The Labour Party has outlined proposals for its Help to Build scheme to harness the delivery capacity of smaller house builders.
The proposed programme would provide government guarantees for loans to SME house builders.
Labour argues this will overcome the single biggest barrier to delivering more new homes, which is access to finance on viable terms.
The proposals flesh out the party’s call for an “emergency” Help to Build scheme back in March.
Shadow housing minister Emma Reynolds and shadow chief secretary to the Treasury Chris Leslie launched the proposals at a Building Associates housing site in Gillingham, Kent, where the firm is building 17 homes for housing association Amicus Horizon.
They said that a Labour government would also require local authorities to include a higher proportion of small sites in their five-year land supply.
They added that Labour would guarantee that a proportion of the homes built in the next generation of new towns and garden cities were built by smaller firms.
Smaller house builders used to build two-thirds of all new homes but they are now building just over a quarter and much of this reduction has happened in the past six years.
This has inevitably had an impact on the overall capacity of the industry to build the number of new homes needed.
Brian Berry, chief executive of the trade body FMB, welcomed the plan.
In the FMB’s 2013 House Builder Survey, 60 per cent of house builder members cited access to finance as a major barrier to their ability to increase their output of new homes, more than any other factor.
He said: “While it is encouraging that there is cross party support for more small house builders to enter the housing market, the ‘Help to Build’ idea being put forward by Labour is the most far-reaching solution to have emerged so far.
“This is an idea which could re-invigorate the SME house building sector and we hope the policy is implemented by whichever party forms the next government after the General Election.”
Mike Leonard, CEO of the Modern Masonry Alliance, said: "We very much welcome the Help to Build Scheme designed to help local Builders bridge the deposit gap.
"This builds on our Local House Builder Club initiative which aims to get local authorities, local Builders and local banks delivering more homes making best use of local land, materials and labour.
"200000 homes per annum by 2020 can only be achieved if we are to spread the build programme throughout the UK and ensure local companies have the access to finance and land.
"Local builders offer the consumer choice and generate demand for bricks and blocks and offer skilled jobs in the community where they build."
