HL Deb 16 September 2004 vol 664 cc1329-40

The National Authority may by order designate rural areas as exempt from the right to buy scheme."

The noble Lord said: The aim of this proposed provision is to exclude the right to buy in certain rural areas—the smaller places where there are populations of 3,000 and under. That would make the right-to-buy restriction in line with the right-to-acquire scheme for other social housing landlords. The purpose is pretty straightforward; it is to preserve an adequate supply of affordable rented housing for local people in rural areas.

The right to acquire and the right to buy are two very similar schemes, the former available to tenants in properties owned by registered social landlords and the latter to tenants of local-authority-owned properties. Currently, there is significant disparity in the application of the schemes in relation to properties in rural areas. The right to acquire is not available now to tenants in designated small rural settlements—those with a population of 3,000 or under. The reason for that is to preserve the supply of affordable rented housing for local people. That justification applies equally to localauthority-owned properties in similar locations, and the right-to-buy scheme should be changed to mirror that element of the right-to-acquire scheme.

The difficulties of replacing properties through right to buy in rural areas are commonly accepted. First, there is the price of housing in rural areas, which is often exacerbated by the purchase of second homes by better-off people. Secondly, the availability of land severely limits the scope for newly built housing, and the potential to buy on the open market is limited due to the overall size of local housing markets. That is made more acute by the removal of local authority social housing grant. Securing an ongoing supply of social housing for rural communities is surely essential to achieving sustainable communities. My proposed change to the right-to-buy scheme seeks to realise sustainable communities by ensuring an ongoing supply of social housing for future generations in rural areas.

I have been assisted by the Local Government Association on the amendment. I beg to move.

Lord Dixon-Smith

My Amendment No. 212 is grouped with the amendment. It is aimed in a somewhat similar direction, but I am bound to say that I do not find myself in sympathy with the amendment moved by the noble Lord. I do not see why particular sectors of the rural community should be excluded from right to buy, as available to the rest of the country. It is not as though the shortage of suitable social housing exists exclusively in rural areas. It exists in most urban areas in the country. This great city of London—if I could include that in the wider sense of the word "great"—probably has the most acute form of that problem: we see that with essential workers completely unable to get suitable housing. But the right to buy exists here and, as the Minister has indicated, there is general agreement that the right to buy has been beneficial. A discriminatory amendment of the sort that the noble Lord, Lord Borrie, has surprised me with—he is generally very broad-minded about such issues—would not be helpful.

12.30 p.m.

My noble friend Lord Hanningfield on the Front Bench has identified the source of the problem, which is the static building rate that applies nationally and appears in an acute form in many rural communities and particularly the smaller communities. There are a number of reasons for that, which I will not go into now because it would take too long. I am under some time pressure and I want to get to the end of the debate.

Amendment No. 212 is addressed to a different issue. It looks as though for the coming decade the major source of new social housing will be as part of a great swathe of new development required across the country. We have seen various figures as to what the proportion of social housing should be where major development takes place. Indeed the Minister's honourable friend—at least I assume he is an honourable friend since he is now back in the Labour Party—the Mayor of London would like to see that figure as high as 50 per cent.

The fact is that those houses are not free. They have to be paid for, and they are paid for by one of three groups of people—or possibly a fourth. I declare a retrospective interest in the subject, having once been involved in Section 106 negotiation, so I have some feeling in the matter. In such developments, social housing will be paid for either by the original owners of the site, or by the developer, or—this is where it starts to become dangerous if the proportion goes too high—in the end by the purchasers of the final properties on the rest of the site. The cost of the social housing is borne in different proportions by those three groups of people.

There is indirectly a fourth participant in that equation—the Treasury has an interest because the cost of those social houses comes off the profitability of a new development and therefore reduces the Exchequer's take in gains taxes. The Treasury is in a sense a participant as well. That equation can and does produce a large volume of social housing. The Office of the Deputy Prime Minister's considerable ambitions to increase the building rate is a matter with which I have some sympathy. However, the purpose of building social housing—which is paid for largely by individuals—is defeated if the right to buy can apply straight away once the houses become social houses—when they are transferred to the people. When we were making our Section 106 agreement, the biggest obstacle we had to overcome was the right to buy. There are ways round it, but it would be much more sensible, if it were clearly stated that there was a period of time during which social housing provided in that way should not have the right to buy applied to it.

