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Labour promises support for small builders in house-building drive

17 Oct 14 The Labour Party appears to have won some hearts in the construction industry with a plan to build 200,000 new homes a year if voted into government.

Ed Miliband visits a Crest Nicholson site in Milton Keynes, with shadow housing minister Emma Reynolds (left) and Crest Nicholson director Chris Tinker (right)
Ed Miliband visits a Crest Nicholson site in Milton Keynes, with shadow housing minister Emma Reynolds (left) and Crest Nicholson director Chris Tinker (right)

Councils will be compelled to produce plans for house-building and given powers to take property away from private owners to assemble land for new developments.

Labour also says that it will increase competition in the housing industry by backing small and medium sized building companies to build more homes through a ‘Help to Build’ scheme. This will allow them to access lower cost bank lending supported by exchequer guarantees, and through a simpler planning system for smaller developments of 10 homes and under.

“We’ll also extend the affordable homes guarantee programme, speed up the use of public land and make provision for councils to have greater flexibility to deliver social homes,” said shadow housing minister Emma Reynolds.

“Finally, we’ll ensure these reforms benefit the next generation. In our new ‘Housing Growth Areas’ first time buyers from the area will get priority when these new homes go on sale. Local authorities will be able to reserve a proportion of homes built for first-time buyers for a period of two months.  In addition, local authorities will be able to restrict the sale of homes in these areas so they cannot be sold for buy-to-let or buy-to-leave empty properties.”

The plan is based on a report produced by Sir Michael Lyons, the former chief executive of Birmingham City Council. Lyons' report was launched by Labour leader Ed Miliband yesterday on a visit to Crest Nicholson’s Oakgrove Village development in Milton Keynes.

The British Property Federation (BPF) welcomed the plan. BPF chief executive Liz Peace said: “The sensible review is extremely comprehensive and pinpoints exactly where problems in the planning system are and comes up with thoughtful solutions. While some proposals, for example those surrounding 'use it or lose it', may be difficult to implement, on the whole the review shows a clear understanding of the major problems of the planning system, and how these impact on development in the UK.

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“It would be fantastic to see other political parties commit to such a thorough and all-encompassing review like this one.’’

The Federation of Master Builders (FMB) described it as “a long overdue blueprint for increasing the capacity and output of small and medium sized (SME) house-builders”.

FMB chief executive Brian Berry said: “This is the most comprehensive review of housing delivery we have seen in recent years. Given the extent of the housing shortage we face, the target of 200,000 new homes per year is ambitious, but it is a necessary ambition. To achieve this aim we will need to significantly boost the capacity of the house building industry and Sir Michael Lyons has rightly identified the SME house-building sector as a crucial part of the housing sector’s capacity. It is very pleasing to see that Lyons has recognised the barriers that small house-builders face, which prevent them from building the homes we need, such as access to finance and a shortage of small sites, and has put forward a package of measures to address them.”

Berry added: “As well as endorsing the ‘Help to Build’ loan guarantee initiative, which Labour is already in the process of developing, the report makes the groundbreaking recommendation of a return to a simpler ‘redline’ system for outline planning applications for smaller sites. The focus across the whole of the report of pushing more land into the system is also extremely welcome and Lyons rightly highlights the need for a focus within this on the identification of smaller sites and packaging opportunities for SMEs as part of larger developments.”

Berry concluded: “Taken together, these amount to a very significant package of measures which would allow smaller builders to deliver many more homes. In order to reach their 200,000 target though, a future Labour government would need to significantly increase investment in social house-building, as private sector capacity is unlikely to be able to increase sufficiently to hit that target by 2020. I would be keen to see more detail on Labour’s plans for capital investment in housing as their strategy develops.”

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