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Thu May 06 2021

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MPs call for end to house-building oligopoly

2 May 17 The dominance of large volume house-builders needs to be reduced if the UK is to increase the number of homes that are built, a committee of MPs has recommended.

The House of Commons communities & local government committee has called on the government to give more support to smaller house-building companies to counter the oligopolistic tendencies of the market as it currently operates.

Its report, Capacity in the homebuilding industry, notes that the eight largest firms build more than half of all new homes and calls for a more competitive market, with a large number of companies of different sizes.

The committee recommends improving access to land and finance for smaller builders and says government should reduce the risk for builders by preparing sites for development by providing infrastructure and planning permissions.

The committee also calls for increased building by local authorities and housing associations, which will help protect the sector against economic downturns but has almost ceased. The MPs say borrowing caps on councils’ housing revenue accounts are limiting their ability to build and should be raised or, in the areas where housing affordability is at its worst, removed.

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The MPs also come out in favour of prefabricated homes but say that a single, recognised quality assurance mark is needed to give lenders, builders and buyers confidence.

Labour MP Clive Betts, chair of the communities and local government committee, said: “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."

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