Amendment No. 212 is a probing amendment. Nothing would please me more than if the Minister could demonstrate to me that it is completely unnecessary. If he can do that, I should be exceedingly happy and shall leave the Chamber in great glee. One should not have to go through all sorts of legal procedures and devices, as we had to, in order to ensure that where social benefit is provided to the community it remains as a social benefit to the community for a reasonable period of time. One can argue about the length of time. I have suggested 25 years in the amendment because I think for ever is too long and is not appropriate. I shall be interested to hear what the Minister has to say.

Baroness Miller of Chilthorne Domer

I welcome the fact that the noble Lord, Lord Borrie, tabled his amendment to enable us to have this debate, but I agree with the noble Lord, Lord Dixon-Smith, that rural areas should not suffer an absolute blanket exemption from the right to buy.

The statement made about a previous amendment by my noble friend Lady Maddock was absolutely right. The right people to make the decision about this matter are local authorities. They are charged with producing a housing needs document. They are also best placed to make a judgment about this matter. The blanket designation of settlement by size—whether they should be in or out of the right to buy—has not proved wildly successful either. The size of the population does not provide any measure for how much social housing it has or not, or what the pressure on that social housing is. These are all issues that come up in the housing needs assessment.

Further than that, there are another couple of reasons why we would not want to designate rural areas in this blanket way, which was alluded to by my noble friend Lady Maddock. When one denies a group of people the right to buy their house, that section of the rural community will become less diverse, because it will be less attractive to those who are able to buy their own home. The likelihood is that that section of social housing will continue to be occupied by those who are unable to afford to buy. It will—I have seen it happen time and again—enter into a spiral of decline and become a real challenge to the local authority. If the Government are aiming for diversity of community, they should resist ghettoising—if I might use the word—sections of housing and particularly just choosing it by geographical area.

I was quite surprised by the short memory—if I may say so—of the Conservative Bench because the problem with the right to buy, especially in rural areas, began with the fact that local authorities never had the right to replace the housing stock by using the capital receipts from that housing. In little villages which had 6, 10 or 20 houses, that inability proved fatal to the villages—not only in terms of social housing, but in terms of the post office and the pub, whose customers naturally fell off as the younger people had to move into the towns. It is still something I feel deeply about.

I see the noble Baroness, Lady Hanham, shaking her head, but I can tell her that when I was leader of South Somerset District Council that was exactly what happened. I declare an interest as a Somerset county councillor. We are part of our local strategic partnership, and we are deciding how to spend the moneys from the extra second homes tax at the moment. I hope that county councils will make a decision to devolve that money to local strategic partnerships, which will then decide to put it into affordable housing.

The Minister may be aware that the rural commission of the Local Government Association met in Bath on Tuesday of this week. It passed an emergency motion regarding affordable housing in rural areas and the desperate situation that exists. If the Minister has not yet seen that motion I hope that he will take time to look at it. The point of interest beyond the words of that motion was that it was passed unanimously—with everyone from every party supporting it. That says something regarding the depth of feeling in rural areas.

The key is issue is making sure that rural areas have the money to spend on social housing. It is key to retaining jobs, as the Minister knows. Finally, I should like to comment on exception sites. Perhaps it was the noble Lord, Lord Borrie, who mentioned that land was expensive, and, of course, it is. But extremely good use has been made of exception sites—that is where housing may be released and developed for social housing use only, never for private housing. It has been used successfully by bodies such as the Rural Housing Trust, to whose work I shall return in a later amendment. I hope that the Government will continue to encourage the use of exception sites and perhaps even to think how they may be encouraged more extensively through an amendment to the Bill. That is not something that I have thought of doing myself, but I might be interested to come back to that later.

Lord Livsey of Talgarth

I shall not detain the Committee for long but I feel passionately about this issue. I am pleased that the noble Lord, Lord Borrie, has moved the amendment and that the noble Lord, Lord Dixon-Smith, has tabled Amendment No. 212.

