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CLG Committee calls for changes to council borrowing cap

The monopoly that large volume homebuilders have over the property market must be tackled in order to fix the “broken” state of housing in the UK, an influential committee of MPs has stated. Another change that was suggested was also removing or raising caps on councils’ Housing Revenue Accounts that limit the ability councils have to build affordable housing.

In particular, the government were told to do more to support small and medium-sized builders, as well as giving local authorities resources so that they can also make an effective contribution to the housing market.

This week’s report, drawn up by MPs sitting on the Communities and Local Government (CLG) Committee, found that creating a more competitive market in the UK was crucial to fix the problems facing the sector.

Increased building by local authorities and housing associations was also called on by the committee. This is a measure that should protect the market against economic downturns, but has in recent years almost ceased, MPs say.

At present, the eight largest homebuilding firms in the UK build more than half of all new homes in the UK, something that committee have stated needs to be addressed.

To solve this problem, the committee recommended the government improve access to land and finance for smaller builders and should reduce the risk to builders by preparing sites for development by providing infrastructure and planning permissions.

 “The housing market is broken, we are simply not building enough homes,” Clive Betts, chair of the committee said. “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.

Betts also added that a successful housing market was a competitive one, going on to press that the government needed to 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,” he explained. “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.”

The committee chair also emphasised the importance of innovation and training being encouraged, saying: “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."

Similarly, last Friday another group of MPs the Public Accounts Committee also criticised the government for “lacking ambition” in trying to tackle the problem of housing, that is now in a critical state.

And in March, the Office for National Statistics also warned that housing was now totally unaffordable for a large portion of the population, as the median price paid for residential property soared by 259%.

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