Key findings

In their report, “Building more homes”, published today, the cross-party House of Lords Economic Affairs Committee criticises the Government’s housing policy for:

Setting a new homes target which will fail to meet the demand for new homes or moderate the rate of house price increases.

Restricting local authorities’ access to funding to build more social housing.

Creating 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.
A narrow focus on home ownership which neglects those who rent their home.

Conclusions

The Committee makes wide-ranging recommendations to address the housing crisis, including:

Restraints on local authority borrowing should be lifted. Local authorities should be free to borrow to fund social housebuilding as they are other building programmes. This would enable local authorities to resume their historic role as one of the major builders of new homes, particularly social housing.

The current historically low cost of borrowing means local authorities could make a large contribution to building the houses we need for the future. Further, the new Prime Minister has announced that the Government will abandon their fiscal target. This paves the way to increase local authority borrowing powers.

Council tax should be charged on development that is not completed quickly. The Government’s reliance on private developers to meet its target of new homes is misguided. The private sector housebuilding market is oligopolistic with the eight largest builders building 50% of new homes. Their business model is to restrict the volume of housebuilding to maximise their profit margin. To address this the Committee recommend that local authorities are granted the power to levy council tax on developments that are not completed within a set time period.

Maximise the use of public land. The Government must take decisive steps to build on the very substantial holdings of surplus publicly owned land. The Committee recommends that a senior Cabinet minister must be given overall responsibility for identifying and coordinating the release of public land for housing, with a particular focus on providing low cost homes. The National Infrastructure Commission should oversee this process.

Local authorities should be given the power to increase planning fees. Local authorities should be able to set and vary planning fees to help fund a more efficient planning system and the upper cap on these charges should be much higher than the current limit. …”