If you have ever been confronted as a younger person, as I was once, with two children, a wife and family, not to be able to afford to compete with second home owners in your own community is really the end. I had an extremely bleak experience. There was no social housing anyway, because that had dried up. This is an important amendment. The pleas made for local authorities to be in the driving seat regarding these policies are important, because, as has been said, housing needs are assessed by them.

However, there is a famine of social rented housing in the countryside and young people cannot compete in the private market at all. One of the problems is that builders are building executive homes in villages and in comparison with the low wage economies in rural areas buying a home is cloud cuckoo land for young people. They cannot even look at those homes. Social exclusion is happening to young people from rural areas. This distorts community life; schools do not have so many children in them and eventually close down in many cases; older people dominate—there is nothing wrong with that—but to such an extent that there are not equal numbers of people of different ages in the community. GP practices are overrun in some places and social problems result.

Commuters dominate in other places and second home owners in others. Often all occur in the same place. This problem has to be overcome. It results in few jobs for young people in rural areas and the local economy often dries up because people are spending money elsewhere, not in their local community. It is vital that this problem is overcome in the most practical ways possible. Indeed it should be in the forefront of ensuring that young people can actually live in their own communities.

12.45 p.m.

Baroness Maddock

I have much sympathy with the sentiments behind the amendment, but for the reasons that my noble friend has given, we may not be solving the problem that we are trying to tackle. Problems of affordable housing in rural areas are well documented and I was surprised that in speaking to his amendment, the noble Lord, Lord Dixon-Smith, seemed to think that the problems were just the same as in the city. Perhaps I could read him a few figures—86 per cent of rural housing is owner occupied or privately rented, whereas it is about 77 per cent in urban areas. In rural areas the social rented sector is only 13.4 per cent of total housing, compared with 22.4 per cent in urban areas. We also know that in 2002–03 house prices rose faster in rural areas than in towns. That shows us the scale of the problem, but the question is how we tackle it.

As I said earlier, this should not be a blanket scheme; it should be up to local authorities to make their own decisions. In recent years the Government have moved towards giving power to local authorities and if Ministers wish to help, this would be one area in which that would be useful. The key to this is affordability. Trying to find ways of keeping affordable the houses that come in through social money is difficult. The noble Lord, Lord Dixon-Smith, talked of his own experience and trying to find legal ways of doing such things is difficult.

However, there are schemes up and running. I understand that there is a scheme in Shropshire called the golden share scheme. Under it, the equity that has built up by having social money in affordable housing remains there and the houses remain affordable, whether one is buying or renting; so that when rented social housing is lost, at least it does not become a very high-priced second home. We on these Benches are looking at how we can put this into some national policy. But there are schemes working and I know that government departments know about the scheme in Shropshire. It is not an easy issue to tackle.

For the reasons that I have outlined, although we understand the sentiments behind the amendment and what it is trying to achieve, it will solve some problems but re-create others. We do not support the amendment.

Lord Bassam of Brighton

This has been a valuable 20 minutes. As a government spokesman I cannot accept the amendment, but I recognise the importance, validity and the urgency of the debate. In particular, I was struck by the words of the noble Baroness, Lady Miller of Chilthorne Domer. I have often pondered the problem myself. I grew up in a village and my mother was a council tenant. The stock of social housing in that village has shrunk as a product of right-to-buy and many of the friends with whom I grew up exercised their right, quite understandably. Sadly, in that part of Essex social and affordable housing in the rural communities has not been replaced.

Our Government have made and renewed their commitment to ensuring that there is social housing in rural communities. For the first time in a generation the numbers of social housing units built in rural communities has begun to increase. We recognise that there is more to do in this field and the rural White Paper underlined our commitment to ensuring that more of the existing housing in rural areas is available to local people. That was the issue that the noble Baroness, Lady Miller, touched on with her heartfelt plea. It is an important issue. Many of my friends were forced to move away from the village because they could not rent and the available and emerging estates of new homes were there only for sale. They were beyond those ordinary working folk's pockets.

Under Section 157 of the Housing Act 1985 landlords in certain specified areas may place restrictions on the resale of homes sold under the right-to-buy scheme. Landlords can choose between requiring owners for at least three years to resell only to people who have lived or worked locally or, if landlords prefer, for the 10 years following initial purchase require that owners first offer the property back to the former landlord before selling it on the open market.

