Apparently, if the broken housing market is to be fixed, more competition is needed. This is to ensure that the dominance of big housebuilding companies can be ended.
According to recent reports, it has been encouraged that the government should focus their efforts on supporting building companies of both small and medium sizes. This is in order to support local business and challenge the “hold” that big companies have over the housing market.
The report, conducted by the Communities & Local Government Select Committee, found that more than half of all UK new build homes are built by one of the eight largest housebuilding firms the country has to offer. Alongside this, the report also revealed that smaller businesses, on the other hand, tend to struggle to access land. This is because of local plans reserving sites for large volume builders. Small and medium builders were also found to struggle to access finance too as they were seen to be more of a risk. They were also found to struggle to access finance too, as they were seen to be more of a risk.
Consequently, this has encouraged the committee to call for a “more competitive market.”
To do this, they have recommended that small and medium-sized businesses should have easier access to land and finance. Alongside this, the Government should also reduce risks for small builders by providing planning and infrastructure permissions for sites.
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The committee stated that local housing associations also need to be building more to help protect the sector against economic downturns. The chair of the committee described: “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.”
“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.”
In response to this, Mark Farmer, the author of the Farmer review stated that if these recommendations were not acted upon, then “homebuilding and the construction industry in the UK will continue to deteriorate, impacting economic growth at a time when we need a solid platform for domestic industrial performance.”
So what do you think of this? Let us know in the comments below.