home ownership in London. The trouble in Inner London is that there are so many old properties, ordinary terraced houses, for which the prices being asked today are, to some extent, beyond the financial resources of the people living in them. It is common for a house bought in Inner London four years ago for £6,000 to have an asking price now of £13,000. One of my constituents paid £6,000 for a house only four years ago. She has just sold it for £13,000 to some invaders from Chelsea. It is impossible for the ordinary middle-of-the-road person to purchase a house at such a price. We must look at ways by which we can help people in the middle and low income groups to buy their own houses.

In London there are many property sharks. Companies are being formed because property in London is at a premium. These people are coming in and, in some cases, forcing up the price of property in London so that ordinary people cannot afford to buy places of their own. I entirely agree with the hon. Gentleman that it is the lower income group which needs the most help.

One of my constituents, not the proverbial widow but a spinster lady of nearly 80 years of age, owned six terraced houses in an adjoining constituency. She expressed a desire to the people who were to sell those houses for her that she wanted the sitting tenants to be given an opportunity to buy them. I have been in touch with the six tenants. They were unable to buy those properties. Those six terraced houses were bought by a property company for £4,800, and they are now being offered to the tenants for £3,800 each. This is the kind of thing which is going on in London. Therefore, people in London are being penalised regarding home ownership.

It is all right in the provinces where there is plenty of land, but no land is available in London. I am sure that the Minister has this point at the top of his list of priorities for housing in London. Some people may regard what I have just said as good business. It may be good business for some, but it is depriving people in London of the opportunity of owning their own houses.

The building societies are overloaded with money. They have so much money that they are seeking different ways of lending it for house purchase. I advise anyone contemplating buying a house or investing in house purchase to put his money in a building society. People should be very careful of the deferred house purchase scheme, because they may be caught. Some of the smaller insurance companies, some of the sharks selling deferred house purchase, when people make application for an advance after two or three years in the deferred house purchase scheme, tell them: "We are sorry, but we have stopped that scheme now", or, "The house does not come up to the valuation." People must be warned against the deferred house purchase scheme. If people have money to invest, I advise them to put it in a bank, or preferably a building society, so that they can draw it out when they want it. When I was in insurance I came across many people who had been caught because, having entered into a deferred house purchase scheme, when they wanted the money to buy a house they were told: "We are sorry, but we have now dropped that scheme." It is important that this point should be pressed home to people.

I was interested in what the hon. Gentleman said about a tax concession for lower-paid workers. We discussed some time ago a kind of negative income tax. There is no reason why people on low earnings who want to buy a house should not be helped along these lines. I agree with the hon. Gentleman about that. Many people in casual employment, such as building trade workers and those employed in hotels, want to own their own houses. They are not salaried, they are not members of the regular staff, and they do not belong to any pension scheme. They ought to be able to buy their own houses.

I am glad to have the opportunity of giving a little advice to people who are contemplating buying a house. My advice is that if they want to become a house owner later, and in order to do so they want to save some money now, they should put their money into a building society, and not go in for deferred house purchase through a small insurance company.

1.10 p.m.

Mr. Norman Tebbit (Epping)

I, too, am glad to be able to take part in this debate. I was surprised that it started a little earlier than we had expected, particularly as the Member's car park is so full. I take it that that is because of a desire to do some Christmas shopping, rather than a desire to increase home ownership.

We often take the case for home ownership as read, but it is worth restating. The owner-occupier looks after his property better than does the tenant. I do not blame him for that, and I do not blame the tenant, either. The owner-occupier tends to improve his home and to add to its value because he knows that he will get the value back. The tenant is not in that position.

The owner-occupier is more likely to move away from the high-cost commuter areas when he retires, which, again, the tenant, and particularly the public authority tenant—and, after all, there are not too many private tenants about these days—does not. That movement by the owner-occupier is helpful in keeping down the cost of property in high-pressure areas.

By arranging his mortgage to end at about the time he retires, the owner-occupier ensures that his outgoings are reduced at the same time as his income is reduced. That kind of arrangement eases the problem of the man retired on a fixed income. The owner-occupier normally covers his mortgage by insurance—most certainly he should do so—and in that way he protects his family in the event of his untimely death.

