Supply can grow if large house builders reduce dominance says MPs
The dominance of large housebuilders needs to be reduced if the housing supply can ever meet the levels of demand in the UK.
According to MP committee CLG, over 50% of new homes are built by just eight companies, indicating a need for greater competition within the market to be encouraged.
Setting out their stance in a new report – Capacity in the homebuilding industry – the committee advises that access to finance and land should be made easier for smaller builders, stating that the government should implement greater planning permissions and infrastructure in order to minimise the risk for housebuilders.
As a way to help protect the sector from economic pressure, the committee also highlights the need for additional building by housing associations and local authority. At present, this has almost completely stopped. Where there are limits on borrowing for the councils’ housing revenue accounts, the committee states that the ability to build houses is being hindered, highlighting a need for borrowing caps to be increased or removed completely.
Although MPs have generally expressed support towards prefabricated homes, they recommend that a standard mark of quality should be adopted in order to ensure builders, lenders and buyers feel confident in the service they are being provided.
Commenting on the need to address the housing supply was Clive Betts. The Labour MP stated that aside from improving market access for smaller builders, local authorities have an important role to play.
“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.”