Jenrick plans to break dominance of volume housebuilders

Housing secretary Robert Jenrick has said he wants to use the government planning reforms to break the dominance of the volume housebuilders and will put more money in to the planning system.

Answering questions following his keynote speech to the Create Streets annual conference, Jenrick said that he would only regard his reforms as successful if they managed to reduce the proportion of new homes produced by the major volume builders.

He also said that he recognised that the government’s planning reforms – which call for all local authorities to produce new local plans within two and a half years, compared to the usual seven – will require additional funding from the government.

Asked if the current market was too concentrated in the hands of major builders, Jenrick said: “I don’t think we will have succeeded with our reforms if we are sat here in 10 or 20 years’ time and the market was as concentrated as it is today. And I think that if we don’t take action there is every chance that the market will be become even more concentrated. Our volume housebuilders have very strong balance sheets and are looking to consolidate their position in the market.

“So, the need for action is clear, and I hope the things we are putting forward in the white paper will create a more diverse and competitive market than we see today. That’s certainly one of the key missions that we’ve set ourselves.”

Last year the top 10 housebuilders, including Persimmon produced nearly 90,000 homes, nearly two fifths of the total number of net additions. Meanwhile the proportion of homes built by small housebuilders had declined from 40% in the 1980s to just over one in ten by 2015, with a third wiped out in the 2008/9 global financial crisis. The Home Builders’ Federation estimates that returning the industry to the same number of small firms that existed pre 2008 would result in the construction of 25,000 more homes a year.

Small builders regularly cite planning difficulties as one of the main barriers to entry preventing them from growing. Jenrick’s comments come just weeks after it was announced that four listed builders are under investigation by the Competition and Markets Authority for potentially misleading customers over the sale of leasehold homes, and after years of concerns over the quality of new build houses.

Responding to questions, Jenrick said the reform of the planning system would be enabled by more funding for local authority planning departments, though he did not say how much will be made available. Planning departments have been hit hard by swingeing austerity-era reductions of 40% in funding to councils, and Jenrick conceded that the reforms will be “very challenging” for local authorities to implement.

Jenrick said: “It’s just a truth that many local authorities have had to reduce capacity. We need to ensure that they are better resourced, and we need to be re-focusing planning departments and professionals on the things that drove them in to the profession in the first place.

“I hope that this could be a defining moment for the profession. It will be a huge change, it will require further resources and support from my department.”

As expected, Jenrick also used his speech to announce the appointment of former Beauty Commission chair Nicholas Boys Smith to head up the creation of a new housing design body.