In the present situation of a shortage of rented accommodation there is a lack of mobility on the part of tenants. They find it difficult to move to get a job somewhere else. The home owner is not so immobile. Certainly there is no reason technically why the tenant should not be mobile, but for the public authority tenant there is just not the machinery by which, even when houses are availble, it is easy for him to move from one list to another.

The home owner has the sheer satisfaction of being beholden to no landlord, and he has pride in the possession of his home which is undoubtedly increasing in value. If it is such a good bet, why is it that only 53 per cent. of the households are in private occupation? The greatest bar to increasing home ownership is undoubtedly the price of land. I must emphasise that to my hon. Friend. We can be sure that, one way or another, by 1980 about three million to four million—or perhaps more, we hope—more units of accommodation, as we tend to call them, will have been built. In some way the land will have been made available for them.

If each of those sites is gouged out of reluctant authorities, one by one, the price will be very high. Speculators who can get hold of a bit of land will sit on it, knowing that the following year the price will go up by a handsome margin. At auction after auction district valuers will look at the price of land with horror, knowing that they have to pay the market value for land, and accordingly they will jack up their sights. The public tenant will be worse off as well.

If, on the other hand, the Minister, at some time, says that he is determined that the land for that number of houses will be made available—and made available on a continuing basis—and he pledges himself to that, it will be a deflating experience for the land speculator and for the price of land. One way or another that land will be made available. If it is done willingly, the price will be much lower than if it is done reluctantly.

I follow the remarks of my hon. Friend the Member for Bristol, North-West (Mr. McLaren) about mortgages for older borrowers. I believe that with a little more encouragement the building societies would be willing to move in that direction.

As my hon. Friend said, the cost of conveyancing is still much too high. It seems absurd that if I sell my house tomorrow, having bought it only a year ago, and almost nothing having changed, all the solemn paraphernalia would be gone through and at the end of the day, in many cases, the protection which the would-be purchaser gained would not be worth much against a solicitor who carefully inquired whether a motorway was going through the property, but had no means and no obligation to listen to the local gossip, which would have told him that the motorway would run not very far away from the property. It seems absurd that these costs go on, and on, and on.

I hope that my hon. Friend will be able to give me some encouragement about the sale of new town houses which are now being held back to some extent, not by a lack of willingness on the part of new town authorities, certainly not by a lack of willingness on the part of would-be purchasers, or even a lack of funds, but by a considerable hold up at the. Land Registry which is unable to deal with the huge tide of work that has devolved upon it.

I know that my hon. Friend will not be able to promise that V.A.T. will in no way impinge upon housing, but I hope he will be able to assure me that the Secretary of State for the Environment will be in there in the Cabinet biting and kicking at the Chancellor of the Exchequer if there is any suggestion whatsoever that V.A.T. will affect the price of a house.

Perhaps the Department of the Environment might consider sponsoring, through some agency or another—I am sure that there are enough agencies through which it could do this—competitive prizes for young architects and young developers who bring forward designs for houses particularly suited for purchase by the younger and less affluent would-be purchaser.

One hears talk of the extendable house—the house, initially of low cost and relatively restricted accommodation, which is designed to be increased in size as the young couple bring up a family, without their having to move and to go through all the paraphernalia and costs again. That is a possibility for initiative by the Department.

When the last Conservative Government left office, they left a situation in which the average industrial wage earner's wage was sufficient to purchase on mortgage the average new house then being built. I make no party point. With the passage of years that situation no longer prevails, and I should like my hon. Friend to say that it is one of the Government's ambitions to see that before the next General Election we have made substantial progress towards restoring that situation because, unless we do, all our talk about extending home ownership beyond the 53 per cent. mark and into the lower income groups will be as dust in our mouths.

1.20 p.m.

Mr. George Cunningham (Islington, South-West)

I should like to congratulate the hon. Member for Bristol, North-West (Mr. McLaren) on raising this subject and to continue the relatively non-partisan nature of the discussion. Sometimes, when the House is fuller, we fling across the Chamber charges about tax relief for those who borrow money in order to buy a house. It may be worth while, in the very quiet mood of the House this morning, to see whether it is possible, in a non-partisan way, to extend the area of agreement between the two sides.

