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Lords slam housing policy and call for 50% boost to homes target

Bricks building housing constructionThe Government must lift its target by 50 per cent and build 300,000 homes a year in order to tackle the housing crisis, a committee of Lords has argued.

The current target is for 200,000 new homes each year, although this is set to rise to one million a year by 2020.

The cross-party Economic Affairs Committee in its report “Building more homes” also suggests that local authorities and housing associations must be freed up to build substantial numbers of homes for rent and for sale, including by taking advantage of current low borrowing costs to fund development.

It strongly criticises the current “misguided” housebuilding model, which it says is too heavily reliant on private developers.

It calls the private sector housebuilding market “oligopolistic” with the eight largest builders building 50 per cent of new homes.

Their business model is to restrict the volume of housebuilding to maximise their profit margin, the Lords claim.

The Lords want local authorities to be able to charge council tax on developments that are not completed within a set time in order to prevent building work stalling while housebuilders seek to restrict volumes in order to maintain property values.

They argue that the Government has created uncertainty in the already dysfunctional housing market by frequent changes to tax rules and subsidies for house purchases, reductions in social rents, and the extension of the Right to Buy.

All of these changes reduce the supply of homes for those who need low cost rental accommodation, they say.

Policy has maintained too narrow a focus on home ownership, neglecting those who rent their homes, the committee claims.

Chairman of the committee Lord Hollick says: “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.”



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