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House crisis to worsen as fewer homes get go-ahead

Housebuilding at its lowest since the 1920s while 5 million are on council waiting lists

Britain faces a worsening housing crisis as a dysfunctional planning system delivers new homes at just half the pace needed to match demand, an industry body will warn today.

The Home Builders Federation's (HBF) figures show planning approvals were granted for 32,900 homes between July and September, down 10 per cent on a year ago and running at little more than half the pace required to keep up with official estimates of UK household growth over the next 20 years.

The figures are in stark contrast with the boom years of the housing market in 2006 and 2007, when more than 60,000 homes were given the go-ahead on average every quarter. But the toxic combination of a mortgage lending drought, a deep recession, and planning uncertainty has seen housebuilding plunge to its lowest levels since the 1920s while some 5 million people languish on council waiting lists.

The HBF executive chairman Stewart Baseley warns: "Building the homes we need would take millions off social housing waiting lists and enable beleaguered first-time buyers to buy their own home. It could also create half a million new jobs, so giving the country a huge economic boost."

Planning approvals so far this year are down 17 per cent on 2010 and average just 33,280 per quarter against 38,500 last year, the HBF's figures show. The worst-hit region was Scotland, where approvals are down by 38 per cent so far this year, although other regions, including the Midlands and the North, have also seen double-digit declines.

The worsening housing shortage comes at a time when lenders' demands for much bigger deposits are locking hundreds of thousands of would-be homeowners out of the market, as well as forcing up the cost of scarce rental properties to record levels as rock-bottom interest rates allow more families to hang on to their homes.

Housebuilders have cut back on building to reflect the mortgage lending drought and tackle debts built up in the boom, while the Coalition also threw the planning system into limbo last year by scrapping regional housing plans under its localism agenda.

July's draft National Policy Planning Framework (NPPF) won more support from the industry by including proposals to speed up the system with a presumption in favour of sustainable development. But a committee of MPs will today warn the the NPPF risked tilting the balance too far in favour of the developers. Labour's Clive Betts, the chairman of the Communities and Local Government Committee, says the new framework's default approval for schemes should be stripped out of the proposals and called for extra time for councils to adopt their own local plans.

He says: "The way the framework is drafted currently gives the impression that greater emphasis should be given in planning decisions to economic growth. This undermines the equally important environmental and social elements of the planning system."

Housebuilders hit out at the committee's recommendations, which Mr Baseley says would "risk creating additional barriers to housing delivery".

He adds: "Our figures demonstrate clearly why Government must stand firm and deliver a robust planning system that provides enough land to meet the nation's housing needs. The committee's report appears to discount the seriousness of the housing crisis."