I start from the view that it is desirable that as many people as possible should own their own homes. I know very few of my constituents who are ideologically opposed to doing so and thousands who are determined to do so if they can only lay their hands on enough money.

The Government have said that they wish to make it easier for people to own homes, and in some small respects they have taken measures to achieve that end. But if they are serious about this they need to look more carefully at tax relief for the house borrower. At the moment, the tax relief provided is in direct proportion to income. Therefore, without wanting to use the word "subsidy", to which I know many people object—I do regard it as a subsidy, but let us call it "assistance"—I must point out that this assistance is greater the better off the recipient, the greater the value of the house he owns and the more he borrows.

Someone who can afford to buy a £20,000 or £30,000 house in my constituency, in Islington, does not need tax relief, to allow him to buy a house. He would buy a house anyway, whether he got tax relief or not. The effect of withdrawing that tax relief—a course which I am not suggesting—would be to dampen down the inflation in house prices which has occurred over the years.

In a situation in which there are not enough houses to go round, the effect of repaying in the form of tax relief some of the cost of buying a house is simply to allow a person to pay more gross than he could otherwise afford. It does not allow him to get a bigger house, if one takes all buyers together, because, the market being very restricted, the effect is only to raise the general prices of houses.

Mr. Tebitt

The hon. Gentleman will, of course, want to emphasis, I am sure, that this situation applies not just to mortgage interest tax relief but also to the tax relief that a rich man gets for his wife and children, as opposed to what the poorer man gets. It is inherent in any form of tax relief that the man who pays the most tax gains the most benefit. I see no moral reason why the man who pays surtax should get a bigger tax reduction than I do for having another child, but this is how it is in all forms of tax relief.

Mr. Cunningham

With respect to the hon. Member, it is not. There would be a perfectly simple method, which may be open to objections by many people, of counteracting that. That would be to make tax reliefs reductions in tax payable instead of reductions in income taxable. I do not want to go into that revolutionary line of thought today, but that would be a way of achieving it. It was to achieve something like that that the option mortgage scheme was introduced, to give the same standard of subsidy to the relatively poor man as to the relatively rich man.

The rich man will buy his house anyway. There is no need to induce him to buy by means of tax relief. The people whom one wants to induce to buy are those on the edge who are thinking about it and who think it is too costly or genuinely find it too costly. Is there some means of making it cheaper for these people? Now there is. I believe that in the end we shall go over to a system in which there is no tax relief for borrowing for house purchase or improvement and that the option mortgage scheme will be extended to everyone, so that everyone, whatever his income, will get the same amount of tax relief when he borrows money—the subsidy which at the moment is 2½. per cent. on the interest that he pays.

The advantage of this system would be that it was infinitely flexible. If interest rates fell considerably, it would be possible to reduce the margin of interest subsidy provided. If interest rates boomed up again, then the margin could be increased. It would be a flexible arrangement without the disadvantage of the present system of not taking away money from those who do not need to have it forgone and giving it on an equal basis to all.

One of the difficulties about this is that the housing people do not know about the tax situation and the tax people say, "That is to do with housing, and we are not looking into it very much." A point which is not often made in the House is that as a tax device this is most unusual, apart from the change introduced in 1969, in that it has no upper limit. It is treated not as an allowance, although we commonly regard it as an allowance, but as an outgoing, and as such it has no upper limit.

But, even if one treats it as an outgoing, there is one category of outgoing already in our tax system which does have an upper limit, and that is contributions to private pension schemes under the 1956 Finance Act, as amended this year. There is an upper limit of 15 per cent. of income there.

It is high time that the Government taxation and housing Departments together looked at these aspects in order to increase the temptation to buy of those who are on the margin of being able to afford it or not.

1.27 p.m.

