Developers limiting supply of new homes in bid to maintain prices: Letwin

Developers are slowing the system for house building by limiting the number of new built homes that are released for sale at any one time, Sir Oliver Letwin has warned in a report.

The report said the practice, known as the ‘absorption rate’, was “designed to prevent a glut of new built homes driving down prices in the local market”.

He argued, however, that developers could increase the choice of design, size and tenure of new homes without impacting on the local market and therefore speed up the rate at which houses are built and sold.

Sir Oliver Letwin was commissioned by the government to examine what could be done to speed up the slow rate of house building on major sites.

His study, Independent review of build out: draft analysis, said that “….to obtain more rapid building out of the largest sites we need more variety within those sites”.

The report also found that a shortage of British bricklayers would have a “significant biting constraint” on government plans to boost the number of new homes built from 220,000 a year to 300,000. It called for 15,000 more bricklayers, almost a quarter of the size of the current workforce, to be trained over the next five years.

Sir Oliver said: “It is clear that the main cause for delay is the absorption rate. We found that if house builders were to offer more variety of homes and in more distinct settings then overall build out rates could be substantially accelerated.”

Sir Oliver and his panel will submit final recommendations on improving build out rates in the autumn.

The Secretary of State for Communities, James Brokenshire, said: “We want to help people onto the housing ladder, and so I would like to thank Sir Oliver and the expert panel for their excellent work. I was particularly interested to see that increasing the choice of design, size and tenure of new homes in helping to speed up build out rates and help deliver the homes we need and communities want. I look forward to receiving the final report in the autumn.”