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Government quality mark needed to back new construction types for lenders

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  • 02/05/2017
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Government quality mark needed to back new construction types for lenders
MPs have called on the government to sponsor a “quality assurance kite mark” to assure and encourage lenders to lend on properties built using modern methods of construction (MMC).

They also called for the breakup of the oligopoly of builders which results in more than half of new homes being built by just eight developers.

The recommendations are part of the Capacity in the homebuilding industry report published by the Communities and Local Government committee.

It echoed the government in calling the present housing market “broken” and made a series of suggestions to improve the situation.

One of those was to encourage the use of MMC and the belief that it could make a significant contribution to solving the housing crisis, but the committee acknowledged that the relative infancy of the industry was dissuading developers from adopting MMC more fully.

It suggested government support could help boost this sector: “We also note concerns from the lending community regarding different methods of MMC, and recommend that the government should sponsor a single, recognised quality assurance kite mark,” it said.

“We believe that custom and self-build homes have the potential to make a far greater contribution to housing output than at present, and are disappointed that despite apparent government support there does not appear to have been any growth in this area in recent years.”

 

Housebuilding oligopoly

One of the biggest targets within the report were house builders, with the MPs saying that the country was “overly reliant on an alarmingly small number of commercial actors”.

“The large developers are often accused of landbanking (holding on to land to artificially restrain supply in order to maintain high house prices), and while we have not seen evidence of this, we have found that there is little incentive for volume housebuilders to build any quicker,” it said.

“It is in their commercial self-interest to maintain profits and they cannot be blamed for this. However, if the country is to build the homes it so desperately needs, then we need to reduce the dominance of the high volume builders by encouraging a far greater mix of developers.”

Overall the committee was largely supportive of measures announced in the government’s Housing White Paper, calling them “promising”, but warned that “their implementation must be closely scrutinised”.

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