Since the 1960s, housing supply has fallen steadily each decade, according to the Centre for Policy Studies.

In a new report the thinktank noted that attempts to boost supply have focused on increasing the number of planning permissions flowing through the system. However, while the 2010 planning reforms led to permissions rising to over 350,000, the number of new homes actually built was just over 200,000.

In ‘The Housing Guarantee’ report, the CPS has therefore called for changes to the planning system to open up the market and allow better access for small and medium sized companies and to diversify the housing supply.

Big builders

The top 10 house builders currently build 40% of all new homes, with the top six controlling around 33% of the market.

Facing challenges to obtain land, smaller builders face being squeezed out of the system – falling from building around 40% of homes in the 1980s to around 10% now, said the CPS.

The six biggest house builders alone currently have roughly one million plots in their strategic land banks, nearly the equivalent of the target supply across England over the next five years.

Three key reforms

The CPS suggested three key reforms to support delivery of more homes:

1. Changing permissions to delivery contracts based on an agreed timeline. Where house builders cannot deliver this, they would have to pass the land on at an agreed price to local SMEs. This would mean as land came forward for development, it was actually translated into new homes.

2. A renewed emphasis on the Housing Delivery Test, ensuring councils are assessed on the basis of numbers of homes built, not on planning permissions granted – and are penalised if they are not delivering for their community.

3. Introducing panels of local house builder SMEs that public sector land is sold to, with challenging delivery targets to ensure the quality and diversity of local housing supply, and support competition within the sector.

Report author and CPS head of policy, Alex Morton, said: “The Government’s planning reforms are very welcome. But we need to focus on delivery and learn from previous attempts to fix England’s housing supply problems.

“The reforms we are proposing would help create a new, better planning system that focuses on ensuring delivery, working alongside the other proposals Government is bringing forward.

“We have a once-in-a-generation opportunity to fix these issues, and with a Planning Bill under way, now is the time for action.”

Chief executive officer at Regal London, Jonathan Seal, added: “As one of London’s leading residential-led, mixed-use developers, we are proud to have been a part of the city’s transformation but are confident there is more to be done in improving supply to London. We are committed to delivering more high-quality homes as part of the important contribution SMEs are making.

“This report is much-needed recognition of the need to reassess how we achieve that and for SMEs to have an important seat at the table.”