The Spectator

Grill the Housing Minister: Mark Prisk answers Coffee House readers’ questions

Grill the Housing Minister: Mark Prisk answers Coffee House readers' questions
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Housing Minister Mark Prisk's brave request for a grilling from Coffee House readers generated a very enthusiastic response. Here are the minister's answers to your questions.

House Prices

Q: What will the Government be doing to rebalance things back towards private buyers and away from the BTL speculators that have driven the market up to such an extent that private buyers are priced out? (Specifically, get the Treasury to end the tax breaks introduced under Labour that drive this, and level the playing field for ordinary buyers).

A: It’s important not to overstate this problem.  In 2011, buy to let accounted for just 12 % of all mortgages.  And of course it’s important to have a ready supply of rented accommodation for people who want or need that flexibility.  The real problem that I’m focused on is the housing shortage we have in this country.  We’re putting in £570 million to a Get Britain Building fund which has the potential to build 16,000 new homes, we’re making more land available to developers, and we’re working with councils and developers to get homes built more quickly on large sites.  We’re already seeing these sorts of measures taking effect – right now, house building is higher than it was before the market collapse in 2008 – though there’s obviously some way to go.

Q: Is the Minister prepared to use taxpayers' cash to support house prices at current levels and prevent prices returning to historic equilibrium of about 3.5 times single salary?

A: Of course it isn’t right to use taxpayers’ money to encourage another housing bubble.  But what we can do is help create the conditions for the market to work more effectively: so that builders don’t face problems building and would-be buyers can buy.

The most effective thing the Government can do to promote stability is to avoid the need for rapid increases in interest rates, which is why we are working to tackle the record deficit inherited from the last administration.

But we also know that many hard-working families simply can’t scrape together the large deposits that are needed at the moment, so we’re offering a variety of complementary schemes to work around that.  For example, there’s the NewBuy Guarantee which could help up to 100,000 families by reducing the deposit they need.  There’s also the FirstBuy scheme, which could give up to 25,000 people a loan towards a deposit.

House Prices/ Land

Q: Rather than pursue ‘affordable’ shared ownership schemes, which are in fact costly and cumbersome,  wouldn't effort be better spent finding ways to reduce prices for all new home buyers by increasing supply of cheap land while ensuring house builders don't profiteer from this?

A: I don’t think that’s an ‘either/or’ option.  We can do both.  Outright homeownership isn’t a realistically affordable option for everyone, but there’s no reason why people shouldn’t still be able to get a foot on the ladder, and then take on more responsibility as their circumstances change.

But at the same time, we are making public sector land available for new housing, and are aiming for enough land for 100,000 homes by April 2015.

Q: Will the Government consider a policy of 'use it or we tax it' to force companies to build on the massive land banks they have built up, rather than waiting till prices go up again?

A: I’m afraid that there is rather a myth around landbanks.  Like any other business, developers have got to have long-term plans, and in fact, if we are going to have any hope of meeting the housing crisis, they need to have land which can be developed over the next three to five years, as well as the next year.

The real problem is that developers and councils negotiated many deals before the financial crisis which are now outdated and unviable, so developers can’t afford to see them through.  There’s actually a law going through Parliament right now which will make it easier for developers to renegotiate these unaffordable deals, unblocking many stalled developments.

We’ve also set up a whole range of financial incentives to get builders building now, such as the £570 million Get Britain Building investment fund, the £770 million Growing Places Fund to grow infrastructure, and the Local Infrastructure Fund, which included around £190 million to prepare and release surplus public sector land for development

Q: Why is the government not building more council houses?

A: The government doesn’t build council housing: it’s up to local authorities to work out what sort of mix of housing they need locally – owned, rented, shared ownership and social housing.

What we do though, is provide the support and incentives for councils who want to build new council housing.  For example, councils can keep the proceeds from sales through our Right to Buy scheme to invest in new council housing.  In fact, nationally, we want to make sure that for every home sold through Right to Buy, another is built: so we get the right balance between supporting homeownership and reducing council housing waiting lists.

Overall, we’re investing £19.5 billion in affordable housing for rent and low cost ownership schemes, which should mean 170,000 new homes by 2015.  Last year, we delivered 58,000 new affordable homes – on average, that’s a third more than was delivered each year under the previous Government.

Q: And why do planning laws restrict house building in times when we desperately need more homes and more construction jobs?

We inherited a cumbersome, bureaucratic planning system from Labour designed around Whitehall edicts and top-down targets which actually held the country back in recent years: not just in meeting housing needs but also putting a break on business.

We’ve spent the past couple of years dismantling that system: and in it’s place we’ve put a much simpler, clearer, faster, and fairer system.  Instead of Government dreaming up housing targets which built nothing but resentment, we’ve put councils and communities in control of planning.  But this isn’t a one way street.  With greater localism comes greater responsibility. As they draw up their local plans, councils must assess their local housing need and plan to meet it.

And unlike in the past, councils now have financial incentives to deliver housebuilding through the new homes bonus.

Welfare reform

Q: Will the Government re-draw 'local average' rules on Housing Benefit that have led to ever higher amounts of taxpayers' money going direct to BTL speculators (I don't have the numbers but HB is now more than the entire Higher Education budget)?

