Planning reforms could break housebuilders' ‘failed' dominance

Independent

12 hours ago

Major housebuilders cannot be relied upon to achieve the Government's target of building 1.5 million new homes, a housing expert has said, as he criticised a 'failed monopoly' in the sector.
Lord Best, who is vice president of the Town and Country Planning Association, hit out at the 'oligopoly' in the sector said the major firms for building homes had failed in their task of building enough.
He told peers that small building firms were responsible for 10% of new homes since 2000, down from a previous figure of 40%.
A Government report from 2024 found the 11 biggest housebuilders, including Barratt Homes, Taylor Wimpey and Persimmon made up 40% of all new homes built in 2021-22.
The crossbench peer said: 'A key question hanging over the ambition to build 1.5 million more and better homes is, who will the nation entrust to get this job done?
'For many years, the answer for most house building has been 'we will let the volume housebuilders acquire the sites, come up with the plans, design and build the homes, and make their profits, while we try to require them to allocate a modest proportion of their output for affordable housing'.
'My lords, this reliance on the large housebuilders has not produced the quantity or quality of homes we need.'
Lord Best's comments come a year after a report by the Competition and Markets Authority criticised the speculative model employed by many of the largest housebuilders.
He added: 'It's led to so-called 'fleece-hold' sales to homebuyers, to uniform, soulless design, and with little attempt to provide the green spaces and community facilities that are the making of any place.
'And the housebuilders have worked at a rate that suits themselves, a build-out rate that ensures no reduction in house prices.'
He said he believed the proposed development corporations, which form part of the Planning and Infrastructure Bill which was getting its second reading in the House of Lords on Wednesday, would make the Government less reliant on large firms which could see more homes built.
'(It) enables the use of this development corporation model for any major development, introducing an alternative to the failed business model of the oligopoly of volume housebuilders,' he said.
'Here is the breakthrough that the Bill could achieve.'
The Bill includes measures to help the Government achieve its central manifesto commitment of building 1.5 million homes by 2029. It restores mandatory housing targets, legislates for a generation of new towns, and will reform planning to make it harder to reject developments.
The debate heard that there are 1,000,000 planning permission applications for homes that have gone unbuilt in England, with 250,000 in London. ONS figures showed fewer than 185,000 homes were completed in 2024.
Housing minister Lord Khan of Burnley had hit out at his predecessor's 'mismatched territory of ill-fitting, short-termist reforms, tinkered around the edges rather than resolving our problems'.
The Labour peer said the Bill could 'turn this around'.
He said: 'Home building has fallen from already insufficient levels. There are simply not enough homes … this would be the lowest year for net-additional dwellings in England since 2015-16.'
However, his opposite number, shadow housing minister Baroness Scott of Bybrook said: 'In 2019 the Conservative Party committed to delivering one million additional homes over the Parliament. In 2024, before the general election, we delivered on that commitment.
'The Labour Party has now committed to deliver 1.5 million homes over this Parliament, and it is essential that they deliver on that manifesto commitment.'
Conservative former housing minister in John Major's governments, Lord Young of Cookham warned about a lack of planning officers in councils which could hamstring the Government's housebuilding hopes.
Lord Young recalled a discussion with a senior economist from his time as a Treasury minister. He said: 'I suggested a new policy that had been tried in New Zealand. He said it may work in practice, but it doesn't work in theory.
'Now, the risk of this Bill is exactly the opposite. It may work in theory, but it won't work in practice unless planning departments are resourced.'
Party colleague Lord Patten, who as John Patten served as education secretary in the 1990s, declared a shareholding in housebuilder Persimmon.
He said: 'The record sadly shows that no Conservative or Labour government since 1945 have ever met their stated aspirations or hopes or pledges to build this, or that particular number of homes in any one year or in any one decade.'
Tory peer Lord Lilley, who held ministerial positions under Mr Major and Margaret Thatcher said reforms to speed up the planning process were much-needed, as he decried sums spent on planning processes.
He said: 'Virtually every housing project in my old constituency, and in indeed parts of the country, has faced objections locally.
'We've created in effect, a 'vetocracy', objectors can impose such costs and delays on project developers that they can effectively veto those projects going ahead.
'We must find ways of reducing the power of that plutocracy and I welcome steps in this Bill to do that.'