Public sector building programme urged to tackle housing shortage


A major public sector building programme is needed to tackle the housing shortage and stop property prices spiralling higher, according to a report.

Think tank Civitas said that an over-reliance on private sector developers "drip feeding" new properties on to the market is helping to keep house prices high.

It argued the Government could substantially overcome the lack of housing supply in England by injecting a single capital investment of less than £20 billion.

Civitas called for a new requirement on local authorities to step in and directly commission homes that the private sector fails to build. The proceeds from the sales of these properties could then be ploughed into more homes.

It said a one-off outlay of £15 billion to £20 billion could build 100,000 houses and flats, including 25,000 in London - and this investment could be reinvested year after year as homes are sold to top up private sector building output.

The report calls for the introduction of new "use-it-or-lose-it" planning permissions, placing an obligation on developers to build out sites more quickly. This would carry with it the threat that land that is not developed quickly can be compulsorily purchased by the local authority at half its residential use value.

The report, titled The Housing Question: Overcoming the shortage of homes, said the shortage of houses dates from the early 1970s, when council house building went into "terminal decline".

It said planning permissions have been granted in ever-greater numbers in recent years, hitting 261,000 in England in the year to March 2015 - but output still languishes well below demand, with around 100,000 fewer homes being built a year than are needed.

The author of the report, Civitas editorial director Daniel Bentley, argued that private housebuilding interests - including both landowners and developers - have no incentive to build homes so fast that house prices start to dip. A lack of homes to choose from is considered to be one of the main factors pushing house prices to record highs in recent years.

The average house price in England recently pushed over the £300,000 mark for the first time, according to Office for National Statistics (ONS) figures.

Mr Bentley said that to build enough homes so that housing costs are reduced for everybody, the public sector should directly commission the construction of those homes that the private sector does not build.

He said efforts to improve the supply of homes so far have been "too timid".

Mr Bentley said: "The single biggest barrier to building sufficient homes is the lack of incentives for landowners to release land, and developers to build it out, any more quickly than they do already. We need to take away their power to restrict supply in order to hold up prices.

"This will require public sector investment to build the homes that the private sector does not, and new incentives for developers to speed up the construction and sale of the homes that they do build. We cannot afford to leave the business of housebuilding to the interests who have most to gain from choking it off."

A spokesman for the Department for Communities and Local Government (DCLG) said: "We've got the country building again with new homes up 25% over the last year.

"We have doubled the housing budget and are investing £20 billion to deliver our ambition for a million new homes.

"This includes releasing enough surplus public sector land for at least 160,000 homes - an ambition which has recently been matched by local authorities - and directly commissioning thousands of new affordable homes."