Mr. Idris Owen (Stockport, North)

As there seems to be a unanimity of opinion on both sides today, I would attempt only to add some emphasis to the excellent speeches already made. I am in complete agreement with every speaker. All our problems in housing—exploitation of the customer and the tenant, for instance—stem from shortage. Every Minister and Government must decide how quickly we can overcome the shortage factor.

There is no doubt that someone who purchases a house for the first time suffers more than anyone else. Young couples who, for the first time in their lives, are determined to embark on home ownership, have nothing to sell and can only buy. It is very difficult today for anyone with an income below £1,750 to acquire a new house, and he is con demned to buy a pre-war secondhand house—

Mr. George Cunningham

If he is lucky.

Mr. Owen

Indeed, if he is lucky.

When the Housing Finance Bill reaches the Statute Book and more council tenants are obliged to pay higher rents—what will then be known as fair rents—many husbands and wives will be asking, "Shall we leave this house for someone less well off and buy a new house?" I expect that this will happen and that the figure of 53 per cent. home ownership will rise.

But if they do that, what choice will they have? Will they leave a new, well-built, well-designed council house, less than five years old, for a house of inferior standards which was built before the war, and for an outlay equal to the rent which they are paying? This is a great discouragement, and I am sure that if the Minister thinks about these points he will come to the conclusion that many council house tenants in 1973 will be wanting to buy their own homes. In other words, he will have created a situation in which they will have some consumer choice.

The inflationary trends are apparent to all and we cannot stand idly by and allow these people to be exploited. Make no mistake, they are being exploited. Ostensibly we have a free market in home ownership with free market forces coming to play, but the shortage has been created by the shortage of land, and this is at the root of all the trouble.

When a farmer can acquire land for agricultural purposes on the fringe of a stress area for £200 an acre and then rejoice at being able to sell it for £20,000 an acre as a result of obtaining planning consent—he may get more: I am being modest and I am associating my remarks not with London and the Greater London area but with the provinces because these high prices have reached the provinces—inflation in house prices is bound to result.

I assure the House that these figures are modest, particularly in the Manchester conurbation and especially on the south side of the area. If a farmer who has paid £200 an acre is able, through a land agent, to acquire planning consent and get £20,000 without any trouble, this is bound to be a prominent factor in house prices. We cannot stand by and allow this situation to develop.

The Government are not without some blame. Because of the £19,800 profit per acre made in such a deal, the Government, through the Exchequer and tax system, get a handsome piece of the action. They may feel disposed, having done so well, to put some of it back. In other words, the Government are collecting revenue as a result of the high price of land. I therefore invite them to consider putting at least some of it back from where it came, for they are, in effect, taking this money from young couples who want to buy their own homes.

The inflationary spiral is easy to see. The farmer sells the land at a large profit. The builder builds on it and sells at a profit. As Lloyd George used to say, it is the consumer who always pays. It is, of course, the consumer who pays the tax on the capital gain, and this is not a socially attractive proposition.

There is much room for thought in this matter. I urge the Government to make an inquiry into the cost of houses and the factors that have made it possible for a house in the Manchester area that was costing £3,750 in 1969 now to cost between £5,250 and £5,500. I know the major reason that would come out of such an inquiry. Whatever hon. Gentlemen opposite may say, I assure the House from personal experience that there is a desperate shortage of skilled craftsmen in the construction industry. There is room for a crash programme of training to enable those unfortunate unskilled construction workers who are unemployed to be trained in the new skills that are in short supply.

It has been suggested that if a lot of land were released on to the market house prices would come down. I agree. On the other hand, if a lot of labour were released on to the building market the price of labour would come down because, although construction industry workers are quite well represented by their trade unions, those unions have been able to negotiate terms applying to less than 50 per cent. of the total wage bill of the industry. It is not uncommon for building craftsmen, because of this shortage and the lack of apprentices, to take home between £45 and £60 for their services.

Mr. Tebbit

Has my hon. Friend's attention been drawn to the case of a local authority in the South-East which recently said that although it wished to build more public authority houses and had made plans to do so, it was unable to employ sufficient skilled building workers to do the work?

Mr. Owen

I am grateful to my hon. Friend for that intervention, which underlines the situation.

