Land supply is major barrier and regulation could magnify issue “We are cleaning the car window when the petrol tank has a hole in it” HBF today warned the FSA and Government that regulation of the mortgage market was not a solution to the threat of future house price inflation, the root causes of which lie elsewhere, and indeed could itself exacerbate the problem. And whilst no one is advocating a return to the irresponsible lending levels of yesteryear, imposing prescriptive inflexible constraints on lenders that take no account of personal circumstances or risk cannot be used as a tool control the inflationary consequences of restrictions on land supply – the major risk to future housing supply and thus prices. With the latest household projection figures showing that even more homes are going to be needed in the future than was estimated when the Government set its extremely challenging target of 3 million new homes by 2020, addressing the key issue of where the land is going to come from on which to build these homes is critical. Without the land, a huge shortfall is inevitable, which in itself will generate a price boom and the associated social issues as people without significant capital are thwarted from meeting their ambitions. The warning comes in advance of tomorrow’s publication of Lord Turner’s report in to the future of financial regulation. Speaking today at HBF’s Policy Conference, Executive Chairman Stewart Baseley said; ‘If the FSA and Government go down the route of mortgage control to try to head off future asset bubbles they are likely to entrench and worsen future housing under-supply that is rooted in the constraint of land supply. House price booms are caused by an imbalance between supply and demand and the long term solution to escalating prices is to ensure there are enough homes to meet demand – not to impose regulation that takes no account of personal circumstance or risk that could discriminate against people perfectly able to realise their ambitions of home ownership. We are cleaning the car window when the petrol tank has a hole in it.” - Ends – Notes to Editors: 1. The Home Builders Federation (HBF) is the principal representative body for private sector home builders and voice of the home building industry in England and Wales. The HBF’s 300 member firms account for some 80% of all new homes built in England and Wales in any one year, and include companies of all sizes, ranging from multi-national, household names through regionally based businesses to small local companies: www.hbf.co.uk For media enquiries, or to arrange an interview, please contact Steve Turner 020 7960 1606 07919 307 760 steve.turner@hbf.co.uk
