Good morning, and a happy new year. Welcome, everybody, to the Housing, Communities and Local Government Committee. This is our third session of our inquiry looking at affordability of home ownership. My name is Florence Eshalomi and I am the Chair of the Committee. Can I ask my Committee colleagues to introduce themselves please? Lewis?

Lewis Cocking, MP for Broxbourne.

Lee Dillon, MP for Newbury.

Will Forster, MP for Woking.

Sean Woodcock, MP for Banbury.

Chris Curtis, MP for Milton Keynes North.

Can I ask our guests to introduce themselves, please?

Morning, happy new year and thank you for the invitation to give evidence today. I am head of policy campaigns at Propertymark, the UK’s largest professional membership body for property agents.

I am the director of delivery at the Conveyancing Association, which represents 70 or so of the conveyancers in England, Wales and Scotland. I am also co-chair of the Home Buying and Selling Council.

Good morning, happy new year and thank you for the opportunity to come and present evidence to the Committee. I am the UK CEO of PEXA, which is a digital electronic conveyancing platform that is widely used in Australia; we are currently in the process of talking to lenders and conveyancers about a different way of transacting property in the UK. I have been in that role for two years. Prior to that, I spent the previous decade working predominantly in the property sector, looking at different ways to make the property transaction process work better.

Thank you everyone for coming this morning. For many people up and down the country, the new year signals the start of maybe finally putting your house on the market, maybe doing that upgrade and moving into a bigger property. But we have seen across our inquiry that the affordability element seems very expensive for so many people across the UK. Just an opening question to our guests: why is affordability and the housing mix such a difficult one to fix?

The new year certainly brings seasonal optimism from our estate agent members, and expectation that the market will pick up. Reflecting on 2025, I would say the industry data we published saw 35,000 more properties put on the market to sell in 2025 than 2024. The average exchange price increased by £4,000 or £5,000, but an additional 9,000 transactions fell through in 2025 compared to 2024. So the inquiry, and the UK Government’s focus on reforms to home buying, selling and material information in property listings, are timely. In terms of linking back to affordability and the element of stability and instability, again reflecting on last year, stability has come from inflation coming down—we had the four base rate cuts—but there has been instability in the market. In April 2025 the current Government did not retain the increased thresholds for first-time buyers, reducing them from £425,000 to £300,000, and the maximum value relief came down from £625,000 to £500,000 on the 5% portion above £300,000. Ultimately, at the lower end of the market for the general buyer, the nil rate threshold has fallen from £250,000 to £125,000. So stamp duty is a challenge around affordability that continues to come back from our members. Ultimately we had another fiscal event in November and, rightly or wrongly, there was speculation around stamp duty reform from August; that really put pressure on people’s decisions and was not helpful moving forward. We would like more formal conversations and engagement around stamp duty reform, which would be positive, with the Government and the sector. Average stamp duty deposits have increased: according to the English Housing Survey a first-time buyer will now need up to £78,000. Having said that, there is a final point reflected from our members: there are a lot of mortgage products out in the market to help first-time buyers with affordability, but knowledge of those products, both among the agent community and consumers, is perhaps low, and we need to do more to try to educate people around those products.

I would add to that the earnings to price ratio. Of course people’s salaries are just not going up fast enough to be able to afford properties, and property prices increase all the time. However, I know that my co-chair of the Home Buying and Selling Council would be shouting at me if I did not say that actually there are a lot of affordable homes. The problem is that consumer confidence is eradicated by the media. They talk about the standard average house price being £290,000, and at Land Registry, yes, it is, but of course that includes the £1 million houses. What is the saying? If I have my feet in the fridge and my head in the cooker, on average I am at the right temperature. The reality is that actually in every town there are properties that are affordable but consumers are just not aware of that. On top of that we have all the conversation that goes on about how awful and stressful it is to move house. It is the top of the top three most stressful things—the other two are death and divorce—so theoretically it is the only one with a positive outcome. But the reality is, as I think BEIS found in its 2016 report, that people lose £1,500 with fall-throughs. And as Timothy said, 20% to 25% of transactions do not go ahead at the moment because of the lack of information available, the complexity of title, and the material information to get the right buyer at the right price for the right vendor is not available.

That is what Nationwide said in written evidence to us, that the complexity of the process is also a key barrier putting many people off the home-buying process.

I would 100% agree with that, and with what both Beth and Timothy have said so far. Affordability breaks down into two key areas: first is around the price of the property, and secondly is about the cost of the transaction. The price of the property is obviously very heavily driven by supply and demand. That is very well known, and I know that the Government and other parties are already taking action to try to resolve that in some way, shape or form. But to the point that has been made about the quantity of fall-throughs, the current process is inefficient to such an extent that it now takes, on average, five months from me agreeing to buy your property to me completing and moving into that property. Whereas if we go back 20 years, it was three months on average. Obviously I am talking about this from a PEXA perspective, which is an Australian business that was set up to address some of these issues in the Australian market; the situation in the Australian market is that it now takes 30 days, on average, from me agreeing to buy the property to the point at which we complete on the property. There are multiple ways in which affordability can be measured and there are multiple ways in which affordability can be affected. Stamp duty is clearly a significant one. Making the home buying process more efficient and more effective so that it happens sooner improves the productivity for all the professional bodies—the lenders and the conveyancers—in that marketplace as well. They are in an opportunity where they can effectively—

If that was addressed, do you think you would see more supply in terms of the affordability of homes, and that would help improve the buying process?

Yes. One of my one of my main contentions is that people do not move house as often now as they used to. It used to be said that you would move—buy and sell a house—once every seven years. We are now north of 20 years. One of the key reasons for that is because it is actually such a painful process. When you ask what are the most stressful things that you do in your life, purchasing or selling a property is always second on the list after divorce. Obviously those two things often come together at the same time anyway. But if you could make it less of a nightmare and get it back to the process that it previously was, and make it much swifter, then it goes to the core of the so-called British dream about home ownership: the potential to actually own their own property. If they feel that they can do it, they will do it. Whereas, at this moment in time, a lot of people might be thinking about downsizing. Then they think about the process, about what their friends have told them about the process and—to Beth’s point—what they read in the media about the process, and they decide not to do it. If we could get back to that point where people were actually climbing the housing ladder, it would increase the supply of second-hand properties into the market to augment the supply of new-build properties that the Government are rightly focused on, and that that would bring a benefit to the market as well. Because as you climb the housing ladder you vacate the property you bought previously: you start off buying a first-time buyer property, and you move up.

I agree with what Joe and Beth both said. If we talk about first-time buyers and those on lower incomes, from an agent on the ground’s point of view it can often be difficult to know the financial situation of potential buyers. Where a buyer has sought independent financial advice, understands their budget before viewing a property and understands the timing of their mortgage application or has an early mortgage in principle, these are practical steps that the best, or the knowledgeable, buyers can take to speed up the process and help themselves to get ahead of the game. It may sound simple, and it is fragmented across the country, but where those steps are in place agents see buyers who are better along the process to get a property that meets their financial situation, but also understand what they are buying from the outset.

One of the challenges is that most mortgage lenders will give you an offer in principle that will last for three months, because the expectation was always that three months would be sufficient time for you to complete your property purchase in. But, as I have said, it is now five months on average. In a significant number of cases, therefore, the mortgage offer will lapse before you actually get to the point of completion and you will have to go and renew it, which is really challenging for the individual as well as for the lender.

That is one of the things that the Government cites, that that impact on one in three transactions is costing around £400 million a year, so it is quite a significant amount as well. Beth did you want to come in?

It was only to say that the Home Buying and Selling Council is made up of participants but also all the representative and trade bodies, and we have been working on this for seven years now. MHCLG recently launched the consultation on home buying and selling reform, which reflects a lot of the things that had come out from the Home Buying and Selling Council work. We know that where those solutions are deployed, providing up-front information to identify the material information, that would impact the average consumer by ensuring that buyers have already had a financial review, as Tim has said, that then means that transaction time goes down to five to seven weeks. We are seeing that where it is being tested and, in fact, where pilot firms have been testing it, it is now business as usual because it works so well. But the difficulty that we have is that with chains of transactions you can only go as fast as the slowest person. Unless we get some legislative commitment to have this across everybody—that has to be enforced as well—then we are not going to be able to improve the situation across the whole of England.