I am sure that the noble Lord, Lord Borrie, will be aware that similar restrictions are in place in the seven national parks, in the 37 areas of outstanding natural beauty and in 30 areas designated as rural for this purpose by the Secretary of State. Together, these cover about 40 per cent of the land area of England. Clause 165 extends a right of first refusal to all other right-to-buy landlords wherever they are, but it explicitly retains the current system in national parks, AONBs and designated rural areas.

Similar amendments to the one tabled by the noble Lord, Lord Borrie, were debated on Report in another place, as the Parliamentary Under-Secretary of State for the Office of the Deputy Prime Minister said at the time: We recognise that there are pressures on affordable housing in many rural areas."—[Official Report, Commons, 11/5/04; col. 252.] However, exempting rural areas from the right to buy would, I think most contributors to this debate have said, unfairly discriminate against those who wanted to become home owners in those areas.

It would be too inflexible and very sweeping for all tenants who happen to live in rural areas to be denied the chance of home ownership. The existing restrictions on reselling, which recycle former right-to-buy homes to local people and are already in place in a significant part of the country, are sufficient. Tenants can choose to buy or to continue to rent, while landlords can choose to impose one or other of the two resale restrictions, or not to include any restriction.

I know that the Home Ownership Task Force considered the difference between the right-to-buy and right-to-acquire schemes in this respect. But it did not call for immediate change. It recommended that the rural restrictions for both schemes should be retained, with a view to alignment in the longer term. In response, we have said that we are committed to retaining the existing rural restrictions in both schemes, and that we do not plan to align them.

A balance is needed here between respecting the quite proper aspirations of social tenants in rural areas to become home owners and the need to retain social housing for local people. Those who raised the issue in another place suggested that if the Government do not wish to restrict the availability of the right to buy in rural areas they might instead consider lowering the maximum discounts available to tenants in those areas. We have already done this in 41 areas in London and the south-east that are under the greatest housing pressure.

The Minister for Housing responded by saying that we recognise that housing pressures may be driving up house prices in some rural areas and that, although we have no intention of introducing across-the-board restrictions, we will continue to monitor the situation. I can confirm that we will keep the position on maximum discounts under review. We believe that this more flexible approach is preferable to the amendment.

I turn to the second amendment, which, in our view, is unnecessary. Most new social housing for rent, whether provided under a Section 106 agreement or on rural exception sites, is provided by registered social landlords. The right-to-buy scheme does not apply to assured tenants of registered social landlords, so it is unlikely that tenants living in new properties built under Section 106 agreements or on rural exception sites would be eligible for the right-to-buy scheme.

As is commonly understood, the right to buy is only available to secure tenants of local authorities, and to pre-1988 secure tenants of non-charitable housing associations. Former local authority tenants of housing stock which has been transferred retain a preserved right to buy.

Both the rural exceptions policy and Section 106 agreements can be used to secure the provision of new-build affordable housing. Affordable housing ranges from social rented housing generally provided by registered social landlords to low-cost home ownership schemes, such as shared ownership and housing for sub-market sale.

The rural exceptions policy allows local planning authorities to grant permission for housing development within and adjoining villages, which the local plan would not otherwise release for housing, in order to provide affordable housing to meet local needs in perpetuity.

Section 106 agreements are those between local authorities and developers. They are usually negotiated when planning permission is granted in respect of the use of land being developed. Planning obligations can be used to secure contributions from developers towards the provision of necessary infrastructure associated with the development, and the provision of affordable housing to meet identified needs based on up-to-date housing assessments.

Baroness Miller of Chilthorne Domer

I am grateful to the Minister for his reference to exception sites. However, would he make a judgment on their value? He told us what they were, but he did not actually say whether he regards them as useful, very useful or essential. I would be grateful for any such indication.

Lord Bassam of Brighton

They are useful, but I am aware of some statistics and I can see that we have a problem. What we are trying to suggest is that we need flexible means to address the problems. No doubt the Local Government Association rural commission will bring forward some further thoughts as a product of its recent motion.

