I welcome this debate, and I am glad that the Government have made housing a key priority in this Parliament.
Much has been made of the affordability of houses. Although I recognise that a lack of housing supply and the unaffordability of housing for individuals and families are issues in many parts of the country, it is important that the policies implemented to solve them also take into account the situation in areas that experience low values.
My constituency of Stoke-on-Trent South, and indeed the whole city, poses a number of housing challenges, which often contrast with the national picture. A largely industrial city, Stoke-on-Trent is characterised by an abundance of Victorian terraced stock and a large number of undeveloped brownfield sites. Consequently, the local housing situation can be labelled “low-value”. We have, for instance, the second-highest number of properties in council tax bands A to D.
Such a low-value market creates its own problems of viability. There is little incentive for developers to consider brownfield sites, as the remediation costs coupled with the low eventual sell-on prices render most schemes unprofitable. Even the restoration of existing terraced stock, or the conversion of empty commercial properties to residential, is a challenge. In other areas, developers may land bank to generate excess profits at the expense of local housing supply. Unfortunately, in Stoke-on-Trent, land banking can often be the harsh reality that we face of land owners simply trying to avoid excessive losses. Of course, in many cases, profits are a matter of subjectivity, but where we have sites that fall into negative equity from the costs of redevelopment there does need to be some incentivisation.
A further potentially unseen consequence of persistently low-value markets is the lack of contribution that can be demanded of developers to aid infrastructure development to support planned and future building works. The community infrastructure levy, for instance, is a much simpler way to raise such funds when compared with the complexity of section 106 agreements, but is often not suitable for low-value markets, only further supressing marginal viability. Indeed, there has been a far lower take-up rate of the CIF within lower-value areas.
I welcome the measures that the Government have already taken to address some of these issues, including the £3 billion home building fund, the £3.5 billion private rented sector guarantee scheme and the £2.3 billion housing infrastructure fund. The latter has already made a difference, with £10 million of marginal viability funding from the housing infrastructure fund awarded to the city.
In 2015, Stoke-on-Trent City Council secured housing zone status, making it one of 20 pioneer authorities outside London. The council has also recently established Fortior Homes, a wholly owned company, in which it will initially invest £50 million to act as that catalyst for development, as well as stimulating the market, particularly in the PRS sector. I hope that Fenton town centre will see those developments coming forward in the very near future. What this recognises is that specific housing products within a market can be untested, and despite high potential demand there can be an unwillingness by private investors to take the risk of that first step—having the confidence to invest.
We also see demand for a range of different types of living. Yes, we need housing that people can afford, but we also need more family homes, more homes for the elderly, more tenures that have the flexibility of PRS and more executive homes for people to grow into. We have started to see those executive homes—I was very pleased to open the final phase of Wedgewood Park recently—but it is crucial that we do not lose sight of the unique and sometimes contrasting challenges in housing markets in low-value areas such as Stoke-on-Trent.
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