Builders are slammed for putting land trading first

Construction firms are more interested in profiting from land sales than building homes to ease Britain's ever-worsening housing crisis, a leading think-tank says.

The Institute for Public Policy Research warned that UK housebuilding was facing a "lost decade" with pitifully few homes being built, while developers looked to make money from increased land values.

"Our construction industry has for too long prioritised trading land over building homes. This has to change," Nick Pearce, IPPR director, said. "The Government's new housing strategy does not make sufficient demands of the housebuilders. Instead, it offers them public land, money and guarantees without a serious quid pro quo. The Government must demand more bang for the taxpayer's buck – if it doesn't, the result will be subsidised stagnation and another lost decade of housebuilding."

The IPPR said developers with the right to build on public land should have strict time limits set on when they should complete construction, or risk losing their permission. Developers should also be split in two, with parts that speculate on land values separated from the housebuilding operation, the IPPR said.

Steve Turner, head of communications for the Home Builders Federation, responded: "Suggesting home builders prioritise land trading is an absurd claim. Separating the development process into land and building would do nothing to increase home building.

"Imposing build-out rates for public land disposal ignores the fact that home building for the private market is sales-led, not building-led," he added.

As for developers sitting on land that has planning permission in the anticipation that its price will rise, Mr Turner said this was a "myth" that had been debunked by an Office of Fair Trading investigation.