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End ‘big eight’ house builders’ dominance to fix housing market, say MPs

Words: Huw Morris
Houses / iStock_000024561120

The government must end the dominance of large house builders if it is to fix the UK’s broken housing market, according to MPs.

The eight largest companies build more than half of all new homes, said the Commons Communities and Local Government Committee, and the government should support small and medium-sized builders to ensure a competitive market.

It called for improved access to land and finance for smaller builders, with the government reducing the risk for them by preparing sites for development by providing infrastructure and planning permissions.

“The housing market is broken, we are simply not building enough homes,” said committee chair Clive Betts. “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.”

The committee also called for increased building by local authorities and housing associations to help protect the sector against economic downturns. Borrowing caps on councils’ housing revenue accounts are limiting their ability to build and should be raised or removed in the areas where housing affordability is worst.

The government also needs to tackle the demand for more rented homes, give more help to modern methods of construction and make improvements in further education to tackle the growing skills shortage – described by MPs as the biggest challenge facing the sector.

They noted that development land market is so competitive that developers pay inflated prices and seek to recover costs by increasing density, reducing affordable housing and building slowly to keep demand high. A successor Commons committee should examine the case for public intervention.

MPs also voiced concern that the government’s housing white paper weakens protection for green belts in the National Planning Policy Framework as  “exceptional circumstances” for development could now include any local authority not building enough homes. They urge the government to publish clear guidelines.

The RTPI is mentioned a number of times in the report, with head of policy Richard Blyth illustrating the scale of recent reductions in resources in local authority planning departments.

According to the report, the reduced resources of planning departments are a factor in many of the other challenges indentified in the report, such as the prioritising of larger sites over multiple small sites, the time taken to process planning applications and the time taken to negotiate with developers.

It states that the RTPI identify the issue as being "less of a skills gap, and more of a capacity gap, and explain that 'in the majority of cases, local planning services are surviving on the goodwill and professional integrity of the officers, but this may not be sustainable''.

The RTPI’s work to encourage more people to pursue a career in planning has been welcomed by the committee.

The report states that the role of planning is “fundamental to the success of communities,” and council leaders and chief executives must show leadership and support to recognise this and empower innovation by planners. It recommends that local authorities “must show a commitment to the planning function and ensure there are incentives and support in place for employees that are seeking further training and formal planning qualifications, such as those facilitated by the RTPI”.

Capacity in the homebuilding industry can be found here.

Image credit | iStock