Tenants of social housing built or acquired by registered social landlords with public funds after 1 April 1997 may qualify for the right-to-acquire scheme under the Housing Act 1996 and be eligible to purchase their rented home at a discount. However, the right to acquire does not apply in areas designated as rural. These are generally small community settlements with a population of 3,000 people or fewer. As this is the same coverage as rural exception sites, the social housing on such sites is already preserved for local people in perpetuity.

We already have a range of means in place for preserving new social housing on rural exception sites or provided through Section 106 agreements. The amendment is public-spirited, but it is not necessary in order to achieve the ends that we all seek. I have listened hard to the debate and I think that there is more to do. There are other approaches—I was particularly interested in what the noble Baroness, Lady Maddock, had to say. From personal experience, going round the country and as leader of a local authority with rural communities remote to our major settlement, I can see that this is not an issue that will go away or one that can be left. We are addressing it through current policies.

Lord Borrie

I am grateful to all those who have participated in the debate, which was probably rather longer than Ministers wished it to be. I am particularly grateful to those from the Liberal Democrat Benches who gave varied, I might even say disparate, but certainly balanced comments on the problem. I am most grateful to the Minister for a comprehensive response and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 212 not moved.]

Clause 158 agreed to.

Clause 159 [Exceptions to the right to buy: houses due to be demolished]:

Lord Bassam of Brighton moved Amendment No. 212A:

Page 107, line 34, after "a" insert "final"

The noble Lord said: This group of amendments relates to the aim of the demolition notice provisions and is designed to address loopholes in existing legislation. Currently, when tenants know that demolition is likely, they are able to buy at a discount knowing that when the property has to be repurchased using compulsory powers they will be entitled to full market value plus home loss compensation. This adversely affects the financial viability of regeneration schemes.

In another place it was suggested that our original proposals did not deal adequately with regeneration schemes involving the phased demolition of blocks or areas over several years. Tenants in such areas are likely to be aware of demolition plans well in advance and may be tempted to exploit the rules. Stakeholders have also suggested that the existing clauses did not adequately address situations where landlords had compulsorily to purchase from local owner-occupiers, a process that, as most of us will have experienced or observed, may be subject to delays.

We thought that there was force in those points and we have therefore decided to amend the procedure for demolition notices. There will now be a two-stage process. First, initial demolition notices—IDNs—will suspend a landlord's obligation to complete a right-to-buy purchase. Secondly, final demolition noticesFDNs—will terminate any right-to-buy claims and prevent any new ones being made. In both cases there will be a prescribed notification procedure that landlords must follow. Notices must set out the reasons for demolition and the effect of the notice served. Landlords must also publicise them locally, both in the local press and on the landlord's website—my notes say "if he has one"; I suppose that most landlords probably now do. But that is an obligation on them.

1 p.m.

The initial demolition notices are not capable of extension, although the final demolition notices may be extended on application to the Secretary of State. Either notice can be revoked by the Secretary of State if he takes the view that the landlord has no intention of demolishing the properties.

We therefore propose, first, that an initial demolition notice, valid for no longer than five years and not extendable, may be served, and that will suspend the landlord's obligation to complete the right-to-buy sale. It will not prevent new right-to-buy applications being made but it will provide a breathing space in which landlords can properly develop schemes and, where necessary, follow the statutory compulsory purchase procedures. Tenants' interests are protected. Right-to-buy claims can continue to be made and will be processed as normal so that if a demolition plan fails to proceed, the application can then be completed.

Secondly, final demolition notices can be served. These should be valid for two years rather than 18 months. Final demolition notices will end any existing right-to-buy claims and prevent any new ones being lodged.

A landlord will be able to serve a final notice only if there are no owner-occupiers within the planned demolition area and acquisition of those properties is essential for the demolition plans to proceed, or if t here are such properties but binding agreements for the acquisition of the properties have been agreed and/or compulsory purchase orders have been successfully made and the landlord has served notices to treat or has made a vesting declaration in respect of all the owner-occupied properties within the planned demolition area.