Obviously we have seen a massive increase in digital property transactions in Australia over the last decade. The research is showing that it works on over 90% of property transactions, over 20,000 a week. Just on that, Joe, could you tell us a bit more about what that process is like, and is there anything we can learn here in the UK?

Yes, 100%. The reason I came to join PEXA was the Australian experience, because of what the business had proved could be done in the Australian market. The first point to make is that PEXA is not a silver bullet that does everything that the Australian market does differently from the UK market. There are some other things I would support. Beth has called for material information as part of that. They have reservation agreements over there as well, so there are other aspects that make a difference to the overall process. But one of the key things that PEXA does—there are other digital platforms as part of that process—is that it effectively creates a digital hub that sits at the heart of the transaction, that the consumer, the conveyancer and the lender on both sides can have full access to, so everyone is looking at the same piece of information at the same point in time. Obviously over here we are integrated with the Bank of England and also with HMLR. Within Australia that is integrated with the Federal Bank and with state registries, so that you get to a point in a transaction when you can effectively set the system up so that it will say, “Okay, as long as everyone has greenlit the process we know the transaction can happen at a particular point in time.” So you set it up and you say that, at 10 am on Friday 9 January, that transaction is going to happen.

You’re going to exchange.

Effectively what it does is manage the money movement. It nets the money movement between reserve accounts at the Bank of England, and at the same time it lodges the interest at Land Registry. So it massively reduces the flow of money that goes through the system in the housing transaction process, which massively reduces the potential for fraud and other sorts of errors that can potentially occur that costs the industry vast sums of money every year over here.

Chris, did you want to come in?

Are there any barriers, on the Government side at least, to your system becoming as efficient in the UK as it is in Australia?

We focus very much on it being a market-driven activity in the UK, so we are focused very much on the conversations we have with lenders. The system currently works for 70% of cases in the UK, and provided that the lender is using the platform, you can use the system. There are two lenders that use the platform today, and we announced recently that NatWest will become the first of the big six lenders to start using the platform. Our strategy is very much around getting more and more lenders on to the platform, as that then makes it much more viable for the conveyancers to go on and use it because people do not want a dual process in some way, shape, or form. From a Government perspective a sense of direction would be really useful, as the market is very keen to look at the direction of travel and say, “Okay, are we going down the process of digitisation as a route?” That will effectively enable people to move away from the paper-based processes, which is the way that we operate today and is almost the last resort if you were thinking about how you would manage this process. To effectively say, “We’re going to go through a digital process going forward” would be a very useful thing. I do not think there is any significant legislation required. There have been some changes at HMLR, for example the introduction of the acceptance of qualified electronic signature. That is important because at the moment I can buy and sell businesses using Docusign, but I cannot buy and sell a two-bedroom flat in Scunthorpe using Docusign. We are getting through that and working really well with HMLR. What happened in Australia, and obviously each state is different, is that it got to a certain point where the land registries went out to the market and said, “We no longer wish to receive this the old-fashioned way, we want to receive it digitally.” Different states took different approaches. In Victoria they were very proactive and said, “Actually, when you get to 20% of completions happening this way then we want to mandate that as the way to do it going forward.” Whereas in Queensland they said, “You have to get to 80% before we are prepared to do that.” There will come a tipping point at which Land Registry will effectively drive that as they will be the people who will be impacted by this. At the moment round about 25% of work that is submitted to Land Registry needs to be sent back to the conveyancer for a rework.

Just to be clear though, PEXA just does the settlement—the financial transaction—not the gathering of information up front. So yes, all the stuff that Joe says makes a huge difference, but the real difference in Australia is the vendor disclosure element: the vendors have to have all the information relating to the property on the kitchen counter top, including termite reports and things like that, for the consumer to review so that they put in a binding offer. It is not a reservation agreement; it is a binding offer. They have a six-day cooling-off period during which they can identify if they have the financing sorted, then they agree a completion date and that is where PEXA comes in to do all the digital execution of the documents and the disintermediation of assets; so passing the money and getting the land registration in return. As Joe says, that has been so effective that all the states are coming on board one by one. Was it Queensland that came on board in August last year?

Tasmania and Northern Territories as well.

It certainly works, but PEXA—

How are we going to get that cultural shift in terms of moving to a more digitalised system in the UK? What do you think the Government would need to do?

We need a set data standard that is agreed. The Open Property Data Association has created the Property Data Trust Framework, and that is currently being tested in a sandbox environment to enable anybody that wants to join in to digitise and transfer data. All the stakeholders in the home moving process need the same data, and we have done some work on this in the Digital Property Market Steering Group, DPMSG, where each sector had a working group to identify what data they needed and when. Then we looked at it and went, “Oh, everybody needs the same data”, but there is so much duplication. Once we have it digitised it can be shared across all the sectors at the right time in a much more efficient process. To do that we need it to be digitised under FAIR principles: findable, accessible, interoperable and reusable. That will require a huge amount of work from Government to digitise local authority and Land Registry data, for example, to enable that to be shared, and we are just at the beginning of that process. There is a pilot being run through DPMSG of nine local authorities that are looking at highways and building regulations data. This all needs to be pushed forward and supported to ensure that it is delivered.

That is fair, but what I would say is that that progress can be made irrespective of all of that, to get the full degree of return. That is utopia and where we want to get to, but we cannot make significant strides at the same time we are doing that.

We do need the quick wins, do we not? And digital ID is the key one because that reduces that fraud element. For example the professional indemnity insurers will say that if we use digital ID and digital signatures then they can see that the insurance premiums will reduce by 60%.

Very quickly, Timothy—I am just thinking of time.

Yes, very quickly. From an agent point of view, all roads start from the title, and that is essentially the Land Registry. As Beth has alluded to, there is a local land search information project which started in 2018, but as of March 2025 we only had 110 local authorities that were fully signed up to that, so we are not even halfway. We need some extra investment from the Government to chivvy that along. People have held up the Nordic countries as an example—Finland or maybe Norway—where you can move in a matter of weeks. But what they did was to spend the time and investment to cleanse their information—I know it is a smaller market and not like-for-like comparable—but they cleansed all their data. All of that information on the property around leasehold restrictions, easements and so on, we have to get it correct in the Land Registry first.

If we abolished stamp duty, what do you think that would do to the housing market?

Wonderful things. This is just a personal opinion, but it is a hugely regressive tax. Clearly you need to have a property tax. If you look at somewhere like France, I believe it has an annualised tax in replacement of stamp duty. But stamp duty seems to me to be a massive barrier to activity in the marketplace. You are saying that the buyer is going to have to put forward tens of thousands of pounds in some way, shape or form, or that it is going to be added to their mortgage, which therefore reduces the number of properties they are potentially able to buy because you are paying that at the point of transfer. It puts people off buying property. To be clear, I am not an economist and I am not speaking on behalf of PEXA with this comment. I am just saying that for a long time now I have felt it is a hugely regressive tax, and there must be a better way. You are clearly not going to give up the revenue. You are going to have to get the revenue another way and doing it through some annualised taxation model would seem to me a better suggestion.

There are exceptions for first-time buyers, but not for final sellers—the downsizers—which causes a huge problem with the bedroom-blockers, like me, whose kids have left. Do I want to sell up and then just throw away a load of money on stamp duty, or just stay where I am? That is why that average home moving time has gone up to 19 years: people are not downsizing now, and they are bedroom-blocking.