We can afford to be completely honest in discussing this subject rather than being only political, partly because of the Yuletide spirit which permeates the Chamber and partly because there is not the same degree of dissent as when our debates are better attended. I hope, therefore, that hon. Gentlemen opposite will accept from me, as one who has spent a lifetime in this industry, that young couples desiring to buy their own homes for the first time are being exploited in circumstances which appear to be beyond the control of all socially-minded people.

Building workers are among the highest paid people in this country today. This situation prevails because there is a far greater demand load on their services than there are men capable of carrying out the work. It is the old story that when there is a shortage, one must pay more for the item in short supply, and that is happening in this case. If we could have produced an adequate labour force with an adequate supply of land, the price of building would have come down dramatically.

Nothing would give me greater pleasure than to see the 53 per cent. home ownership figure lifted to 80 per cent., for that would place less strain socially on the Exchequer. Because nine-tenths of the people would be living in their own homes we would have to take care of only one-tenth, so enabling the Exchequer to provide more money for other social objectives.

A property-owning democracy is a highly responsible one. It has been said often in the past that a man will take much greater care of his own home than he will of someone else's, just as the company car is never as well looked after as the privately-owned one, which is popped in the garage and cleaned religiously, perhaps two or three times a week, while the company car lives out in the drive all night and in all weathers. Pride of possession creates a sense of responsibility. It is, therefore, socially right for the nation to have the highest possible level of home ownership.

I need not mention that home ownership creates mobility and provides an investment. One of my constituents recently told me that his home, a simple semi-detached house, which he bought in 1932 for £295, was now worth ten times that figure. He paid off his mortgage long ago and he told me, "This is my little nest egg. It was the finest day's work I did when I bought this house." The sadness of the situation is that his modern counterpart cannot do the same.

I want to see people in the lower income bracket being able to acquire homes of their own for the first time at prices which are reasonable. Prices today are thoroughly unreasonable and I am saddened by the exploitation that goes on. The exploiters are victims of the situation rather than victims by design. I want to see a situation created in which the circumstances do not demand such exploitation. The remedy is firmly in the hands of the Administration. I hope they will take action.

I should like to see my right hon. Friends go down as the most successful Ministers associated with housing the country has ever known. In the final analysis the nation wants more homes. I am, therefore, delighted to be associated with all the remarks that have been made in this debate.

1.39 p.m.

Mr. R. A. McCrindle (Billericay)

Time requires me to reduce the length of the speech I wanted to make, which will no doubt be to the great pleasure of hon. Members who have ventured out on this last day before the Christmas Recess.

I intervene mainly to make a few observations about how we can, in a practical sense, push forward still further the move towards owner-occupation. I should, perhaps, declare my interest in that for many years I have, as part of my occupation, assisted people in the purchase of their own homes.

I wish at the outset to congratulate Governments of both parties on what they have done over the years to make owner-occupation very much easier than it was a decade ago. Nothing I shall say should be construed as a criticism of the building society movement. On the contrary, we owe a great debt to it, perhaps literally as well as metaphorically, because over the years, especially the past few years, it has opened up its coffers and tried to help as many as possible. But there is still room for a movement still further forward by the building societies. I hope that they will take kindly to what I shall say today.

I have never understood why, if a man goes into an occupation and pays for his pension during the whole of his working life, he cannot do the same for the purchase of his property. After all, lie looks forward to retirement and to being in receipt of a pension. Surely he will look forward to retirement and to having something in terms of bricks and mortar, which is his investment to pass on to his 'children. There is a case for extended mortgage repayments over the whole of a man's working life.

We are told that the average man in Britain marries when he is 23. That is the first statistic. If we accept that the average wage in Britain at present is about £1,300 a year, by the normal yardstick of a building society lending roughly 2½ to 3 times gross earnings the man will be able to borrow up to a maximum of £3,900. Most of us know that that is nowhere near adequate, certainly in the London area, unless the couple have been very successful and have saved a very large deposit. But if the repayment period were to be extended to the whole of a man's working life, it would then be possible to lend up to five times the individual's gross income. That would mean that the man on the average wage could borrow £6,500. That would bring him much closer to being able to take out a mortgage than he is at present.