That proviso is important. It would be unfair to bring right-to-buy claims to an end and prevent new ones being made in cases where a regeneration scheme, and hence the need for demolition, depended upon the purchase of local owner-occupied properties which may never take place. So, if a CPO is necessary in order for demolition plans to go ahead and the CPO is not confirmed or is quashed by the courts, an IND will cease to have effect.

For tenants who have made a valid right-to-buy claim, and an initial demolition notice or a final demolition notice is served before the transaction is completed, compensation will be available for conveyancing-related expenses incurred before the respective notice was served.

We believe that the amendments will improve the Bill's original safeguards against exploitation by tenants, while providing sufficient safeguards against unreasonable behaviour by landlords. We hope that we have the balance right; I think that we probably have. I therefore ask the Committee to support the amendments. I beg to move.

On Question, amendment agreed to.

Lord Bassam of Brighton moved Amendments Nos. 212B to 212Y:

Page 107, line 36, leave out ""demolition" and insert "final demolition"

Page 108, line 2, leave out "and" and insert— () stating that one of conditions A to C in paragraph 13A is satisfied in relation to the notice (specifying the condition concerned), and

Page 108, line 10, leave out "138A" and insert "138C"

Page 108, line 14, leave out "18" and insert "24"

Page 108, line 16, after "a" insert "final"

Page 108, line 17, leave out "18" and insert "24"

Page 108, line 18, leave out from "(4)" to end of line 19 and insert ", but this is subject to—

  1. (a) compliance with the conditions in sub-paragraphs (6) and (7) (in a case to which they apply), and
  2. (b) the provisions of paragraph 14(1) to (7)."

Page 108, line 24, after "a" insert "final"

Page 108, line 27, after "a" insert "final"

Page 108, line 44, after "any" insert "final"

Page 108, line 45, leave out "and" and insert "unless extended or revoked under paragraph 14,"

Page 108, line 48, at end insert— () that there may be a right to compensation under section 138C in respect of certain expenditure incurred in respect of any existing claim.

Page 109, line 1, leave out "paragraph 14" and insert "paragraphs 13A and 14"

Page 109, line 3, after "premises," insert "or of a reference to the acquisition or transfer of any premises,"

Page 109, line 4, at end insert—

"13A (1) A final demolition notice may only be served for the purposes of paragraph 13 if one of conditions A to C is satisfied in relation to the notice.

(2) Condition A is that the proposed demolition of the dwelling-house does not form part of a scheme involving the demolition of other premises.

(3) Condition B is that—

  1. (a) the proposed demolition of the dwelling-house does form part of a scheme involving the demolition of other premises, but
  2. (b) none of those other premises needs to be acquired by the landlord in order for the landlord to be able to demolish them.

(4) Condition C is that—

  1. (a) the proposed demolition of the dwelling-house does form part of a scheme involving the demolition of other premises, and
  2. (b) one or more of those premises need to be acquired by the landlord in order for the landlord to be able to demolish them, but
  3. (c) in each case arrangements for their acquisition are in place.

(5) For the purposes of sub-paragraph (4) arrangements for the acquisition of any premises are in place if—

  1. (a) an agreement under which the landlord is entitled to acquire the premises is in force, or
  2. (b) a notice to treat has been given in respect of the premises under section 5 of the Compulsory Purchase Act 1965, or
  3. (c) a vesting declaration has been made in respect of the premises under section 4 of the Compulsory Purchase (Vesting Declarations) Act 1981.

(6) In this paragraph— premises" means premises of any description; scheme" includes arrangements of any description.

Page 109, line 6, at end insert "final"

Page 109, line 15, after "a" insert "final"

Page 109, line 22, after "a" insert "final"

Page 109, line 38, after "a" insert "final"

Page 109, line 39, at end insert "final"

Page 109, line 44, at end insert— () The Secretary of State's consent under sub-paragraph (8) may be given subject to compliance with such conditions as he may specify.

Page 109, line 45, leave out from "notice" to end of line 46 and insert "under paragraph 13 or 14 may be served on a person—"

On Question, amendments agreed to.

Clause 159, as amended, agreed to.

Clause 160 [Right to buy: claim terminated by demolition notice]:

Lord Rooker moved Amendment No. 212Z:

Leave out Clause 160 and insert the following new clause—