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UK’s housing market is broken, and only a radical solution can fix it | Peter Hetherington

Builders working on a house
In the year to December, just 140,660 new homes were completed in England. Photograph: Ben Birchall/PA

Britain has a lamentable housebuilding record. For the past three decades, relative to population size, it has built fewer houses than any other western European country.

That was the recent admission of the communities and local government secretary, Sajid Javid, in a candid assessment of the country’s inability to provide the most basic resource for its people: a roof over their head, no matter income, circumstance or background.

Launching a white paper last month, grandly titled Fixing our broken housing market, he noted that a once solid assumption that some form of housing would be available to all starting off in life – whether renting or buying – was now a distant dream for many. The scale of the crisis was underlined a few days ago in new figures from Javid’s department showing that just 140,660 homes in England were completed in the year to December, a 1% fall on 2015. More alarmingly, they revealed that housing associations, the main providers of homes classed as “affordable”, built a fifth fewer homes in 12 months – victims of an assault on their finances, and standing, by the previous Conservative-led government, which forced them to cut rents and sell off valuable housing stock. Now, in the words of one association chief executive, they’ve been “formally rehabilitated”.

Javid’s white paper , represents a welcome if tacit admission that the Cameron government failed to address the reality of that broken market, – worse, by subsidising home ownership, it pumped up prices – but remedies are short.

A determination to continue with a right-to-buy policy, pioneered by the Thatcher government in the early 1980s, hardly signals enthusiasm to build badly needed social housing. Will, for instance, a new breed of council-owned housing companies, high on ambition, be subject to enforced sales of new homes? If so, that’s hardly an incentive to build for the neediest – at a time when ambitious councils are keen to borrow more if allowed by a government that has floated the idea of “bespoke deals” for these housing providers.

But while the white paper raises more questions than it answers, at least one minister is opening a dialogue with councils, housing associations and private builders. Gavin Barwell, the housing minister, is holding a series of meetings around the country and telling them all that he is desperately in need of allies across the political divide. This alone represents a welcome break with predecessors not always known for constructive engagement.

Significantly, it seems, the focus has now shifted from blaming councils for delaying plans, through a cumbersome planning system, to blaming builders and developers for sitting on large land banks once planning permission has been granted. Why, for instance, when around 270,000 homes are annually given planning permission, are only half that number being built? Why is so much tied up in opaque agreements between owners and developers? Is an artificial scarcity of land distorting the housing market and limiting building? Two years ago an independent commission, chaired by former BBC chairman Sir Michael Lyons for the former Labour leader Ed Miliband, spoke of six firms of land agents alone holding strategic land banks of 23,000 acres and warned that owners were holding onto land, sometimes with planning permission, in the hope that it would rise in value.

Ministers, implicitly critical of the building industry, have floated the idea of giving powers to the Land Registry, which logs house transactions and – ostensibly – ownership of land, to try to uncover the scale of the problem. There is even a strong hint that the public sector – councils and government agencies – rather than developers should get the financial benefit from an uplift in land value once planning permission is granted. If that sounds radical, it is a model that funds housing, and infrastructure, in many other countries. That alone might go some way towards fixing a broken market – if it ever happens. We shall see.