Previous Section Back to Table of Contents Lords Hansard Home Page


Lord Mackay of Ardbrecknish: I shall try to help the noble Lord, Lord Monkswell, who seems to be making a mountain out of a molehill. It all depends which side of the coin you are looking at, because it is the same coin. Clause 16(1) states:


and paragraphs (a), (b) and (c) then follow. Paragraph (b) states:


    "the dwelling was provided with public money".
If the tenant has a right to acquire that dwelling, that must mean that the landlord has an obligation to sell it. I do not think that I am splitting hairs because, if a tenant has a right to buy and if he exercises that right and buys the property, the landlord must be selling. However, it is totally wrong to jump from that and to say that we are placing on landlords a compulsion to sell. The trigger, if I may call it that, will be pulled by the tenant. That is what happens in all the right-to-buy legislation that we have introduced. We have said that tenants have a right to buy and Clause 16(1) states that a tenant has the right "to acquire".

I believe--the noble Lord and his party may not believe this--that there is a distinction to be drawn between money provided by the public purse and private or charitable money. That distinction is obvious to me. If the noble Lord is saying on behalf of his party that the Opposition want to give tenants the right to acquire their property even if absolutely no public money has been involved in any way, shape, or form, I believe that they will find themselves in some dispute with many of the charitable organisations which are involved in the social rented sector and which have not needed public money for their developments.

I think that my position is perfectly clear. I am sorry that the noble Lord does not agree with me. We shall come to some of the other arguments when we reach other amendments which stand in the noble Lord's name. As he has unbundled his amendments, I shall unbundle also and stand my ground and say that I believe that in the social rented sector there is the

6 Jun 1996 : Column 1451

distinction to be drawn between those dwellings that have been provided by public money and those which have not been provided in that way.

Lord Monkswell: I thank the Minister for his response. We are gradually getting to an acceptance by him that the right to buy is not the same as a requirement to sell. He has not quite got all the way there yet, but, on the basis that he is heading in our direction, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

9.30 p.m.

Baroness Hamwee moved Amendment No. 60:


Page 10, line 38, at end insert ("which accounted for 20 per cent. or more of the total cost of the dwelling").

The noble Baroness said: I beg to move Amendment No. 60. I speak also to Amendments Nos. 66 and 75 in my name, which are grouped with Amendments Nos. 62, 65, 72 and 78. Two of those amendments are in my name and that of the noble Lord, Lord Williams, who will no doubt speak to them, and two are in the name of the noble Lord, Lord Berkeley.

Amendment No. 60 pursues in greater detail the issue just addressed: what is meant by the provision of public money within the definitions set out in the clause. Clause 16(2) allows for dwellings to be bought, and therefore required to be sold--it can be put the other way round, but I do not think it much matters--if they are wholly or partly provided with public money. My concern is what is meant by "partly". The amendment proposes that dwellings are to be regarded as being provided by public money and so included if that money accounts for 20 per cent. or more of the cost of the dwelling. It is perhaps the other side of the coin, or rather quite a lot of coins in the case of property. If the other source of funding accounts for 80 per cent. of the cost, the dwelling will be excluded from the right to buy.

The Minister has referred to resources raised by donations from charitable organisations, individuals and an association's own reserves. I believe that in circumstances where the large majority of funds for a dwelling do not come from public funds the right of tenants to force the association to sell should be questioned. The Minister may say that if there is a particular percentage cut-off there will be anomalies, but "provision in part" may, to take it to extremes, mean the provision of a few pence. One may say that there is a cut-off somewhere. But my real concern is the macro-effect. We are aware that already associations and organisations have placed moratoriums on the development of affordable dwellings. They are concerned that their investment of charitable funds may rapidly be turned to private use and their objective may be thwarted. Quite understandably, they await the outcome of this legislation. Many noble Lords referred to that matter at Second Reading. We should not create a disincentive for the building of more affordable homes; indeed, I suggest the opposite.

