In a report out today, the communities committee has called on the government to support small and medium housebuilders because the eight largest property firms currently build more than half of all new homes - and they're not solving the housing crisis.
A quarter of all new homes built in 2015 were constructed by Taylor Wimpey, Persimmon, and Barratt alone, and the lack of competition is constraining both supply and innovation within the sector.
The market share for small builders has plummeted from 28 per cent to just 12 per cent between 2008 and 2015, according to government figures, as the financial crisis wiped out firms in the middle market.
The MPs argue that without a more competitive housing market, it will be impossible for the government to build the number and range of homes the country needs.
Labour MP Clive Betts, chair of the communities and local government committee, said:
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.
To help small and medium builders, the MPs recommended:
- Improving access to land and finance for small firms
- Reduce the risks for smaller businesses by preparing development sites and providing the planning permissions required to build
Meanwhile, the lack of building by housing associations, which normally protects the housing market during economic recession, has also become a major problem, the MPs said.
In 1969-70, local authorities built 135,700 new homes. But this source of supply has been almost completely cut off; in 2000, just 60 homes were constructed by local authorities.
Building by housing associations has picked up over the past year; they have become one of the major buyers for sites across London.
However, to further protect them, MPs said the government must increase councils' borrowing caps for housing, or in places where housebuilding has completely stagnated, remove the borrowing caps altogether.
The Green Belt
The committee of MPs also said that the government's housing white paper, released earlier this year, weakens the current protections for the green belt, and that more guidelines for building on green belt land should be outlined.