HL Deb 21 October 1986 vol 481 cc160-4

2.48 p.m.

Lord Beswick

My Lords I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government to what extent their policy of encouraging home ownership is affected by the current trend in house prices in South-East England.

The Parliamentary Under-Secretary of State, Department of the Environment (Lord Skelmersdale)

My Lords, none.

Noble Lords

My Lords, will the noble Lord repeat the Answer?

Lord Skelmersdale

My Lords, none.

Lord Beswick

My Lords, I try to thank the noble Lord for that Answer. His Government are claiming credit for bringing the rate of inflation down to 3 per cent. Can they escape all responsibility for the fact that house prices in the South-East of England have risen by 16 per cent. in London, by 20 per cent. and 40 per cent. in certain sectors? With these present prices, and with current immoral interest rates, is not home ownership a mockery for many deserving young couples; and is it not a misery for those who achieve home ownership when one in 20 are facing repossession orders?

Lord Skelmersdale

My Lords, the reduction of the inflation rate to 3 per cent.—for which the Government quite rightly claim credit—has had the effect of creating a rise in real incomes in the region to which the noble Lord refers in his Question; namely, the South-East. With regard to first time buyers, these have risen in number every year since 1980 according to the building societies' figures. In 1985 there were 175,000 compared with only 95,000 in 1980. I should have thought that these figures speak for themselves in demonstrating the success of the Government's encouragement of home ownership.

Lord Mellish

My Lords, I, at least, am thrilled about the very good demand for new housing. Is the Minister aware that one of the worst aspects of this demand is what I call the "spiv" who has moved in? He buys eight, nine, 10 or 20 houses at, say, £40,000—in docklands, for example—and then holds on to them and sells them for £70,000, £80,000 or £90,000. What can be done to stop wretched people acting in that way?

Lord Skelmersdale

My Lords, like the noble Lord, Lord Mellish, the Government do not approve of either "spivs" or "cowboys". This is obviously a situation which needs watching very carefully. But I have not had evidence to suggest that it is happening on a widespread scale. If the noble Lord, Lord Mellish, would like to produce evidence I shall consider it.

Lord Mellish

My Lords, I shall do that.

Lord Winstanley

My Lords, does not the situation to which this Question draws attention place intolerable burdens on young people who seek to further their careers by taking posts in London? Is it not a fact that in London there are far too many houses which have been renovated to such a high standard that nobody can afford to live in them, and far too many houses that are so dilapidated that they are not fit to live in? Is it not economically and urgently desirable that there should be enough ordinary houses in London for ordinary people to live in? What is being done to provide them?

Lord Skelmersdale

My Lords, that is exactly the reason why the Government are encouraging local authorities to take up the 100 per cent. allowance for capital receipts for low-cost home ownership, which I think is probably the subject which the noble Lord is covering in his supplementary question.

On a more general point, we know that estate agents do not report any difficulty in selling properties. The figures that I have announced since 1980 confirm what I have said, that at the moment there is no difficulty in selling such properties.

Lord Northfield

My Lords, is the noble Lord not misleading us about the situation in the South-East as compared to the rest of the country? I think he was giving national figures. If one takes the present average earnings in the South-East of about £200 per week—£10,000 a year—and if one considers the mortgage of £25,000 to £30,000 which that income should allow people to have (namely, 2½ to 3 times their annual earnings), does that not mean that people on average earnings in the South-East cannot now afford a newly built house? Is this not something to which we must pay some attention?

Lord Skelmersdale

My Lords, that surely presupposes that all houses in the South-East are newly built, which in fact is not the case.

Lord Wallace of Coslany

My Lords, is the noble Lord aware—and I am sorry to have to put it this way—that his answers so far have been shockingly inadequate on a situation which is getting well beyond control? My noble friend Lord Beswick refers to a 40 per cent. increase. He is miles out; it goes into the hundreds. Is the noble Lord aware that, unless competition is introduced by the building of an adequate number of houses at a suitable price or rent then young people will have to suffer, and face the fact that they cannot even afford to have a child?

