The Government needs to incentivise smaller housing developers to build more homes to help meet the rising demand sparked by the Help to Buy scheme, says the Federation of Master Builders (FMB).
Help to Buy has contributed to an upturn in demand in the housing market, while mortgage approvals have also seen a significant year-on-year increase. To remove the obstacles restricting the supply of new homes, the Government needs to ensure small developers have access to the business finance they need to get projects off the ground. They will also need to place renewed emphasis on improving the supply of smaller, easier-to-deliver sites and reduce the cumulative burden of regulation and developer contributions, which so often discourages smaller developers from bringing new homes to market.
Brian Berry, the Chief Executive of the Federation of Master Builders, said: “The Help to Buy initiative is helping to revitalise the flagging housing market, and the Government is to be applauded for having worked hard to make the scheme more accessible to small builders and developers. Rekindling demand in this way helps create the environment for developers to start bringing more homes to market, but there is still a long way to go before we are once again building the 200,000-plus new homes we need each year just to keep pace with demand.â€
Berry continued: “In 1988 SME house builders built two thirds of new homes in the UK, but now that proportion has dropped to just one third. This trend has not been helped by the recent recession, the worst in living memory. To build on the current tentative upturn in economic conditions, and to secure the diversity of housing supply, we need government at all levels to properly engage with smaller housebuilders to establish how we can bring more homes to market.â€
Berry concluded: “To avoid any risk of the Help to Buy scheme creating a housing bubble, the Government now needs to increase the supply of land. It should also lift local authority borrowing caps to help build more social and affordable housing.â€
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