Break big property developers' grip on housebuilding market to solve UK's housing crisis, MPs urge

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The UK's housing crisis can be solved by breaking the grip of a handful of major developers on the housebuilding market, an MPs committee has urged.  

The Communities and Local Government Committee found that the market is reliant on an 'alarmingly small' number of firms that have little incentive to increase building rates.

The UK's eight largest companies build more than half of all new homes and smaller builders struggle to access land for development, concluded the committee.

Tall order: The UK's housebuilding market is reliant on an 'alarmingly small' number of firms that have little incentive to increase building rates

Major firms have been regularly attacked for so-called landbanking, holding on to plots to artificially curb supply in order to keep high house prices.

But the committee said it was 'rational commercial behaviour and a sound business model' for developers to devise schemes that allow them to cover their investment and make a profit.

The committee has called on the Government to devise incentives to encourage developers to build more rapidly and suggested councils should demand building schedules before granting planning permission.

It also urged local authorities to make more land available to smaller builders.

However the committee raised concerns about Government proposals to reform planning, warning protections for the green belt could be weakened.

Rules allow building on the restricted areas only in 'exceptional circumstances', but proposals to overhaul the guidelines could allow councils that are not building enough homes to use the clause to develop the protected plots, MPs said.

Official construction figures show that in the year to September there were 141,960 new build homes completed, four per cent up on a year earlier. 

But it has been suggested that the UK needs to build at least 220,000 homes a year for the next decade just to keep up with population growth.

DCLG statistics show private enterprise new builds up 10 per cent on the previous year, but housing association completions down 19 per cent on an annual basis. 

Committee chairman Clive Betts 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.

Housing crisis: The Communities and Local Government Committee chairman Clive Betts has warned that the housing market is broken due to a lack of homes being built

'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 pro-actively 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.'