Second, I should like to see the building societies develop a greater flexibility towards taking into account wives' earnings. They have to understand it as a fact of life in 1971 that a large percentage of women work, at least in the early years of marriage. We all know that the facts of life equally teach us that that earning period can be brought to an end fairly quickly, and perhaps sometimes in a manner not altogether planned. The fact is, however, that the building societies could take into account a woman's earnings more than they do, and I will say how they could do it.

During the period when both the man and the woman are working and can afford a very substantial outlay, what should happen is that the mortgage is taken out over a shortish period of, say, about 15 years, but that the period of repayment is made flexible, so that if there has to be a reduction in the repayment when the woman ceases work to have a family, the period of the mortgage is extended to about 35 years, or perhaps over the period of the man's lifetime. If that were done, more young couples could borrow more. As this is the trend we all want to see. I can recommend it safely to the building societies. I know that some do it already, but I should like to see a few more adopt this pattern.

Third, I should like greater flexibility in interest rates. I mean no disparagement to the Building Societies Association, but I believe that the monolithic structure of this association as presented to the public does the movement less than the credit it deserves. In these days, when floating interest rates are fashionable in other spheres, the Building Societies Association could well get away with stating that lending rates can be between X and Y, and leave the building societies and their commercial instincts to decide at which rate they should lend to their borrowers. If this happened, there would be competition to a greater degree among the building societies. There is already competition in attracting funds from the public. Therefore, I see no reason why there should not be competition in lending to the public.

Anyone who has ever tried to get a mortgage on something like a maisonette, or a flat in some quarters, especially if the flat was not purpose-built, will realise that the number of building societies prepared to lend on that type of property is extremely small. But if there were a range of interest rates, it may be that one would have to pay fractionally more to get an advance on a flat or a maisonette, but that is how the thing should be played.

Those are three ways in which we can expand still further.

Mr. Roger White (Gravesend)

On the subject of interest rates, the public are puzzled and concerned that when Bank Rates rises the mortgage interest rates rise proportionately, but as we have seen, they do not come down proportionately when Bank Rate is reduced.

Mr. McCrindle

I agree that there is puzzlement in the public mind. The fact is, however, that no building society retains its rate of interest higher than it needs for one day more than it feels it must. It has to take into account the fact that it must continue to attract funds from the investing public. If there is competition from investments which pay better than building societies, the societies feel that they have to keep their rate of lending higher than ideally they would wish.

I have suggested some ways in which the movement towards owner-occupation could be extended, but I simply do not believe that in Britain we shall ever achieve 100 per cent. owner-occupation. or anything like it. People who pursue this in a doctrinaire fashion are pursuing a will-o'-the-whsp. If we reach about 75 per cent. we shall have reached the optimum.

I want to stress, especially to my hon. Friend on the Front Bench, that there will always be a continuing need for houses for rent. I frequently take issue with some of my hon. Friends who seem to have a doctrinaire opposition to the development of council properties. I do not believe, as may some hon. Members opposite, that there should be a continuing building of council properties whether or not the need exists. But in certain areas, particularly in some parts of greater London, there is and will continue to be a serious need for the development of council property. But there is also a need to try to encourage the development of privately rented property. Though movements are now certainly afoot in that direction, I have to say that, regrettably, we have a very long way to go.

I conclude by declaring yet another interest. For my sins, I am vice-president of an organisation called the Corporation of Mortgage Brokers. The corporation was formed a couple of years ago because it was felt that some standard had to be laid down for the mortgage-broking fraternity. I am the first to concede—after a lifetime in this sphere—that there are a great many sharks in this business. Nowhere is it easier to take money under false pretences than it is from a couple seeking a mortgage to buy a property. Through the debate, I would suggest to the public that they could do worse than to find out who is their nearest member of this non-profit-making body, the Corporation of Mortgage Brokers. I hope I shall be forgiven if that sounds like a commercial plug.