A: Under Labour, Housing Benefit spiralled out of control, nearly doubling in cash terms in the last decade to £21 billion. Over 50,000 out of work households in England receive more in benefits than the average household income of £26,000.

That’s why we have now capped the level of housing benefit which can be paid at up to 30 per cent of the local average.  The changes we’ve made will restore fairness to the system and exert downward pressure on rents, but it doesn’t mean, as some people claim, that people will be forced to move out of their area. In most areas, housing benefit claimants will still be able to afford up to a third of properties on offer, but they won’t, of course, be able to afford expensive homes – and I think most people would see that as fair.

Private Rented Sector

Q: Why does the government have no interest in protecting private tenants? I pay just under £900 per month on rent for a property that if it was a car would not pass an MOT.

A: I’m encouraging councils to crack down on those few rogue landlords who are exploiting their tenants and trapping vulnerable people in terrible conditions. There are laws already in place to tackle bad practice –and I want see councils using them.  For example, councils can prosecute landlords who do not remedy hazards in their properties and, where justified, can introduce licensing for rental homes in areas where they are contributing to antisocial behaviour and low demand for housing.

Equally, I want to see councils tackling that small minority of letting agents who are letting down both tenants and landlords.  A recent Which? report showed that one in five tenants are dissatisfied with their letting agents, and the Government is determined to raise standards.  Again, councils have powers here - to prosecute letting agents who give false or misleading information.

And I’m also determined to make the Privately Rented Sector bigger and better. Boosting supply is key to improving competition and standards across the sector, and last month I launched the £200m Build to Rent fund to attract new investors into the sector and build new, high quality homes specifically for private rent.

Q: What will he do about rogue landlords who let their properties run down to such an extent it deprives those living next door of gaining profit on their own properties?

A: Labour's plans for more state regulation on the whole private rented sector will mean higher rents and less choice. One only has to look to Labour's expensive and flawed Home Information Packs to see how excessive regulation on the housing market pushed up costs for consumers.

Councils already have the powers, the guidance and the funding to take decisive action if they wish to deal with problem properties, and the Government is keen to work with councils, and other local agencies such as the police, to help them further.

Last year we published guidance on the powers that local authorities have at their disposal to tackle rogue landlords, and we are providing £1.8 million of funding to the nine local authorities where the problems of illegally occupied outbuildings, or 'Beds in Sheds', are most acute.  Councils have the power to tackle this problem, and we want to see them used.  For example, in Brent the local authority became aware of a large outhouse being built in the garden of a property, which the builders claimed was a garage.  When the council inspected it, it was clear that it had been built as a self-contained flat.  After going through legal proceedings, the council demolished the outhouse so that it couldn't be used again.

Q: The key issue is lack of demand, yet institutional investors crippled by low yields. Could you increase demand by relaxing restriction on SIPP investment in to private residential to let? Perhaps restricted to new-build with a guarantee of letting for ten years? Also, to encourage Institutions to invest in PRS, could any rental profit be exempt from tax is retained within the pension fund?

A: The private rented sector has definitely been the poor relation in the UK’s housing market for years, and there is a lot of scope to make it more professional and increase the number of large scale landlords, so that it better meets the needs of today’s renters.

Last year, we had a major review into this issue which came up with a series of really useful recommendations.  What we need to do is attract and encourage new players to the market, while at the same time avoiding the excessive regulation that would force up rents and reduce choice for tenants.

So we’re providing a £10 billion debt guarantee scheme which should increase confidence in large scale buy to let projects.  And just before Christmas I announced a £200 build to rent fund which will cut the risk for developers keen to explore this new market.  We’re laying the foundations for a   more professional, larger scale private rented market in years to come.

Housing Stats

Q: Why does the government include the sale of council houses in its new housing total? A council house re-branded is not a new home!

A: The housing statistics we collect show the changes in the housing market, rather than the number of new homes built.  So if a council house changes to a private home – or indeed vice versa – that shows up.  It helps give an overall, detailed picture of the market. The number of net additional dwellings is now at its highest level since 2008-09 (the tail end of Labour’s unsustainable housing boom), with 135,000 in the last financial year.

And the New Homes Bonus is incentivising councils to deliver even more new homes. Over the next year, England’s councils will share a cash payout of £661 million for delivering 142,000 new homes - including 58,000 affordable properties.  This takes the total paid out since the start of the New Homes Bonus scheme to over £1billion.

Q: Can Mr Prisk confirm that we are heading for fewer than 100,000 housing starts this year against an annual requirement for 240,000? Can he further confirm that this trend has been going on for at least the last 20 years?

A: It’s true that last year, housing starts were just below 100,000 at 98,020.  But actually, because of conversions and changes of use, there were 135,000 additional homes last year - putting net housing supply at its highest since 2008, an increase of 11 per cent on the previous year.

But as you state this isn’t a recent problem, This country has been building insufficient homes for years.  We inherited a paralysed housing market where housebuilding was at its lowest peacetime level since the 1920s; the result of building roughly half the homes we needed for more than a decade. This is why in 2011 we published a comprehensive housing strategy to tackle this problem from all angles.

Two years later and we have made significant progress. Everything that we are doing – reforming the planning system, working with councils and developers, providing financial incentives – is aimed at reversing these years of underinvestment. But it won’t happen overnight.