Lord Skelmersdale

My Lords, we will not know the figures for 1986 until they are published. However, I can tell the House that in 1981 the growth in house prices was 6 per cent; in 1982 it was 2 per cent; in 1983 it was 13 per cent; in 1984 it was 10 per cent; and in 1985 it was 9 per cent. I would accept that these figures are national figures and it is very much more difficult to isolate them to particular regions.

Lord Orr-Ewing

My Lords, does my noble friend bear in mind that there has been no move, particularly from Labour Party sources, to restrict the Rent Act? If the Rent Act was eased somewhat, there would be fewer people clamouring to buy their houses and many more moving into rentable accommodation which must be made available by this Government as soon as conceivably possible. No other party has ever backed any change of any consequence in the Rent Acts.

Lord Skelmersdale

My Lords, I would agree with my noble friend that, in so far as there is a problem of dwelling accommodation, which in fact was not what I was asked in this Question, then the more units that are made available to rent must obviously help. Freeing such properties from the scope of the Rent Acts would be very much a step in the right direction.

Lord Cledwyn of Penrhos

My Lords, to move away from party propaganda to reality, is the noble Lord aware that a house in North Wales, in a pleasant situation, costing from £28,000 to £35,000 would cost something like £125,000 to £150,000 in London? How does he justify that situation?

Lord Skelmersdale

My Lords, I do not think it is for the Government to justify the situation. As I have revealed during this series of questions this afternoon, there are people in the South-East who can, and do, afford to pay the prices which are asked of them.

Lord Beswick

My Lords, following on from what the noble Lord said, will the noble Lord comment on the figure I gave, that one in 20 people are now facing repossession orders? Is not all the evidence suggesting that some of those who have incurred these responsibilities are living in absolute misery? Will the noble Lord dismiss what was said by my noble friend Lord Mellish about what was happening with "spivs" operating in the lower sectors?

Will the noble Lord comment on this letter which I received from a substantial firm of London estate agents: The owner offered us a house she thought was worth around £150,000. We advised asking for orders over £250,000. This quickly brought a bid of £260,000 and finally achieved an offer of £300,000. Does this not suggest something unhealthy in the housing situation in London?

Lord Skelmersdale

My Lords, I do not think I can be expected, nor would the House expect me, to make an off the cuff comment on a letter that the noble Lord has read out. However, so far as repossession cases are concerned, obviously this is a worrying factor, but I do not see it as being connected to the Question that the noble Lord put on the Order Paper.

We need a situation where a lot more care is given by the building societies, banks and other lenders of mortgage funds, to make sure that the people to whom they lend the money will be able to repay that loan over the period in the contract.

Lord Seebohm

My Lords, will the Minister not agree that all that has been said recently shows the enormous need for rented accommodation? Is it not time that the Housing Corporation was topped up again so that the housing associations may continue to make a major contribution towards curing this tragic situation?

Lord Skelmersdale

My Lords, I agree with the noble Lord in the first part of his supplementary question. However, the Housing Corporation is not the only funder of housing associations, although it does certainly provide the major slice at the moment. There are also local authorities, where they choose to use that route to spend their money. Since the Building Societies Act came into force there is the opportunity for building societies to invest in that way.

Lord Graham of Edmonton

My Lords, if the Government are seriously concerned about increasing the amount of rented accommodation, is it not time that the Government stopped the nonsense of prohibiting councils from selling their capital receipts? Is it not disgraceful that the amount of public sector building in 1986 is the worst since Neville Chamberlain was in charge of housing in 1924?

Lord Skelmersdale

My Lords, I think we have been drawn down a route which is really not germane to the original Question on the Order Paper.

Lord Northfield

My Lords, the noble Lord did not answer my question. I made the point that as people with average earnings can only service a loan of about £30,000, and the price of very small new houses in the South-East is now over £45,000, are we not facing a situation in which people with average earnings in the South-East of England cannot now afford to go into the market for a newly built house? Is this not something to which we should pay some attention?

Lord Skelmersdale

My Lords, I said in answer to another supplementary question but referring to the noble Lord, Lord Northfield, that the figures I gave originally were countrywide. From those figures there is no evidence that the situation that the noble Lord describes in his supplementary question is putting people off buying houses.