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Govt risks ‘lost decade’ of house building, says IPPR

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The Government’s housing strategy does not make sufficient demands of house builders in exchange for state support according to the Institute for Public Policy Research.

In November, Housing minister Grant Shapps laid out the Government’s housing strategy including an increased subsidy to developers building affordable homes, a £400m investment fund to support developers in need of finance and opening up public sector land to developers on a ’build now pay later’ basis.

In a new report, We must fix it: delivering reform of the building sector to meet the UK’s housing and economic challenges, the IPPR says as it stands the strategy risks a “lost decade” of house building.

IPPR director Nick Pearce says without a shift in policy, the Government will be merely “subsidising stagnation”. The think tank says England faces a shortfall of 750,000 houses by 2025, with 250,000 homes needed every year to close the gap. It adds that construction of new homes in the year to September 2011 was below 100,000.

He says: “Our construction industry has for too long prioritised trading land over building homes. This has to change. The Government’s new housing strategy does not make sufficient demands of the house builders. Instead it offers them public land, money and guarantees and without a serious quid pro quo.”

As well as demanding promises over the number of houses built, the IPPR says:

  • Land should be ’de-risked’ by splitting the development process into two separate parts – the trading of land and the building of houses – much as casino banking activity is to be firewalled from banks’ retail operations.
  • All land ownership and sales should be registered with the Land Registry, with serious penalties for those who fail to
    Strict comply.
  • Strict conditions should be applied to public land release, requiring rapid construction of homes and lower profit margins. A fifth of this land should be earmarked for self-build, and all of it should be supplied through a fairer system of ’joint venture partnerships’.
  • Financially unviable builders producing sub-par numbers of new homes should be allowed to go to the wall, and government should act as a clearing house for their land banks.

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