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Housing: Property Purchase

Volume 710: debated on Thursday 14 May 2009


Asked By

To ask Her Majesty’s Government how many intending purchasers have been helped to buy properties under the MyChoiceHomeBuy scheme; and what funding remains available to prospective purchasers.

Since 1 April 2008, the Government have helped 3,123 purchasers to buy a MyChoiceHomeBuy property. This week, the HCA has released £126 million specifically for MyChoiceHomeBuy to help a further 3,000 households.

My Lords, I thank the Minister and I am delighted to hear that further funds have been released. As she probably knows, this is an enormously popular scheme, with 200 applications a week, yet in the whole of the past year only 400 to 800 sales went through. Some people were promised money before the cash ran out and before the immediate release of new money. People who have been promised money have entered into contracts with surveyors and solicitors and have made mortgage arrangements; they are now out of pocket because they were refused money, having been told that they would get it. What will be done to help those people? I understand that they can now proceed with their purchase if the new money is available. However, if their house has already been sold, what will be done to help them?

My Lords, the noble Baroness is right. This is a popular, generous scheme, for which there is a lot of demand. I have to make it clear that everyone who was interested in the MyChoiceHomeBuy scheme would have been told that they should not spend any money on surveys or solicitors, for example, until the funding was approved. Where the funding has been approved, we have released funding and people will get their equity loans. Now we are considering what we should do in terms of next steps and funding for the affordable housing programme as a whole.

My Lords, does the Minister agree that, although these HomeBuy initiatives are very useful as far as they go, in the great scheme of things they will help only a small number of people? The underlying problem is the acute shortage of homes compared with the number of new households formed each year. Does she accept the conclusion this month of the independent National Housing and Planning Advice Unit that, unless we substantially increase the supply of new homes to rent as well as to buy, after the recession we will face much higher house prices and much more acute shortages than we have had so far?

Yes, my Lords, I certainly accept that, which is why we do not renege on our ambitious target of 240,000 homes a year. We know that, no matter how difficult the current housing situation is, the demography and the demand will not change. We need to make available as much help and incentive as possible for the housebuilding industry in particular. As the noble Lord will know, we provided £200 million towards bringing forward unsold stock for social rented homes and, in the Budget, £400 million of kick-start for the stalled construction industry. We have to use a variety of initiatives to maintain jobs and the supply of housing.

My Lords, does the Minister agree that the current crisis in the housing market presents a real opportunity to get away from the emphasis on property ownership and back towards providing homes for people? In that context, would this money not have been better spent on providing socially rented accommodation?

My Lords, the challenge that the Government have is to meet the diverse demands of the housing market. The noble Baroness is absolutely right: it is not just about home ownership but also about social rented homes. That is why we made £200 million available for unsold stock to be brought forward from developers for the housing associations. We have given £100 million to local authorities to stimulate their own housebuilding programmes. We have to meet diverse needs, including those of aspiring home owners. We need to reduce waiting lists for those who need help in accessing social rented housing. We also need to help people who are in difficulties with their mortgages, which is why we have mortgage rescue and mortgage support schemes. We are trying to do all that while stimulating the housebuilding industry.

My Lords, will the Minister tell us who runs this organisation and how many people are involved in it?

My Lords, the MyChoice organisation involves 15 housing associations. Eight of those are members of the CHASE consortium and are equity loan providers. The housing associations are spread across the country—one in every region—and people who are interested in these sorts of products go to those housing associations, which help them through the process to see whether they are eligible and to find them a suitable property.

My Lords, I agree with my noble friend Lady Gardner that this is an absurd situation and distressing for potential home buyers, especially when there is cash that is unutilised in other housing schemes. For example, the HomeBuy Direct scheme has £300 million available but, amazingly, according to Hansard, as at the end of March no transactions had taken place. It is therefore heartening to hear from the Minister that, at last, the extra funds will be made available to MyChoice. Will she tell the House when this cash will be available for use? Would it not be better to have one pot for all the HomeBuy funds, so that money is made available as and when it is necessary and none of the schemes will run out of money again?

My Lords, the money that I spoke of—the £126 million to fund people—is now immediately available. I sympathise with the noble Lord’s suggestion that there should be one pot but, as I have explained, the diversity of need makes that difficult to provide. I know that this is no substitute but, because the terminology of some of these projects overlaps—HomeBuy Direct, Social HomeBuy, HomeBuy and so on—I propose to put a document in the Library that sets out the different schemes and the different forms of funding, which should help noble Lords. I am afraid that I do not recognise the figure of £300 million for HomeBuy Direct. What we have provided is £400 million to kick-start new land and new homes. HomeBuy Direct, which is the scheme where equity is shared with developers, may be funded from that, which might be what the noble Lord was thinking about.