22 August 2003
A collapse in social housing construction is the key factor behind the UK's shortage of homes and high housing costs.
That is the conclusion of the Royal Institution of Chartered Surveyors in evidence for the inquiry into housing supply problems being carried out by economist Kate Barker for Chancellor Gordon Brown.
Compared to population levels, the UK's housing stock is 5% below that of Germany and 15% below that of Italy, the institution said.
Some 2.5 million extra homes, equivalent to 10% of the entire stock, would be needed to bring the UK up to the average of other major European countries.
The RICS blamed falling government subsidy for much of the problem. It pointed out that private housebuilding rates have been almost unchanged over the past 30 years at 150,000 annually, while building by councils and housing associations has plummeted from 27,000 in 1990/91 to 14,000 last year.
Cuts in grants had left housing associations unable to buy land in areas of high demand, where they were largely dependent on planning agreements with builders to provide a proportion of affordable homes on commercial sites. This route 'will never be sufficient to meet the need for affordable housing,' the RICS said.
It dismissed the widely held view that the planning system is to blame for the shortage. Instead, it blamed housebuilders for holding land and using it only when it best suited their business interests. 'It is quite clear that supply, as determined by housebuilders, is not responding to the demand for housing,' the report said.
This was because builders provided homes for those who could afford high prices, and saw no reason to build less profitable homes for the cheaper end of the market.
The RICS criticised local authorities' reluctance to use their compulsory purchase powers to make available land for house building. It called on the Treasury to change its rules so that public bodies can dispose of land for the 'greatest public benefit' and not the highest price.
The right to buy should be further restricted in areas of high demand, the RICS said. Since the inception of the right to buy policy, 700,000 homes have been lost to the public sector.
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