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Mandatory affordable quotas will worsen housing crisis, say housebuilders

Houses housing newbuild
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The Federation of Master Builders (FMB) has slammed a Lords amendment to the Housing and Planning Bill which would require an affordable housing contribution for small-scale schemes

On 25 April, the Lords voted by 269 votes to 185 in favour of the amendment, which would extend requirements on larger sites to those providing fewer than 10 units. 

Brian Berry, chief executive of the FMB said that the move would increase financial pressures on small builders and stifle the supply of new homes.

He said: ‘We understand the need for more affordable homes in rural areas and government policy must address this need, but the intention to hit all small-scale housing developments will be counterproductive.’

He said that the ‘historically unprecedented’ demands being placed on small developers are reducing the ability of the country to build its way out of the housing crisis.

‘To our members, this amendment will appear little more than a direct attack on small and medium enterprise (SME) housebuilders,’ Berry added.

But this line of argument was rejected by the peer who introduced the amendment, Baroness Janet Royall.

Speaking during the debate, she said: ‘The minister may well say that removing the need for affordable housing from small units will help SME builders, but many with far greater knowledge than me would say that that was wrong.

‘To manage their cash flow, small builders are heavily dependent on the guaranteed income from the sale of these homes to housing associations. 

‘I know of several sites on which the houses on the open market languish, causing a headache for the small local builder, but they are able to get by thanks to the sale of homes to housing associations.’

Supporting the amendment, Lord Best argued that exempting smaller schemes from affordable housing requirements would take a large chunk out of housing provision in rural areas.

He said: ‘Why on earth would the government do that? The answer is that small builders complain that there is too much red tape if they have to provide affordable homes instead of just building executive homes, homes for commuters or retirees, or second homes and the rest. 

‘They say, “This slows us down. We can’t get back into business after the big crash. We smaller builders need this extra help”. However, those of us who have looked at this in some depth do not believe it to be the case.’

Lor Best said that exempting small sites from affordable housing payments would merely enable landowners to increase the price of land, and that big housebuilders would phase developments into chunks that fall below the threshold. He added that an exemption would make it more difficult to prevent opposition from ‘nimbies’.

He said: ‘It will antagonise local residents rather than securing support for development in rural areas.’

Berry also criticised a separate amendment which approved during the report stage ‘that all new homes in England built from 1 April 2018 achieve the carbon compliance standard’.

He said: ‘The disinterring of a zero-carbon standard flies in the face of the fact that further carbon reduction on site will be difficult-to-impossible to achieve, so will likely amount to no more than a tax to enable off-site carbon mitigation.

‘Heaping ever-more taxes and heavy-handed regulations on small local builders will worsen the housing crisis.’

The bill has now returned to the Lords for its third reading.

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