Session 2008-09, 24 February 2009
Publication of Report
Publication of Report
Publication of Report: Housing and the Credit Crunch
Government must stick to house building targets and help those facing repossession, but must be clear how borrowing will be paid off
The Government must stick to its long term house building targets, despite the credit crunch, but a greater proportion of the homes should be social housing, the Communities and Local Government Committee concludes today.
However, the Committee is concerned that the £975 million borrowed by the Government from its 2010-11 budgets to build social rented housing now is not new money, and that the Government has been unable to say how that borrowing will be replaced
In their report Housing and the Credit Crunch, published today (24 February) MPs also urge the Government to do more to help those at risk of repossession by considering sanctions against lenders who repossess too quickly and by doing more to protect tenants and homeowners from unscrupulous landlords.
Commenting on the report, Chair of the Communities and Local Government Select Committee Dr Phyllis Starkey MP said: "The credit crunch has not reduced the numbers of households needing new housing, nor does it affect the need to address years of undersupply.
"The message which we received from witnesses during our inquiry was clear: the steps the Government is taking are welcome, but further action is needed if the Government is to have a chance of meeting its targets for home building and achieving the goal of a decent home for all.
"We are particularly concerned that the Government is borrowing from future budgets now with apparently no idea how it is going to restore that money at a later date."
The Committee urges the Department for Communities and Local Government to:
- Put pressure on the Treasury to ensure measures to revive the mortgage markets are implemented immediately.
- Increase construction of new social housing, both to provide for housing need and as a means of maintaining capacity in the homebuilding industry whilst the market recovers.
- Accelerate refurbishment programmes for social housing, for the same reasons.
- Ensure appropriate opportunities are taken to acquire further social housing through the purchase of unsold stock and street properties.
- Consider the purchase of unsold family homes, for which there is a particular need in the social rented sector, which have been on the market for more than a year.
- Through its agent, the Home and Communities Agency, encourage public sector bodies to make land available for the development of new homes.
- Make its low-cost home ownership offers easier to understand and use, by reducing the number of schemes to three, covering shared-equity, shared-ownership and rent-to-buy.
MPs want to see lenders' repossession behaviour closely monitored with much more effective sanctions being made available against those who do not comply with the new guidelines.
An Office of Fair Trading recommendation for sale-and-rent back schemes should be implemented as a matter of urgency to protect the growing number of households falling behind in mortgage payments from exploitation by unscrupulous landlords.
Plans to extend the period of notice that a lender is obliged to give a buy-to-let tenant that their home is at risk of repossession are welcomed.
However, the Committee adds there should also be guidance for lenders re-possessing privately rented properties ensuring they make arrangements for the professional management of these homes.
The Committee would like to see more done to support housing associations, including increasing social housing grant where necessary. It also urges the Tenants Services Authority to put pressure on lenders to ensure the continued availability of finance at favourable rates.
For those housing associations which do fall victim to the recession the TSA should offer protection to tenants.
In July 2007 the Housing Green Paper Homes for the Future: more affordable, more sustainable set out the following targets:
- A total of three million new homes to be built by 2020, two million of them by 2016.
- To achieve this, the number of new homes built each year is intended to reach 240,000 per year by 2016.
- Within this, a minimum of 70,000 affordable homes, of which 45,000 should be new social rented homes need to be built each year by 2010-11.
Committee Membership is as follows: Dr Phyllis Starkey MP (Chair, Lab), Sir Paul Beresford MP (Con), Mr Clive Betts MP (Lab), John Cummings MP (Lab), Jim Dobbin MP (Lab/Co-op), Andrew George (Lib Dem), Mr Greg Hands MP (Con), Anne Main MP (Con), Mr Bill Olner MP (Lab), Dr John Pugh MP (Lib Dem), Emily Thornberry MP (Lab).
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