In an ideal world we would say, “Yes, get rid of stamp duty.” We know from the holidays that we had throughout the pandemic—May and August 2020—that property selling was two weeks faster back in 2008-09, and transactions increased by 8%. So there is clearly an appetite for people to move, to look to the market, when they see stamp duty removed. Ultimately, while there perhaps needs to be another conversation around where the Government get revenue from, there is a knock-on impact in the wider economy. On average people spend a minimum of £10,000 when they move in terms of the supply chain: professional services and basic furniture removal. So there is an economic benefit to having reduced or no stamp duty in the economy. We have said that realistically, lower rates across the board would maybe get the Government some money and stimulate more activity. So they could maybe get more transactions than the revenue that they could get by bulk sales at the top end of the market because the rate is lower for everyone. But there probably needs to be a better conversation around more regular updates to stamp duty bands so they are reflective of wage and house price growth, and there are obviously geographical differences as well, so the higher starting purchase price is more favourable for people. And as I say, we need to have more engagement. As a Government we do not regularly review stamp duty, there is no sunset clause to say we will do it every five years. It is ad hoc and at fiscal events: it just creates uncertainty and we are at the behest of different decisions on an almost annual basis.

Beth, you said there were some exemptions for first-time buyers.

There are 49 exemptions across stamp duty, which is a nightmare for people to work through.

The threshold is about £250,000 across the country in terms of first-time buyers.

It has gone to £300,000 now.

Yes, £325,000.

Do you think that needs to be regionalised? There will not be many properties below that in my constituency, whereas if you go further north in the country there will be more options for people to be able to get on the property ladder and not pay stamp duty. So do you think, if they were not to abolish it, at the very least the Government should look at thresholds across the country and maybe regionalise those?

If you want to stimulate people getting on the property ladder, absolutely. That has to be the thing that you want to do because if you get people on the property ladder then they have forever security. It means that if they fall on hard times the Government are not going to have to be paying their rent, just the interest on their mortgage, which is so much less. So yes, that makes total sense, and it would be a really good idea to regionalise it.

Just on the abolition of stamp duty, there is a suggestion that while it might stimulate some transactions it does not fundamentally transform things, in the sense that what you are doing is putting more money in the pockets of the same people who are buying the houses; it does not open up the market to a wider range of people. How would you respond to that?

It might well happen in that way because it is a market activity in some way, shape or form. I am not convinced, however, that when people think about it, what they think about is the value of the property that they are acquiring. Let us say that they were buying a £300,000 house, and they were paying £50,000-worth of stamp duty; I do not know if that is correct or not. The reality is, if they thought they were buying a £350,000 house they would feel a lot more comfortable with that idea, rather than saying, “I am buying a £300,000 house and I am giving £50,000 to the Government.”

You would have to balance that really carefully, because of course that impacts affordability. Hopefully in the first half of this year the FCA will be coming out with a consultation on affordability reform, as it feels it has gone a little too far now and people who can prove that they can afford their rent should therefore be able to prove that they can afford to pay their mortgage, which will be less than their rent. So the difficulty is, if you are then sticking on another payment that they are going to have to make on a monthly or an annual basis, that will impact affordability. And for first-time buyers, of course that is going to be key.

Do those people who would be downsizing have that sort of money sloshing around in their pockets? Because they will be on pensions and things like that. I suppose you could enable them to capitalise—

They will do when they downsize.

Hopefully they will, won’t they? But then they have to be the bank of mum and dad and facilitate their kids to get on the property ladder.

Should they? That is a question for politicians.

I would agree with Beth. From my point of view people will sit there and think to themselves that a monthly payment is far easier for them to consume, if that makes sense, rather than some astronomical sum of £25,000, £50,000 or whatever that number would be that they lose. And the point is they lose that on the transaction; it is not simply part of their ongoing cost of owning a property.

From a consumer point of view, is there an understanding of what stamp duty is and why it is paid? At least council tax is a monthly charge. Of course there is some cynicism around local authorities to some extent, but you can see what it pays for and what it does, so maybe that needs to form part of the conversation. But ultimately let us have a review, a consultation, an open conversation with the industry, rather than leaks through the media and speculation. That is the positive way forward.

From my point of view, if you have a digital property transaction that is a lot simpler and a lot more transparent, then people should get a lot more information out of that. And because of the impact that the potential of a solution like PEXA has on the reduction of fraud and intercept, that takes out a significant proportion of cost base that exists within the market as well. Stamp duty aside, there is a significant cost to transact, but then there is also the cost of a failure of the transaction. As both Beth and Tim have said, 30%-plus of transactions in the UK do not complete. Say I am going to buy a house and then that simply does not happen, that impacts affected individuals by over £2,000 on average. So effectively you go into a process where you intend to buy a house—this has happened to me as well in the past—and you end up coming out with absolutely nothing but a £2,000 bill.

Is that mainly the buyer, in those cases?

Yes, it is predominantly the buyer that is going to be having those costs. There are certain items that you purchase up front, but a lot of the professionals do not get paid when a transaction aborts: the estate agent does not get paid, the majority of conveyancers do not get paid and the lender gets no return on the money that they have effectively had to put aside and the processes that they have had to go through. That is a cost which is borne across the industry. So if we were able to take that 30% down, and let us say you get it to 15%—it would be nice to get it close to the 1% they get in Australia—then that is a fundamental productivity saving that the entire industry can effectively enjoy, and you would expect some of that to be passed on to the consumer.

The Digital Property Market Steering Group is creating a Digital Property Information Protocol, which will be an online website where consumers can go and see what they have to pay when, who does what when, and who to go to for advice. What should Government do? They should fund the website. The MHCLG chairs the Digital Property Market Steering Group, yet we are constantly struggling to try to get these things delivered because we do not have any money; it is all done voluntarily. So some funding would be nice. But, as Joe says, we need to reduce the transaction times and the fall-through rates. That will have a huge impact: as I said earlier, £1,500 is lost each time it falls through. The other thing we should do is pass the material information, the up-front information cost, from the buyer, as it is currently, to the seller. We have done lots of surveys of home movers and even those who are selling say, “Yes, I should be paying to provide the searches, the condition report, the title information and the property information, because I know I am selling that house, whereas a buyer does not know if they can buy it until they actually have that information.”

Yes, certainly in Scotland we have the home reports where that information is paid for and provided by the seller. In Norway, Denmark and a lot of Europe it is provided up front. And obviously in Australia vendor disclosure is provided up front.

I have two points on affordability around education: those points around getting independent financial advice, getting your mortgage in principle and knowing your budget. One thing they have done in New Zealand is create a first-time buyer decision tool that indicates costs of professional services and what you might pay in property tax in the round, and actually it may be worth having a look at the success of that. A tool like that sat in gov.uk, which is a trusted brand website, might be helpful for people to understand costs going forward.

It is quite a complex matter and conveyancers are obliged to, and do, provide a breakdown of what the consumer can expect to pay as part of that process. But often appointing a conveyancer is quite late on in the process, so people go into the process right at the beginning of it based on information that they are getting from other parties, then potentially the conveyancer provides some of that information at a later point.

And they do not have the information to be able to get a full quote.

Correct.

So they will not know that it is leasehold, or that it is a Building Safety Act property and that that conveyancer cannot act on it, or that there may be estate rent charges. That is the other problem we have: the sheer complexity of title created through the leasehold issues that we are still trying to resolve, and we have the leaseholder review before—

We could spend all day on leasehold, trust me.

That is why we need to invest in the Land Registry, and the registers across the UK.

Yes, and commonhold.

Just moving on to a slightly different issue, do you think the Government should regulate property agents? And if that happened and they were required to be qualified, is there enough capacity to support that transformation?

I am nodding because last time I was giving evidence to the Committee this is exactly what we all said: yes, we need regulation of property agents. Not just estate agents selling, but also property managers managing blocks. The reason is that there are so many out there that do not actually know the law and that they are supposed to be providing material information. And there is no enforcement because National Trading Standards has the responsibility for enforcement but no resources, so it is going to put all its resources into things that would impact public safety rather than worrying about people buying property. We need to have regulation of property agents, and I am certainly regulated under the Council of Licensed Conveyancers and the Chartered Institute of Legal Executives. I know that I absolutely follow whatever my regulator tells me to do, because otherwise there will be enforcement: it will either take away my practising certificate so I cannot earn any money, or it will fine the company that I work for. If we have that, all we need is the media to start talking about agents getting fines or being asked to supply undertakings. If they are asked to do things properly and they are notified that they have it wrong, and if they know that the next step will be a fine, then that will get them moving into order. But at the moment we do not have a level playing field, so the brilliant ones that are part of Propertymark, for example, will be working really hard to follow the law. But then their competitors will be going in saying, “Oh, don’t you worry about that, we’ll get the property on the market immediately without any material information, we’ll carry the can.” And so they win the listing. That is so unfair, but it also means that the transaction is more likely to fall through and will take far longer.