The property-owning democracy of which we on these benches have spoken over the years is still a great aspiration of mine. We have come very far along the way to achieving it. I hope that some of what I have said will be taken up by the building societies and that if we have a similar debate a year from now we shall find ourselves still further towards our objectives.

1.49 p.m.

The Under-Secretary of State for the Environment (Mr. Paul Channon)

The whole House will congratulate my hon. Friend the Member for Bristol, North-West (Mr. McLaren) on choosing the subject of home ownership for debate. He can feel justly proud of having done so, because of the widespread interest in the House. Many more hon. Members have spoken than in the average Christmas Adjournment debate, which is a reflection of the extreme importance of the subject.

Although I do not agree with everything that has been said, most of us can agree with the overwhelming proportion of what we have heard today. I agree that it must be a continuing and crucial aim of Government to encourage home ownership, which is not only good for the country and the housing stock but is probably the best investment a man will ever make.

My hon. Friend raised a number of matters that he wanted the Government to consider further. We shall consider all the suggestions made in the debate, and as we have regular contacts with the building societies I am sure that they, too, will study everything said today. A number of interesting suggestions have been made. I agree that the prime mover in the change towards home ownership has been the building society movement and that continued rapid progress towards home ownership is best guaranteed when the building societies are active and have money to lend. In the first nine months of this year they lent a total of £1,960 million, only slightly less than the £2,027 million they lent in the whole of last year, which was itself a record year. The number of advances made in the first nine months of this year was 478,000, compared with 393,000 in the same period last year. The movement has also been breaking records in attracting new savings. Net receipts for the first nine months of this year were £1,370 million, compared with £1,011 million in the same period of 1970.

The whole House has also welcomed the fact that during this year we have seen the first reduction in the interest rate charged to borrowers for nearly nine years.

I welcome the initiative of the Alliance Building Society in producing a scheme for escalating mortgages. I am sure that the movement will consider what hon. Members have said about that. I am not quite so happy about longer periods for repayments as are some hon. Members. There are limits to the length of the repayment period. If it is too long, the borrower will find, in the ordinary annuity kind of mortgage, that he has paid off very little of the principal in the early years, which is very inconvenient if he wants to move house, and the reduction in the annual amount of repayment is not all that much. Therefore, we should not push that idea too far.

A number of hon. Members raised the question of building society loans to older people. The percentage of loans given to people of 45 and over in the second quarter of this year was about 13.8, which is not an insignificant proportion. I can announce one new improvement that is to be made to the option mortgage scheme, which will make it easier for elderly people to enter the scheme. Under the Housing Subsidies Act, 1967, a borrower normally has to go for an option mortgage at the time he signs the repayment contract. Changing to an option mortgage after this date is allowed in special cases—if, for example, there has been a substantial but not reasonably foreseeable alteration in the financial circumstances of the borrower, which would have made it reasonable for him to give an option notice if the alteration had occurred before he borrowed the money.

That qualification about the alteration being not reasonably foreseeable rules out changing to an option mortgage in the normal course of retirement, because a person can foresee normal retirement, though not premature retirement. With the agreement of the Building Societies' Association and the other lenders' associations, that qualification will be deleted, so that in future a lender will be able, if he thinks fit, to let a borrower change from an ordinary mortgage to an option mortgage on retirement in the ordinary way. That is one further modest step which will be of some help to more elderly people when they reach retirement and wish to change.

On conveyancing costs, I note the views expressed, particularly by my hon. Friends the Members for Bristol, North-West and Epping (Mr. Tebbit), and I will draw them to the attention of my noble Friend the Lord Chancellor, who is primarily responsible. He has put proposals to the Law Society, on which it is expected to report early in the new year. The proposals are, in brief: firstly, where property sells at £10,000 or over, to dispose of the scale system, so leaving it to the solicitor and his client to agree on a reasonable charge; secondly, where property sells at less than £10,000, to make the scale charges maxima, to enable the client to find a solicitor who will charge less than the maximum while still stopping the solicitor from charging more than the maximum; thirdly, to abolish the system whereby a solicitor acting for both parties can charge each the full scale fees.

