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News » UK » Lords call for 50% increase in house-building target » published 15 Jul 2016

Lords call for 50% increase in house-building target

A parliamentary committee has called on the government to raise its house-building target by 50% and build 300,000 new homes a year to tackle the housing crisis.

The current target of 200,000 is inadequate to address national need, says the cross-party House of Lords economic affairs committee.

It also says that local authorities and housing associations must be freed to build substantial numbers of homes for rent and for sale.

In its report, Building More Homes, published today, the committee says that the government’s housing policy is failing. Its target fails to meet the demand for new homes or moderate the rate of house price increases and restrictions on local authorities’ access to funding are preventing to development of enough social housing.

The report says: “In a functioning market, the private sector, housing associations and local authorities would be building enough to meet anticipated demand. But they are not. The business model of the large developers looks to profit margins rather than volume, housing associations are facing loss of revenue due to Government policy on social rents and local authorities, despite some having the appetite, are not in a position to finance large housebuilding programmes.”

The report also says that frequent changes to tax rules and subsidies for house purchases, such as the extension of Right to Buy, act to reduce the supply of homes for those who need low cost rental accommodation.

Committee chairman Lord Hollick said: "We are facing an acute housing crisis with home ownership – and increasingly renting – being simply unaffordable for a great many people.

"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.

"Local authorities are keen to meet this challenge but they do not have the funds or the ability to borrow to embark on a major programme to build new 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.

"The government are too focussed on home ownership which will never be achievable for a great many people and in some areas it will be out of reach even 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 home buyers hits the poorest hardest and should be reversed.

"If the housing crisis is to be tackled the government must allow local authorities to borrow to build and accelerate building on surplus public land."

The committee recommends that local authorities be free to borrow to fund social housebuilding as they are other building programmes. The current historically low cost of borrowing means local authorities could make a large contribution to building the houses we need for the future. With the new prime minister announcing that the government will abandon its fiscal target, they way is now clear to increase local authority borrowing powers, the committee says. Local authorities should also be given the power to increase planning fees.

The report also recommends that council tax is charged on development that is not completed quickly, to penalise hoarding permissioned land. It criticises the oligopolistic nature of the private sector house-building market, where the eight largest builders build 50% of new homes. “Government’s reliance on private developers to meet its target of new homes is misguided,” the committee says. “Their business model is to restrict the volume of housebuilding to maximise their profit margin. To address this, the committee recommend that local authorities are granted the power to levy council tax on developments that are not completed within a set time period.”

Another recommendation is that the government acts more decisively to build on surplus publicly owned land. The committee recommends that a cabinet minister is given responsibility for identifying and coordinating the release of public land for housing, with a particular focus on providing low cost homes. The National Infrastructure Commission should oversee this process, it says.


Building more homes, by the House of Lords economic affairs committee, can be found at http://www.publications.parliament.uk/pa/ld201617/ldselect/ldeconaf/20/2002.htm





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This article was published on 15 Jul 2016 (last updated on 18 Jul 2016).

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