I will let Timothy come in on the subject of actual regulation of agents because obviously that is very much in his area. I picked up on the word capacity there. I have a genuine concern about the capacity of the conveyancing market going forward because we have seen 15% of conveyancers leave this marketplace in the last two years. I did a survey three years ago which said that 30% of conveyancers were intending to leave the market within the next five years. So the stats that we have seen, and more recently evidence from the response that we got on the survey, was accurate. That is partly because the job of conveyancing has become far more complicated and time-consuming than it was ever set out to be. These are serious people with professional qualifications in the subject, that are regulated but are choosing to leave the industry because, to be frank, a lot of the time the feedback is it is just simply not what they once expected it to be. Unless we change the way that we convey property in this country, we will get to a point over the course of the next few years where it does not matter how many new houses you build, the length of time to transact will just get longer and longer and longer because we will have bottlenecks, and conveyancers will be finding the process incredibly difficult to manage. I do not know, Timothy, if you want to come back on the third point.

The simple answer is yes, and Propertymark has long held that position, to drive up standards, level the playing field and bring more accountability to estate agency. As Beth has alluded to, we need to have it across sales, lettings, and block management to ensure we have that consumer protection; obviously a statutory code of practice; and reforms that standardise home buying and selling. People are ultimately then working to the same standard and the consumer has access to the same protections. In terms of the capacity, we have seen membership growth year on year, and members need to be qualified in order to get into Propertymark membership, so they are doing that on a voluntary basis. In Scotland, where there is letting agent regulation, we have seen higher standards of satisfaction and professional competence when members have been surveyed. So we welcome the fact that Government have looked at it; hopefully there will be further consultations and conversations on that, but it is definitely a part of the puzzle for consumer protection, driving up standards and levelling the playing field.

It would be good to quantify some things that we have been talking about. Do you have the numbers for, say if you were to buy an average property for £300,000, what the cost of that transaction is, broken down by the biggest elements? Obviously on that property you would not pay any stamp duty, but how much would the rest of that process cost you?

If you were a seller you would be paying about 1% in estate agency fees. Would you agree, Tim?

It would be 1.23% including VAT.

Brilliant, and it should be more. Then with the conveyancing fees it could be anywhere between sort of £800 and £1,500, on average. But if you then add in the complexity of the title—so if it is a leasehold property, a managed freehold, a state rent charge, or if it is going to need a deed of variation—that just adds and adds and adds things on to it. One of our members will not take on any work for less than £3,000 because to be able to provide a service and get people moved in three months, that is how much you would have to charge.

Would that be another 1%?

Yes. So if we say that is probably another 1%, and then, of course, you have the stamp duty on top of that as well if you are buying onwards, so that—

So we are probably looking at somewhere around 2.5% plus stamp duty on top of that.

Is it around 3%, Tim, I thought, in total?

Overall.

Overall, which, compared to somewhere such as America where it is 10% and other places like that, then—

Do we have a comparison of what the number would be in Australia?

I do not, but I can write to the Committee and provide you with that information.

That would be helpful.

That would be good, as obviously I am asking because we talk a lot about increasing supply and the impact that would have on affordability, which is a big, important focus of this Government. But it would be good to have the two numbers side by side: what could be achieved by increasing supply and decreasing transaction costs, in terms of affordability. Anyway, the question I was supposed to ask is that we have talked a lot about the simplicity of the process. Is there any more that you think lenders could be doing, Beth, to speed up or simplify the process?

Absolutely. They have a handbook that contains all their instructions that they are digitising at the moment, but they are now talking about charging conveyancers for accessing those handbooks. Unfortunately, conveyancers do not get paid by those lenders to act for them on those instructions, and I am afraid, as Joe said, we are going to see more conveyancers leaving the market because of that. They will not want to be paying to access something to receive instructions that they are not getting paid for and that they are likely to be sued on if they get it wrong. Lenders could also be looking at supporting affordability for first-time buyers better. There are three that I know of: Skipton will enable their affordability to take into account whether they have been paying their rent successfully; Nationwide do a Helping Hand mortgage scheme; and Yorkshire Building Society will allow a £5,000 deposit. So there are ways that lenders are doing things, but it is not across the board. Do you all remember we used to have interest-only mortgages back in the day? That maybe went a little too far, but we are also looking at whether an interest/repayment mortgage could help, where it is part interest, part repayment, and being able to mix that up when your affordability changes with your lifestyle. So once we get some of these products being attempted, tried and tested we will know more, and as I say the FCA is consulting on the form of that. The wonderful thing about the lenders is that they are very competitive, so once they see that someone is doing something that is winning all the business, they will get on with it as well.

The Government have announced plans to replace the lifetime ISA. What improvements would you like to see to that product?

The lifetime ISA works very well. My daughter used it for her purchase; it worked a treat. But we hear that a lot of people put the money in but then decide not to buy a property, or they want to take money out and then they lose out on that. There was a proposal that that should become more flexible so that people could receive a decent amount of return to encourage them to save up to buy a property, but if they need to take the money out for some other life event then they can do that without such a big loss. Maybe putting it along the same lines of your normal equity ISA, for example, so that they still make a return on it but without the grant from the Government because they are not buying a property.

There is a lot of inefficiency that exists within the overall market and lenders are not immune from that: there is inefficiency that exists in the lending operations. We talk to lenders a lot today about how, for example, they actually report on the title interest that they effectively have to register at Land Registry as part of the process. A lot of lenders will have significant processes in place to effectively manage that and that costs them, it costs the Land Registry, and it costs the overall industry quite a lot of money. Land Registry alone recognises that it costs it £19 million a year, so imagine that factored out across the industry: it is fairly substantial. My argument is always that actually, if there are ways that we can make this process more efficient, then that obviously should have impacts on the affordability of lending, and therefore that should effectively have an impact on the affordability to consumers of what they are buying; whether it be services from the lenders or services from the conveyancers.

The feedback we have had from property agents on the whole is that the products out there and the lifetime ISA are good; there has not been negative feedback. In the last 12 months and beyond we have seen a trend from members reporting that they have seen fewer first-time buyers buying doer-upper property because deposits are higher, particularly among first-time buyers, or the need for further deposits is higher and there is less money to go around. That means that there is almost no renovation fund, no money to do up an empty property or, where first-time buyers have had to move to another area, no support to relocate. It does not directly answer your question about lifetime ISAs, but that is some feedback we have consistently had from agents across the country.

Is the £450,000 cap on the lifetime ISA high enough?

I would have thought so, but probably not.

I am guessing it is a particular problem for new builds and, particularly in the south of England, you are not going to get one for less than £450,000, even as a first-time buyer.

Yes, I suppose the average—

Sorry, I thought you meant the money being put into the ISA is capped at £450,000. So are you suggesting that they buy for cash?

No, the price of houses is capped at £450,000.

And that is without incurring the penalty, is it not?

Yes, it is probably best if I come back to you on that one, if that is all right.

Thank you very much for coming before the Committee this morning. We had some really interesting ideas, and we will definitely keep in touch with you as our inquiry progresses. Witnesses: David O'Leary, Steve Collins and Paul Rickard.

Welcome to the second part of our inquiry this morning on the affordability of home ownership. Can I ask our guests to introduce themselves please? I will start with Paul.

Thank you. I am the chief executive of Pocket Living. We are a SME London-based developer and the only developer in the country that focuses on selling discounted full ownership homes. Prior to that, my background was in housing associations, including Clarion.

I am the chief executive of Rentplus-UK, an affordable rent to buy housing product. We have a number of organisations and companies within our structure, one of which is a regulated housing association. I have been operational within the housing industry—both public and private sector—for the last 30 years.

I am an executive director at the Home Builders Federation. We are the principal trade body for home builders in England and Wales.

