Theresa May has turned her fire on the house builders as the government is increasingly criticised for failing to meet national house building targets. The lack of supply props up prices and increasing numbers of people are simply unable to afford homeownership.
She even called the fact that house building CEOs are bonused on profit rather than production volume “perverse”. A statement I would have expected from the hard left of British politics rather than a Tory Prime Minister.
In a bid to pin the blame for a housing shortage on the private sector house builders, Sir Oliver Letwin has been tasked with establishing if house builders deliberately restrict the supply of new homes to maintain sale prices and thus improve their profit margins.
Letwin has now sent an interim report to the Chancellor and the Housing Secretary acknowledging that the rate of build out of large sites was inhibited “by a web of commercial and industrial constraints,” such as limited skills and materials. However, he was “not persuaded that these limitations are in fact the primary determinants of the speed of build out on large permitted sites at present.”
He concluded that the absorption rate seemed to be the determining factor in build out rates on large sites once planning permission was granted.
Letwin intends to spend the summer producing some robust proposals to be announced in the autumn budget to incentivise a higher level of production from private sector housebuilders.