Government urged to end volume housebuilders’ grip on the market

May 2, 2017 / Isla MacFarlane
Government urged to end volume housebuilders’ grip on the market

The dominance of large volume homebuilders must be reduced to help fix the broken housing market and build the homes the country so desperately needs, the Communities and Local Government Committee concludes in its report.

The government should support small and medium builders and ensure local authorities have the tools they need to make an effective contribution to solving the housing crisis, the Committee added.

The report notes that the eight largest firms build more than half of all new homes and calls for a more competitive market, with a large number of companies of different sizes. The Committee recommends improving access to land and finance for smaller builders and says government should reduce the risk for builders by preparing sites for development by providing infrastructure and planning permissions.

The committee also calls for increased building by local authorities and housing associations, which will help protect the sector against economic downturns but has almost ceased. The MPs say borrowing caps on councils’ Housing Revenue Accounts are limiting their ability to build and should be raised or, in the areas where housing affordability is at its worst, removed.

The need for more rental homes, greater assistance for Modern Methods of Construction and improvements in further education to address the growing skills gap, described by the committee as the biggest challenge facing the sector, are also highlighted in the report.

Clive Betts MP, Chair of the Communities and Local Government Committee, said, “The housing market is broken, we are simply not building enough homes. Smaller builders are in decline and the sector is over reliant on an alarmingly small number of high volume developers, driven by commercial self-interest and with little incentive to build any quicker. If we are to build the homes that the country so desperately needs, for sale and for rent, then this dominance must end.

“A successful housing market is a competitive one and Government should support smaller developers if it wants to increase the housing stock. This includes earmarking land, improving access to finance and reducing risk by proactively preparing sites for development. Local authorities have a key role to play but have not been given the tools they to make an effective contribution to solving this crisis.

“Innovation must also be encouraged and we need to finally get to grips with the major challenge of ensuring that the industry has a much-needed supply of skilled workers, without whom this country’s housing crisis cannot be addressed. The government’s promises are encouraging, but their implementation must be closely scrutinised.”

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