Good morning, gentlemen. Chris’s last question to the previous panel was about what more lenders could do. My question to you three is, what are you or your members doing to provide more affordable housing in this country, and what more could be done? Your products are really interesting, and the space is yours. Shall we start with Paul and work our way down the line?

I am happy to start. What are we doing? Where we can we are building homes, which as you will know is incredibly difficult at the moment. It goes back to the question you opened with in the previous session, around affordability. One of the reasons we are very happy to join these types of events is to try to shape that agenda so that we can deliver the homes that are needed. The affordability piece plays into what lenders can do and what Government can do. Affordability can be a misleading word; this is not necessarily about affordability, it can be about accessibility and other challenges as well. I would break it down into four areas, the first being deposits. I know this Committee spoke at length about the mortgage guarantee scheme in the previous session, which unfortunately is insufficiently taken up at the moment. No major lender is providing it on new build flats, which is certainly a problem for a London-based developer of affordable flats; 95% mortgages are not available to our buyers.

What is the maximum value that your buyers get?

Typically, it is 85%. For our homes, there is only one mortgage available right now at 90%, and the extra interest that you would pay on that is over 1% more than an 85% mortgage. So although it is available, it is not very attractive.

That is the affordability issue.

Yes. Secondly there is the loan-to-income ratio. As you know, the banks are broadly capped at 15% of their mortgage book being over 4.5%. That is a challenge for our purchasers because they can afford to spend more than 4.5%. If we look at the rental levels they are paying in London, if they move into a pocket home their outgoings will be less than they were paying in the private rented sector for a much higher-quality product. That is where the affordability confusion arises. They can afford it; they have been paying it for four or five years, but they cannot get the mortgage. It also fails to reflect the earnings potential of the first-time buyer. Typically, first-time buyers will be at the earliest stage of their earnings potential, and a 4.5% in three years’ time will be very different to a 4.5% today. Thirdly, of course, there is sentiment. You cannot quantify it and it is a very difficult thing to solve, but when we speak to our buyers, those who progress and those who do not progress, sentiment carries as much weight as affordability.

Rentplus-UK is a unique product. We predominantly deliver homes within the section 106 affordable homes market, addressing the principal barriers that people face in accessing home ownership products: principally the deposit, mortgage eligibility, and level of earnings over time. Our product is designed to transition people into home ownership over a very structured time frame; we offer four purchase points at years 5, 10, 15 and 20. We work with tenants during that period of time to ensure that they are mortgage-ready and that they have undergone learning, training, development and so on to get them into the best possible situation in terms of their earning potential. We also help them with any perceived bad debts. You can move into a Rentplus product without a single penny; there are no deposit requirements at all. When you choose to purchase, we eradicate the deposit barrier by providing a 10% cash deposit, which in the main is accepted by the national mortgage market. Our experience is that just over 70% of our tenants have bought their home at the time that was originally planned when they first moved in. Tenants know the timing of their proposed purchase point on the very first day that they move into their property, and that really drives their aspiration to learn, develop and achieve the ambition of owning their own home.

Is there no up-front cost?

There is no up-front cost at all, and from a taxation perspective, it is really good value for money for the public purse. It is all funded through institutional investment funds. There is no grant or subsidy that goes into our properties at all, other than the acquisition through section 106.

Both those statements cannot be true. If you get money from section 106, that is—

It is not cash from Section 106, it is effectively a discount. So the developer pays for that, not the tax system.

We have seen a lack of take-up of section 106 properties, particularly from registered providers. Has that given you more market share? Are you growing because of the lack of section 106 take-up?

Yes, a significantly larger proportion of opportunities have arisen during 2025 and now into 2026.

Sector-wide, as Paul says, our members are building homes wherever they possibly can. Strictly from the affordable housing perspective, over the last five or 10 years about 50% of the country’s affordable homes have been built through private sector cross-subsidy through Section 106, but at the moment, we are massively constrained on two grounds. First, viability; Zoopla published a really good report a couple of months back showing that about 48% of the country is constrained by viability. It is either marginally viable, or not viable at all, to build homes in those parts of the country. Secondly, the rest of the country, largely speaking, is constrained on affordability grounds. As Paul said, we talk about affordability in very general terms, and it is assumed that we know what we are talking about. But for new build especially, we are constrained by the lender’s perspective of new build. Since Help to Buy closed a few years ago, lenders are effectively incentivising first-time buyers into the existing market, the doer-upper-type properties that we have heard a bit about this morning. Lenders are setting loan-to-values, especially on new build flats, as Paul has said, and that is where we have the challenge. So you have this twin problem of affordability and viability. The planning reforms we have seen over the last couple of years have been really positive, but we are still constrained by the pure economics of not being able to build homes.

I want to come in on to Help to Buy and other potential schemes in a second set of questions.

I thought it might be helpful to expand on the product that Pocket Living offers.

Could you cover the demographics you target as well? Then, Steve, I will come to you for that same question.

Absolutely. When Pocket Living was founded 20 years ago, we referred to our demographic as the city makers. These are the people London relies on; without them, there is no city, yet they cannot afford to buy in a city that would not exist without them. That was, and still is, at the heart of Pocket Living. You could refer to those people as key workers, especially with the wider ONS definition we have today. Some 40% of our buyers identify as public workers, but if you were to use the ONS definition, it would probably be in excess of half. The average age is now 37, which is up from 32 in 2021. The average earnings of our buyers over the same period have increased from just below £40,000 to just below £50,000. These people had deposits of £58,000 that are now up to £85,000, which of course is against the London average of £150,000 for a first-time buyer deposit and an average property value of over £500,000. As to the Pocket Living product, our current stock averages £269,000 with an entry point at £200,000, so it is arguably the most affordable full home ownership product in London.

Is that a one-bed property?

Our products are solely one-bed, 38 square metres, compact, well-designed homes sold at a 20% discount to market. They are only sold to qualifying individuals: those who earn below the Mayor’s income threshold, do not already own a property, and live or work in the borough.

And you, Steve?

We have a national portfolio. We predominantly focus on key worker family accommodation, so we have a mix of one to four-bedroom houses and apartments from Plymouth through to Northumberland.

I had a look at your website before the meeting, and I see you have some in my local authority area. I do not think I need to declare an interest in that, but it was interesting to see.

Not unless you are buying one, Lee.

They did not have any for sale. Actually, the upcoming list on your website is quite short; there are about 12 properties on there.

That is right, because we are currently going through a fundraising exercise. When more institutional investment funds come through, that list will grow significantly over the next six months.

We heard about home buyers and the complex set of documents needed to complete a purchase. Do you think that consumers have enough information to access affordable products such as those that you offer? From a federation point of view, do you think that people have enough knowledge about affordable housing products and the help available?

It is a bit of a frustration, actually. A Government website that detailed all the public-supported schemes that were in operation was quietly closed down a year or so ago, maybe less. It was a really good one-stop shop. At the time, there was information on Help to Buy, but also other things such as shared ownership. There is a lack of information out there, and a lack of events such as this; as an industry, we could do more to help publicise what is on offer. The last decade or so has been a very difficult period. We still get inquiries about starter homes at HBF, and those are obviously long gone. First homes are still hanging by a thread; they are prominent in some areas but not in others. We have seen a slightly disjointed approach grow out over the last five or 10 years.

That is quite interesting. People still talk about council housing, when they are actually referring to social landlords. Housing terminology has been built layer upon layer upon layer, and people refer to lots of different products, or the same product with lots of different names attached to it. Steve, did you have any further comments?

I was going to say that there is a massive information void. Most information on the internet covers Government-supported schemes, of which Rentplus is one, but of course a multitude of options are available to people both in the private market and what I would consider to be the public market, which is the affordable housing element. In the previous session, you were talking about an affordability decision tool in New Zealand; I made a note of it. That would be a really good way of enabling people to seek out the housing options available to them based on their own affordability criteria, whether that is a rented property, a purchased property or a transitional product.

