Peers debate merits of Starter Homes as Housing Bill begins its scrunity in the House of Lords
Week in Westminster
Published: 29 January 2016 | Author: Michelle Vosper
Concerns about the starter homes scheme were raised by a large number of peers across party during the second reading debate of the Housing & Planning Bill. The main area of concern being the fact that they may be built instead of other affordable housing, rather than in addition to.
The Labour peers leading on the Bill, Lord Kennedy of Southwark and Lord Beecham, name checked the CML in respect of concerns around the scheme’s impact on the housing market. Many peers questioned raised the issue of the 20% discount on starter homes being over a five year period, rather than in perpetuity. Baroness Backwell said, “I welcome the move to promote starter homes. However, I find it incredible that the 20% discount on the value of the starter home should be a one off, giving the owner a double bonus. First, they do not have to pay the full price for the home, and secondly, they will have the benefit of inflation when coming to sell….As a taxpayer if find the one-off discount difficult to justify to those on waiting lists”. And on the discount’s effect on the market generally, Viscount Eccles said, “the scheme provides a 20% subsidy, effectively, which will of course affect the whole market for owner-occupied houses…it will affect all players in the market”. And a number of peers expressed their concern that many of the details of the scheme are not included in the Bill and will be made in regulations at a later date.
Right to buy for housing association tenants was also a big area of concern for those taking part in the debate on the Housing & Planning Bill. Earlier in the week, the DCLG launched the pilot of the scheme which is being run by five housing associations. The pilot is intended to help inform the design and implementation of the main scheme before it is rolled out across the country later in the year.
The Bank of England had its regular Financial Stability Report hearing with the Treasury committee this week. Answering questions on the buy-to-let market, Bank governor Mark Carney confirmed that the growth of the market has warranted heightened scrutiny:
“As a general rule, any time you see a very sharp and sustained increase of activity in one area, particularly that financed with debt, it at least bears heightened scrutiny. In that respect, we have taken note of a couple of developments. The first is that the PRA has instituted a review of the underwriting standards in the buy-to-let market. That review is ongoing. It will be completed by the time of our next Financial Stability Report. Secondly, the Government, as you would be aware, has instituted a few potentially material tax changes that will impact the buy-to-let market. We want to assess the implications of those in assessing the overall sustainability of developments in buy to let.”
Mr Carney was unable to confirm when the Bank’s powers of direction over the buy-to-let market would be put in place but reassured the committee that they were not planning any specific moves once they had the power:
“ There is no specific move here, but the issue is that, if we determine that action should be taken on buy to let, just as it indicates where we felt action should be taken on owner-occupied, it is far better to take action instantaneously. Make a decision and take action, via a direction, which we can do. From a governance perspective, it is far better to have the accountability framework, which comes from having to do cost/benefit.”
And the Environment, Food and Rural Affairs committee launched an inquiry into future flood prevention in England. As part of this inquiry the committee will look at flood insurance, and invites evidence on how accessible and affordable flood insurance will be for businesses as well as householders covered by the Flood Re scheme.