The hon. Member for Islington, South-West (Mr. George Cunningham) raised a number of points about tax relief on mortgage interest payments. He will not expect me to comment in detail. I do not agree with many of his points, though I am glad to learn that the principle that tax relief should be available on mortgage interest payments was common to both our points of view. I should emphasise that many people have made their financial arrangements on the basis that they will receive that tax relief. It would cause complete disruption and a great deal of hardship if changes were ever made in the system to reduce the amount of tax relief available to them. The House would be very reluctant ever to make such changes, and I can give the assurance that this Government will never do so.

I could give a whole list of measures taken in the past year to help with home ownership, but I do not think that the House will wish me to do so in view of the time. The measures are well known.

I should like to say something to the hon. Member for Battersea, South (Mr. Ernest G. Perry) about the price of houses in London. I entirely agree with him about the difficulty. There is no quick solution to the problem. The only way to help with home ownership in London is to get more houses built for owner-occupation. We need more houses of all kinds in London. I do not want to go into the question of London housing, but it is certainly true that we need more houses for owner-occupation, which is one of the highest priorities in London. The figures for private enterprise building in London have been extremely low for the past few years, and I shall do my utmost to encourage it. The proportion of home ownership in London is lower than in many other parts of the country. That is bound up with the need to find land to provide houses for owner-occupation.

A number of hon. Members raised the question of house prices and land prices. I entirely agree that it is essential that there should be an adequate supply of land for house building. Hon. Members may have seen the answer of my hon. Friend the Minister for Local Government and Development on the matter on 8th December, when he announced that the Government have taken a number of steps to help. He said that the Government have in action … working parties on land surplus to defence requirements, on forms of partnership between local authorities and private enterprise, and, with local planning authorities and developers in the regions, to identify land suitable for housing. Major areas for long-term development have been set out in an approved strategy in the South-East region and my right hon. Friend will have the strategy very much in mind in exercising his planning responsibilities."—[OFFICIAL REPORT, 8th December, 1971; Vol. 827, c. 1287–8.] I accept that there must be an adequate amount of land. We must try to identify where there is a shortage through local planning authorities having refused planning permission. I accept that that is one of the most important facets.

I believe also that it is essential that builders should be providing houses for the lower end of the market. That is where the largest share of their markets will be, and it is in their interests as well as the people's that they should cater for it. I appeal to the building industry to think very hard about the problem of providing houses for the lower end of the market, where there will be an increasing demand and an opportunity for them.

My hon. Friend raised the question of local authority mortgages. The City of Coventry has introduced a scheme whereby mortgages are granted based on the life expectancy of the property rather than that of the mortgagor, which of course also helps older people. If a person dies before the mortgage is paid off, the outstanding debt can be recovered by the sale of the house or by the granting of a mortgage to the next occupier. Any other proposals of this kind will receive favourable consideration by the Government.

I shall not go into the question of council house sales in detail. There is a difference of opinion between the two sides on this matter. The Government's view is that councils should sell their houses, and I noted what my hon. Friend said about Bristol. We shall be prepared to consent to an authority selling a house at up to 30 per cent. below the unrestricted market value where price and pre-emptive convenants apply. Birmingham has put forward a not dissimilar scheme. We welcome such schemes. I take the view that it is very sad when a local authority frustrates the wishes of its tenants in this way, but I recognise that that view is not shared on both sides of the House.

My hon. Friend the Member for Epping referred to new town houses. The momentum towards purchase in the new towns is still enormous, and 14,000 in- quiries have been received in the new towns for house purchase. It is an overwhelming response. There are local problems, such as those involved with the Land Registry, which we are examining and which are being overcome. My hon. Friend the Member for Billericay (Mr. McCrindle) will be delighted to know that Basildon Corporation is concluding sales at the rate of 10 a day, which is not bad going.

There may be other points which I have not the opportunity to reply to now. I will carefully study what has been said. I am sure that the building societies will do so as well. The message of the whole House on this last day before the Christmas Recess is that we are all determined to go on promoting home ownership wherever possible and that we all share the objective that a larger proportion of our people should have the opportunity to own their own homes, because this is in the interests both of the individual and of the country as a whole.