I will add to that. There is not enough information. We spend a lot of time running our own first-time buyer seminars to help educate people; especially when you are coming in as a first-time buyer: where do you start? You might be fortunate to have parents who can take you through the process, but most people do not go down that route. It is interesting what you just said, Lee, about the layering and layering and layering. That is also a barrier to institutional investment within housing. We speak to European institutional funders, and they say, “We would love to invest in affordable housing in the UK, but it is just too complex. We do not understand it.” If senior people at institutional partners who are responsible for $10 billion in funding cannot understand it, how is the average person supposed to? On the flip side, there is the irony that despite it being very complex and layered, there is still no innovation within the home ownership space. As far as I am aware, in the 40 years that the shared ownership programme has been running, Pocket Living is the only new innovation in home ownership. We actually have both problems.

What support are the Government offering to boost the provision of affordable housing, and what more can they do?

That is a very interesting question, and could lead to a lengthy answer, which I will do my best to avoid. Broadly, there are a number of things the Government can do, including stabilising the market in some way, shape or form. Continuous change around policy, planning reform, and renters reform is all seen in the market. It really is tinkering around the edges of policy, but some decisions have profound impacts on how the market reacts. From an institutional investment perspective, standardising the securitisation of assets, mortgage and possession clauses would attract a huge amount of investment into affordable housing, which runs into Paul’s previous comment. I also think it is really important to provide a level of flexibility about the type of housing and tenures that are deliverable in local areas. Local authority and Government policy tend to focus on social rent and shared ownership, completely missing out anything that meets affordability need, or criteria that sits somewhere in the middle. Sadly, that is a growing part of our society today. There are more and more working households that cannot get on the ladder for one reason or another, but there are a multitude of products available in the market that would enable you to meet the needs of those people. Yet there are no policy statements or policy reform facilitating the delivery of that innovation. That is a fundamental part of what is missing in Government policy right now.

You talked about local government as well; is there more that local government could do in working with your sector, and with your type of products?

Yes, 100%. We work with local authorities all over the country. At the moment, we generally require a deed of variation to a section 106 to ensure that there are appropriate controls around disposals, deposit management, and all those things, which are designed to protect the tenants as they move into home ownership. Generally, each one of those discussions with the local authority is bespoke, but they do not need to be. A series of model clauses could be inserted into a local plan to say, “This is permissible.” Yet local authorities do not do that, and they do not do it because they fear innovation. There is no policy directive that necessarily talks about them engaging with innovation. I speak to local authorities, as I say, on a regular basis, and their priority is seen as social rents, particularly through section 106. Obviously, that is about meeting housing needs for the most vulnerable in society, which is absolutely right. But if we ignore the lower and middle-income households, the very people who deliver our local services—our nurses, policemen, doctors and so on—in terms of them being able to access home ownership products within their local area, we are going to end up with societies where people will not want to move into those sectors anymore because they are not able to sustain a reasonable standard of living or meet their housing aspirations.

Paul, did you want to add anything to that?

I agree with everything Steve has said. Our own research shows that 52% of key workers in London are talking about shifting profession because they cannot afford housing in London; we already have the worst nursing shortage anywhere in the country. We could talk for eight hours on this question, so I will just make four suggestions. First, tweak the mortgage guarantee scheme so that it is attractive to lenders, making it at best commercially neutral, and then strongly encourage the roll-out to new build flats and houses. That will help solve the deposit issue. We acknowledge that the banks are now offering more high-leveraged products, but those can come and go, and they are inconsistent. Secondly, abolish the 4.5 income multiple for first-time buyers and let regulated UK banks use their own credit systems. They are very good at what they do, and the current system does not support the characteristics of first-time buyers in that space. Thirdly, and this links to a question that came up earlier, recognise and accept that it is okay to distinguish between London and the rest of the country. Their values are significantly different. We are not talking about different treatment, we are not talking about different policies, we are talking about different levels. You asked about the £450,000 cap on LISAs and the £300,000 cap on stamp duty. Having a differentiation between London and elsewhere, and linking it to average values across the country, would make sense. The precedent exists; Help to Buy was differentiated, and other policies have been as well. The last thing I would recommend is a more level playing field for intermediate housing products and innovative products like Rentplus and Pocket Living. We are still in a mentality that is 30, 40, 50 years old, where we say, “For those in society who need it, we have social housing. For those who can afford it, we have private housing.” That used to be the case; when my grandparents were growing up that absolutely was the case, but it is not the case today. There is a huge gap between those two markets. The idea is not acknowledged because people say, “We need and want social housing.” There is nothing wrong with that, but as a result you do not get a level playing field. Take CIL charges on intermediate housing, for example, we pay CIL but shared ownership providers do not, yet our homes are more affordable and less profitable. There are three different definitions of affordable housing, and that is why we benefited from the first phase of Help to Buy but not the second one. There is no consistency and nothing that supports and recognises the importance of intermediate housing for working people.

Can I just quickly add that there are two big things we would like to see the Government do on section 106; first, to address the problem of registered providers not taking section 106 units.

Do you find that has increased a lot with the RPs?

We would probably categorise it as stabilised but not improving. It has been a longstanding issue. We think a reasonably simple solution in the short term would be to direct local authorities and RPs to be a bit more flexible. Secondly, which is more fundamental and long-term, over several years we have chipped away at affordable housing in terms of the priority it is given in the overall envelope of developer contributions. If you assume that each development has a certain amount of viability, and developer contributions can provide whatever the community wants or needs, central Government is increasingly taking a much bigger part of that cake than it used to. Take things like BNG, or the building safety levy that will come in this year; for every new build home that could be provided for affordable housing, an extra £3,000 will be going straight to central Government. Landfill tax is the same. That is not about this Government in particular; over the last decade we have increasingly seen different Government Departments taking more and more of the viability out of development. Ultimately, the first thing that gets squeezed is affordable housing, so at the moment we are seeing section 106 numbers falling in terms of overall units.

I know you are here to represent builders, but basically you are saying that registered providers should be more flexible and take a product that they are not happy to take.

No, not that they are not happy to take.

But if they are not happy to take it, that is why they are not taking it. The retrofit costs and the EPC ratings and the gas boilers are part of why the section 106s are sat on the shelves for RPs.

Yes, and in that instance we are all victims, really, of the inaction that we have seen in terms of Government policy. If we put the future homes standard in place, then everyone would be working to the same standards. In recent times we have seen RPs in particular saying, “We want the future homes standard.” We still do not know what the future homes standards are, but people are making assumptions and asking for what is well beyond current building regulations and current standards.

I will bring in Andrew, quickly, as I am mindful of time limits.

Can I come in first on that one? You are right, the announcement of such huge numbers is fantastic. We are even more excited by the National Housing Bank and the increased flexibilities that will be there with Homes England, including the mandate to help SME developers. Let us be clear, SME developers are on the road to extinction. There is no question about that whatsoever, and it needs to be a serious concern. The challenge with the affordable housing grant element is that, again, it does not encourage innovation. It can only be applied to four core products: social rent, affordable housing, rent to buy, and I forget the fourth one—I am on the spot—but the point is that it cannot be used anywhere else. When we are trying to work with the Government, MHCLG and local authorities to provide a new housing product—for example, a subsidised key worker product would be fantastic—there is no flexibility to offer a grant against that. You have this dichotomy where you have the National Housing Bank, which is brilliant and will unleash help, but then the affordable housing sector is saying, “Yes, we have lots of money, but first, we can only deploy it in these four categories. Secondly, if you look at the numbers, 60% is allocated to social rent. For the numbers we want to deliver, that is a £130,000 grant per home.” That does not touch the sides right now. The starting point of £39 billion is brilliant, but we must make sure that Homes England has the flexibility to do more with it than is currently suggested.

I would just make the point that the affordable housing grant is only applicable to non-section 106 units. It should enable the creation of additionality, not ones that are being delivered through the planning subsidy and planning requirements as part of Section 106. What you have is an affordable housing market that has retrenched from investment; they are not purchasing section 106 for various different reasons. Then you have innovations like Rentplus and other products that want to purchase or acquire those section 106 units so that they can then work in partnership with other providers or our own housing provider to deliver the additionality and utilise the grant, but local or national policy is not necessarily supportive enough to enable that to happen. What you actually end up with is getting the section 106 delivered effectively for nothing as part of that development cost, but then you can acquire a number of built units on that development as additionality, so you are increasing the proportion of affordable housing across the development. Having some clarity around how that can be delivered would really help local authorities and their planning departments to understand it. I have worked in situations where a local authority has actively bid against us to deliver their own section 106 homes, which seems a bit ludicrous. That is actually costing the state. Why not utilise that recycled capital grant funding on non-section 106 units to create additionality and let other players in the market bring in institutional investment funds to deliver the section 106? The rules of engagement in delivering 106 and additionality just do not seem to be consistently employed across the country.

