The government needs to increase its house building target by at least 50% in order to meet demand, according to the Economic Affairs Committee.
The House of Lords Select Committee said in its new report Building More Homes that 300,000 homes need to be built each year to tackle the housing crisis.
It suggested that local authorities and housing associations must be freed to build substantial numbers of homes for rent and for sale.
The report was critical of the government’s attempts to curb the buy-to-let sector through April’s 3% stamp duty increase and the mortgage tax relief cut which is set to come into force next year.
Frequent changes to tax rules and subsidies for house purchases, reductions in social rents, and the extension of Right to Buy have also helped to reduce the supply of homes for those who need low cost rental accommodation, the report said.
Lord Hollick, chairman of the committee, said: “We are facing an acute housing crisis with home ownership – and increasingly renting – being simply unaffordable for a great many people.
“The only way to address this is to increase supply. The country needs to build 300,000 homes a year for the foreseeable future. The private sector alone cannot deliver that. It has neither the ability nor motivation to do so. We need local government and housing associations to get back into the business of building.”
The committee report made a number of recommendations for tackling the housing crisis.
It said restraints on local authority borrowing should be lifted and that “decisive steps” should be taken to make use of surplus publicly owned land for building on.
Local authorities should also be given the power to increase planning fees and charge council tax on developments that are not completed within a set time period.
Lord Hollick said: “The government is too focussed on home ownership which will never be achievable for a great many people and in some areas it will be out of reach even for those on average incomes. Government policy to tackle the crisis must be broadened out to help people who would benefit from good quality, secure rented homes.
“It is very concerning that changes to stamp duty for landlords and cuts to social rent could reduce the availability of homes for rent. The long-term trend away from subsidising tenancies to subsidising home buyers hits the poorest hardest and should be reversed.”
Recent research by Yorkshire Building Society found that the UK has missed its house building targets by a whopping 1.2 million since 2004.
In 2015, the government set the UK house building target by pledging to build one million homes over its five-year term. However, only 142,890 homes were built in 2015, 29% less than the 200,000 homes needed to reach the one million target by 2020.
Nick Marr, co-founder of property website TheHouseShop.com, said: “The report found that even if we meet the government’s pledge of one million new homes by 2020, house prices will still increase by 5-6% per year, putting further pressure on affordability.
“This report could not have come at a better time, as the new Conservative government, lead by Theresa May, could indeed adopt and implement many of the bold recommendations made by Lord Hollick and the committee.
“The best thing that Theresa May’s government can do for the UK’s tenants and stakeholders in the private rental sector would be to reverse, or at least reduce, the higher stamp duty charge and to reassure both individual landlords and institutional investors that the UK private rental sector is a safe and secure place for their money, and that conditions will remain as they are for the foreseeable future.”
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