LONDON (Reuters) - Britain will not fix its "broken" housing market unless it ends the dominance of the biggest housebuilders by supporting smaller providers to ramp up the rate of construction, a parliamentary committee warned on Saturday.
Housing is a huge political issue in Britain where demand outstrips supply, pushing up prices and leaving large numbers of first-time buyers locked out of the market.
A cross-party report by parliament's Communities and Local Government Committee said more than half of all new homes were built by the eight largest firms, meaning the country is overly reliant on a small number of commercial providers.
The report said there was little incentive for so-called volume builders to accelerate their rate of building and said changes needed to be made to help the small and medium-sized builders, who have been declining in number and output.
"The housing market is broken, we are simply not building enough homes," said Clive Betts, the chair of the committee.
"Smaller builders are in decline and the sector is over reliant on an alarmingly small number of high volume developers, driven by commercial self-interest and with little incentive to build any quicker."
The report said that in order to increase competition, land should be made available in smaller portions to allow the smaller builders to secure space, and the government should look at making finance available to smaller groups which are seen as more risky.
The report said around 190,000 net additional homes were built in Britain in 2015-16 but charities and industry consultants believe that figure is too low to meet demand.
According to the committee, a quarter of all new homes in 2015 were built by the three largest companies - Persimmon (L:PSN), Taylor Wimpey (L:TW) and Barratt (L:BDEV).
Other listed housebuilders include Berkeley Group (L:BKGH), Bellway (L:BWY) Redrow (L:RDW), Crest Nicholson (L:CRST) and Bovis Homes (L:BVS).
The Home Builders Federation said it welcomed the report and supported the drive to support smaller providers. But it noted that demands around the planning process were also an issue.
"The vast majority of the big increases in housing supply in recent years have come from the larger, mainstream builders - but we need more builders of all sizes and specialisms if we are to tackle our acute housing shortage," it said.