We see that play out in the whole discussion about RPs not taking section 106 units. In some instances, particularly in southern England, RPs may not want the section 106 units on a site, but they may be willing to pay near open market price to a developer to buy pretty much the same homes, where they can use Government grants and create additionality. You have this weird position where there is existing subsidy in a set of homes on one part of the site, but the RPs want a different one so that they can access a Government subsidy directly. On the £39 billion, yes, we are really positive, and all the other reforms happening in the social space at the moment seem to be putting the RPs on a firmer footing. The £39 billion is particularly backloaded, so it looks like it will probably decrease or flatline in the next five years. It is going to be good in years five to 10, which is where we will start to see the benefits.

Part of the problem, David, is that the section 106 homes are one and two bedrooms, when local authorities are crying out for three bedrooms. Developers are not building the appropriate homes that the local authority or the social landlord want.

Yes, absolutely. We have had many discussions with Governments over the last few years about the disjointed nature of this. A developer will agree the Section 106 package with the local authority, and the local authority will rightly say, “Our need here is for one- and two-bed homes, so we want mostly one- and two-bed homes as part of the Section 106.” The RPs may not want those homes, so you have this weird situation.

I do not think that is a true reflection. Most local authorities will be asking for three-bedroom family homes, but the developer will build one and two-bed flats for which there is less need. That is certainly my experience.

Sorry, if I can interject, it is certainly not my experience. It is a consequence of the planning decision and the schedule of affordable homes that is produced as part of the section 106 agreement. That is mutually agreed between the developer and the local authority. From a developer’s perspective, it is more economical to build smaller homes and the local authority are accepting that as part of the section 106 agreement. But I take your point that in most local authorities, larger homes are required. The default position, and the challenge, is always about the housing needs survey. Local authorities ask, “How many homes do I need here of this particular size type?” But what they do not ask is what is required in terms of enabling people to access those homes, affordability and so on. There is a big challenge about how section 106 is designed and how it is delivering affordable housing types and tenures without actually being a true reflection of what people aspire to have.

My colleague Sean is going to come on to that; Will, you are next.

The Government have announced a raft of planning reforms, including an ambitious target of 1.5 million homes they want to be built by the end of this Parliament. Has that already started to help first-time buyers and affordability? If it has not already started to help, do you think it will?

It is too early to see any discernible sign of that. Long-term, it will help, undoubtedly, but as I mentioned at the start, we are constrained by affordability and viability. You can have a really fantastic, shiny new planning system, but if the economics of building the homes does not stack up, they will not be built unless the state comes along and puts a hell of a lot of money into it.

I almost agree with what David is saying, but the additional part is that, as I mentioned earlier, continuous planning reform and renters’ rights breeds uncertainty; in consequence, I am certainly seeing fewer opportunities coming forward for institutional investments. The affordable housing grant only enables a small proportion of that unit to be purchased; the rest is through private investment, and the level of private investment in UK plc seems to be reducing at the moment as a consequence of uncertainty around the planning system, renters’ reforms, and various other things that are going on. That is probably about all I can say.

Just to come back to David a second; we talk about viability but what we really mean is that you cannot build a house for the cost you can sell it for. Is that right? Often the answer we get from industry is, “Can the Government give us loads of money, please, or subsidise us with Help to Buy?” The Government are rightly hesitant towards doing that. Should we not be focusing far more on the other side of the equation, which is that it costs us significantly more to build a home in the UK than it does in, for example, France or Germany? Why is that the case, and what can we be doing? I am not blaming house builders for this, but the industry has not got any more efficient at building a home in recent decades. Why is that, and what can Government be doing in order to bring down the cost of building a new home so that it is affordable to do so and therefore affordable to purchase?

We are in the process of trying to establish exactly what the additional cost of building a home has been over the last five years. The additional cost is in excess of £100,000 per plot, on average. A large part of that comes down to build cost inflation, which is products, materials, and wages. We ride that cycle, we understand and recognise it. But a significant part is the additional taxes, levies, and policy costs that have been introduced by successive Governments because there has been a view that the land value will absorb these costs. The view has consistently been that landowners will pay for this. We have reached a breaking point in that equation, where there is no more viable land in certain parts of the country, and this is happening across the industry. Developers are opening factories and trying to standardise the process even more, but you then run into design issues with local authorities that want something very bespoke and specific in different local authority areas. So that is a challenge. But fundamentally, we have had new taxes introduced year on year on year, and new policy costs; that all needs to be absorbed in some way, and it cannot be at the moment.

Just on that question of the cost of building a new home, what is the biggest of the new taxes and costs?

In terms of the current and forthcoming ones, the future homes standard probably represents a big number, but it is something that the industry is happy to work with because it will fundamentally improve the product and provide something better for customers. Things like the building safety levy are pretty egregious, unnecessary and unfair.

But it is right that we have that high quality so that we do not ever see the UK facing a situation where 72 people innocently lose their lives.

Absolutely, yes; I completely agree with the changes that have happened in terms of reforms to building regulations since Grenfell. Our members have collectively contributed about £7 billion to go back and remediate and provide support for Government funds through the residential property developer tax and things like that. The building safety levy, though, is completely unnecessary. There is £2.5 billion sitting untouched in the building safety fund, and now the Government are going to levy another £3.5 billion on the industry at a time when that is just not viable.

Can I come in as a developer to answer that question?

Can I just add one more question? Something Canada has done in order to support standardisation and hopefully improve efficiency in the market is to sign off nationally on a set of 50 properties that would automatically be helped through the planning commission process. I think it is through a national architecture competition; they are all quite beautiful properties as well. Do you think that is something we should look at doing in the UK?

To an extent, there is evidence that design codes are helpful. If we look at the example in Croydon, some time ago now—

These are effectively national design standards.

Yes, that is right, but it is just an expansion of a similar principle. You are moving towards a presumption in favour of development if you hit certain criteria, which is not a huge step from what the Government are bringing in anyway through brownfield passports, or the new station consents. But if I can bring this back to your original question, Chris, around the costs, you can break down the cost of development quite simply. You have your land, you have your building, you have the selling and you have the profit, and you can look at each of those. The proposals coming through around the planning phase will be really helpful but will take time. Development is a four to five-year cycle, so we are not seeing an impact on first-time buyers. We are starting to see an impact on developers’ expectations, which is the very first stage. If you look at strategic land people—those who go out and buy the land or site and enter into options to get planning consent—they are really busy. They are the lead indicator and they are saying, “Okay, it is going to come.” But if we look at the actual cost of building, the labour, materials and so on, there are two issues. First, there are the validation requirements, and everything that we have to submit to get a planning consent. It can cost us £1.5 million just to get to a planning committee; that is £1.5 million at risk. As an SME, you are out of business if that goes wrong. You just cannot sustain that. In part, the cost arises because we have to submit 67 different documents. There are four-storey schemes within London that require an aviation study. The MPPF, which was published just before Christmas, is helpful and will start to limit those validation requirements, so we really welcome that and we hope it will go further and have a reduced list for small and medium sites with a separate London distinction. Rationalising that validation list also speaks to the theory of everything-ism, where, as David said, because it will get absorbed into the land value, development can solve all policy challenges. It can fix the environment, it can fix labour, it can fix everything because developers are rich and they can absorb it and it will work its way through the system. That mindset is changing, but it needs to change much more quickly. Development is not treated the same way as any other sector in the country; there is a cap on our profits, we are mandated to sell some of our product at cost or below, and we are mandated to let an arbitrary body decide what we build, rather than the consumer.

