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18/07/2016

One million homes by 2020 not enough, says EAC

Words: Laura Edgar

The government’s target to build one million homes by the end of this Parliament will not be enough to meet the shortage of homes, says the Economic Affairs Committee (EAC).

At least 300,000 homes need to be built each year for the foreseeable future to address the housing crisis, said the committee – 100,000 more than the government’s current 200,000 annual target.

Additionally, local authorities should be allowed to vary planning fees.

In Building More Homes, the cross-party House of Lords committee criticises the government’s policy for setting a new homes target that will fail to meet demand for new homes or moderate the rate of house price increases.

The EAC also criticised the government for: restricting local authorities’ access to funding to build more social housing; creating uncertainty by making frequent changes to tax rules and subsidies for house purchases; the extension of the Right to Buy scheme; and for having a narrow focus on home ownership which neglects those who rent.

Lord Hollick, chairman of the committee, said home ownership and renting are “simply unaffordable” for many people and the only way to address this is to increase supply.

“The country needs to build 300,000 homes a year for the foreseeable future. The private sector alone cannot deliver that. It has neither the ability nor motivation to do so. We need local government and housing associations to get back into the business of building.”

He said that while local authorities are keen to meet this challenge, they don’t have the funds or the ability to embark on a major programme to build social homes.

“It makes no sense that a local authority is free to borrow to build a swimming pool, but cannot do the same to build homes,” said Hollick.

The government, he added, is too focused on home ownership, which would “never be achievable for a great many people” and in some areas it would be out of reach for those on average incomes.

“Government policy to tackle the crisis must be broadened out to help people who would benefit from good-quality, secure rented homes. It is very concerning that changes to stamp duty for landlords and cuts to social rent could reduce the availability of homes for rent. The long-term trend away from subsidising tenancies to subsidising homebuyers hits the poorest hardest and should be reversed.”

Local authorities must be allowed to borrow to build and accelerate building on surplus public land, he concluded.

The EAC makes a number of recommendations it thinks are required to address the housing crisis, including:

  • A senior cabinet minister must be given overall responsibility for identifying and coordinating the release of public land for housing, with a particular focus on providing low-cost homes.

  • The government should ask the National Infrastructure Commission to oversee the number of homes that are actually built on public land.

  • Local authorities should be able to borrow to build social housing.

  • The government should allow local authorities to set and vary planning fees in accordance with the needs of their local area.

  • Local authorities should be given the power to levy council tax on developments that are not completed within a set time period.

Ian Fletcher, director of policy (real estate), at the British Property Federation, said the report is “suitably ambitious if we are to close the gap in housing provision”.

“Their observations on the need to promote all tenures in pursuit of raising housing supply are spot-on. Acknowledgement of the role institutions can play in providing much needed long-term funding for build to rent accommodation, which is able to deliver additional housing supply on a significant scale, is welcome, as is the committee’s observations on the SDLT surcharge hampering additional rented supply."

Fletcher said the recommendations on planning are “generally well considered, as are their principles for community infrastructure levy reform”.

“We support their call to allow local councils to vary planning fees, although we would rather this promoted some service level agreement, than just operating with a cap,” he concluded.

Building more homes can be found here (pdf).

Image credit | Shutterstock

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