Amendment No. 66 proposes that the right to buy will not arise where the dwelling requires repairs that are essential for it to remain habitable within the following

6 Jun 1996 : Column 1452

three years. Many of your Lordships are aware of the problems encountered by leaseholders in blocks of flats because they are leaseholders and their neighbours remain tenants. There is a small, but nevertheless significant, minority of people who have been saddled with high repair bills, sometimes amounting to tens of thousands of pounds. A quite separate situation is one where a housing association may purchase a property which it intends to refurbish in a major way. Long term plans for redevelopment or improvement may be thrown into chaos if a tenant exercises the right to buy at an early stage. For those two reasons it would be fair to both tenants and housing associations if properties which are likely to require major works of repair or improvement within three years--I accept that that is an arbitrary time, or perhaps not; one can perhaps relate it to the discount period--are excluded from the right to buy.

The amendment is confined to dwellings situated in a building, so we are therefore talking about flats. An exemption which is broadly in that form is being included, I understand, in the voluntary purchase grant arrangements, although it is on a discretionary basis.

Amendment No. 75 is similar to Amendment No. 66, but gives the Secretary of State power to use his discretion rather than introduce a statutory exemption. I beg to move.

Baroness Gardner of Parkes: I find the first amendment about a fixed percentage of public funds to be sensible. It would be a pity to designate the dwelling as funded publicly if, as was said, just a few pence had gone in. I do not know whether 20 per cent. is the right figure, but there is an interesting point here.

I am more concerned about major repairs. I do not know whether the amendments solve the problem. When people buy social housing, there is a need for some form of indemnity or insurance to be built into the purchase. I do not know how that could be best done. I do not know whether the Government could write it into the Bill or whether it should be done by the purchaser.

Something should be considered to cover those people who find themselves faced with the most alarming, major structural repairs; for example, where buildings have been found to be constructed of concrete of the type which rusted inside the concrete shell. That is the type of thing which can create terrifying bills for the people who have bought those properties. It is something that has caused great distress. I shall be interested to hear my noble friend's reply to those points.

Lord Hamilton of Dalzell: I have not yet spoken in this debate, so I should declare my interest in the property world. I own estates is Surrey and Shropshire, which include a considerable number of houses, some of which are social houses. I have had no connection with housing associations, but I have been involved in a deal in Shropshire in which the provision of social housing was part of the arrangement for obtaining planning consent.

I am tempted by the amendments, because, unlike the noble Lord, Lord Monkswell, I stand on the other side of the equation. I have never been totally happy with

6 Jun 1996 : Column 1453

the blanket right to buy. I sometimes ask myself whether one's house is a financial asset or liability. If my noble friend Lord Ferrers were here he would probably admit that some houses--I believe that he owns some of them--are liabilities.

To define the matter more accurately, a house in which one lives is only an asset if its price is rising faster than the rate of interest one is paying for the mortgage. Ultimately there are substantial liabilities involved in keeping the property in good repair. Also, if one owns houses in which one does not live, if the rent is too low they become liabilities because ultimately over time they stoke up large bills for keeping them in repair. I wonder whether in this right-to-buy scheme people are being induced into arrangements which they may in the end not be able to afford. I feel that the Government have decided that they do not wish to be a landowner, and I believe that one of the reasons behind the sale of council houses was that they made a very substantial loss on the rents that they charged. Personally, I have been spending quite substantial sums of money restoring houses because they can at last be let at economic rents under assured shortholds. Some restrictions on what actually happens and who is allowed to buy a house would be welcomed.

There is another aspect. I quite understand the philosophy of the Government that when these houses are sold the money should be rolled over to buy more. In the operation which we have carried out in Shropshire, the provision of social housing was regarded by the developer as part of the planning game. It actually amounted to 20 per cent. of the proceeds of the land. Therefore, if you add capital gains tax to that it reaches an effective tax rate of 52 per cent. If one is going to have to keep on rolling over these houses, there are going to be more and more cases in which the planning game element will have to be chipped back into the social housing regime.

As landowners, we are inclined to take the view that as social housing is appearing in the area in which we live perhaps that is pro bono and we ought to put up with it. But we did have the land investment levy which had a tax rate of 60 per cent. A tremendous amount of land belongs to people who simply hold it in land banks and the land investment levy caused a drying up of the supply of land. I was reading in the Telegraph that my right honourable friend the Secretary of State for the Environment thinks that we have to build 4 million houses over the next 20 years. For both purposes--for the provision of land for social housing on a voluntary basis and also in the broader context of making sure that there is a supply of land--I would like my noble friend the Minister to let me know how he believes that will work out.


Next Section Back to Table of Contents Lords Hansard Home Page