Can I just come back to what we started to talk about, which was whether government policy is changing things? I want to reverse that to what the Competition and Markets Authority said recently, which is that it feels private developers are deliberately building slower than they could to ensure that prices stay as high as they can in a local area. That is an example that the Competition and Markets Authority has found. I am aware of that being true in Woking, where they have clearly tried to work out the market of how many we can sell at a reasonable price and that is the location we build, often taking three years when it could get it done a lot quicker. Is that your experience? Is this quite standard practice for everyone on the panel, but particularly David?

Ultimately, developers—like any other industry—need to be guided by the market, and there is also a level at which building more quickly can compromise quality, which we have seen in the past. We do not think that can happen again now because of the provisions that are in place around New Homes Quality Board, new homes quality code and that kind of thing. Ultimately, developers need to build to the market. This is where we talk about affordability and get into all these related concepts, for example effective demand: is there effective demand for a product at the prevailing market value? That will determine whether you can build at all and how quickly you can build.

There is an important distinction here between the volume providers and the SMEs. I cannot afford to slow down, nor can any other small or medium developer, so it is not happening there. We need to build and sell the homes and get the money out. As David said, volume guys need to manage their workflow. I speak to colleagues at much larger organisations and part of it is sales absorption rates; there is no point building something you cannot sell. The other point is labour preservation. They want to keep their labour force engaged, which means spreading them around a little more or slowing things down because they do not want to put those people out of business.

That is going to reduce your prices, is it not?

Yes, but you can also run into a problem—especially if you do not have a pipeline of consented sites—where all the subcontractors finish a site and then have nothing to do. Part of it is the retention of workforce.

David, let me just pick up on something you said. You said you cannot go any quicker because it is going to affect the quality of the development. So are you telling me that when I drive past developments in my site where they have built half and it has basically come to a standstill, they needed to completely pack up and stop for a couple of months to make sure the quality of the next half of the development is going to be good?

No, that is not what I said.

That is what you said; you said you cannot speed up because the quality is going to be affected.

Yes, if you absolutely run it more quickly than the development can handle and end up with needing to take on different labour sources that may not be familiar with your product; it is the same as any other industry in that sense. I am talking more about the extreme end where you are building as quickly as you can, but can you build even faster? That is when you run into challenges around sales, quality and customer satisfaction. The industry at the moment has the highest level of customer satisfaction that we have ever seen in the survey that we have been running for more than 20 years. We have managed that very well and do not and would not want to put that at risk. It is absolutely not saying that sites come to a standstill; that is not what we see it as. Ultimately, as Paul says, any developer of any size will want to build and complete the site as quickly as it can. There are massive on-costs and fixed costs with running a development site, and if you can build and complete the homes and reinvest, then that is what you want to do.

We have just heard that that is not true.

My reading of what the Competition and Markets Authority said was more that the lack of certainty in the planning system leads to developers needing to manage their sites and pipelines, which ultimately leads to conversations about the speed of build.

There are thousands of unbuilt planning permissions.

There are not as many as some campaign organisations claim because many of those are double counted.

We can look at what the CMA outlined.

Just to add, there are 11,000 unbuilt in my local authority that have planning permission. My question underpins a lot of what we have been talking about with the issues in London and the gap between what was every seven years that people were moving and is now 20, issues with downsizing, some of what Lewis has talked about in his local authority, and the want for three beds when you are only building one and two beds for section 106s. The answer to this seems pretty obvious to me: are we building the right homes in the right places in terms of size and tenure? If not, what can Government and industry do about it?

Ultimately, again this comes down to the economics of what can be built and what can be sold. At a previous session of this Committee, I know that the lenders’ representatives had a view that we need to build more one and two-bed apartments. The irony of that is that lenders typically do not want to lend on one and two-bed apartments. Developers are part of an ecosystem of the market and if there is no effective demand for those products with affordable mortgages, then they are more difficult to build. What we have seen over the past decade again is that—

I am sorry to cut across you. What is your understanding as to why lenders will not loan or provide products for those one and two-bedroom flats? Is it simple profit?

You would need to ask the lenders.

Would you say it comes down to the new-build premium?

This is a frustration that we have, because Help to Buy was introduced in 2013 and was intended to allow lenders to lend on new build; in the overall scheme of things, very few lenders do this. It was intended to bring lenders into the market and give them a bit of a book of new-build properties to see how they perform. My understanding is they performed very well. More and more lenders came into that space because there was a government subsidy to support them in doing so. When Help to Buy ended, they vacated that space and the higher LTV loans for especially apartments—but even on new-build houses—were gone as well and that is a frustration. I talked to people in Government at the time who said that when Help to Buy went the lenders would all stick around at 95%, but that did not happen. It was complicated because it happened in the aftermath of the pandemic and rates were rising. It was a challenging time but that support was not there across the entire market. Some lenders have stuck around but not all.

I am going to just respond very briefly. Building the right houses in the right locations: what exactly does that mean? Again, in my experience of working across local authorities, there are house types—one- and two-bedroom flats, three- to five-bedroom homes—that are needed in every single local authority area across the country. They are all houses of need. The question is about prioritisation and that is more of a question around type and tenure. How many of this type of house are for affordable? How many are for market? How many are for intermediate products? It goes back to my previous question: when you look at housing needs surveys, it talks about the types of houses that are needed in that particular local authority area but not the tenure of them or how they enter the market and are marketed to meet the needs of that particular local population. That is a question that needs to be addressed.

Do you think that the Government should address that in their housing strategy with the overall 1.5 million homes?

I 100% do, of course. Again, this is not a political statement by any stretch of the imagination because it has been many Governments over many, many decades who seem to avoid the subject of asking local authorities to do something. They say, “The local authority should make its own determination on what type of housing it needs, where it should be built and so on.” This has been many, many decades of what I would consider not local authority failure but policy failure, both national and local. Somebody needs to take the bull by the horns and actually develop a policy that gives a very clear set of guidelines about what is expected to be delivered. In doing that, you will be able to set the tone, give confidence to the institution investment market, give confidence to developers that building is going to happen and is available, and drive supply innovation, which helps to address the affordability of building and so on.

I suppose some would argue that that is what the NPPF is for and then you get accused of overriding the whims of local people.

I appreciate it is a fine balance because local politicians are elected to act on behalf of their constituencies. But—there is always a but in the conversation—unless somebody sets those clear guidelines, you are faced with a whole series of inactivity and uncertainty, and that is not good for the sector.

Can I answer the question? Right homes in right places, yes with some exceptions but only by default because we are not building enough homes. That is the problem. We welcome the Government’s ambition to target 1.5 million and all the changes coming through. I would love to have a discussion around whether they are the right homes in the right places because that means maybe there is an insufficient—

It is not enough; you need to move them around as well.

Exactly. Whereas right now we need to build more of everything and that is the real challenge. When you look at the Zoopla research that David referenced earlier—that 48% where it costs more than it is worth—you get this really awkward divide. In the high-value areas, you can afford to build them but people cannot afford to buy them. In the lower-value areas, it is the opposite way round. Then you have a risk of things being built in the wrong places. That is almost a problem for the future that I would like to be talking about, but we are so far away from that. Florence, to your question on the new-build mortgages, as David said it is a question for the mortgage providers but I have been led to believe that there is an over-cautious approach towards new-build premiums on new-build flats. But as I say, I agree it needs to be a question for them.

Just coming on to that, the Shared Ownership Council pointed out that new supply makes up only 10% of transactions whereas it is 90% for existing homes. Do you feel that this is an issue with your members, David, and is there anything that could be done to address that new-build premium?

A new home is very different to an existing home, obviously, by definition. That differential is about to grow when we eventually see the future home standard and start to see that new homes will have electric vehicle charging points—they already have—photovoltaic panels on roofs and all those kinds of things. That is sometimes reflected in the price, so there is a premium, if you want to call it that, on a new-build property. Our understanding is that it has not changed at all over recent times. In fact, I have seen some research that suggests that it is lower now than it has been in the past. It is just a fact of life that they are different products.

Thank you very much for attending the session this morning. We actually found the quote from the CMA so maybe we will just write to you and clarify what it said. It has been a really good discussion this morning, which will help us in terms of our deliberations and final report.