When Sajid Javid presented his White Paper, “Fixing our broken housing market”, to parliament in February 2017 he recognised that the very structure of the housing market makes it harder to increase supply. In particular, he made the point that a handful of very large private sector companies were responsible for around 60% of all new private homes.

Although not in itself a bad thing in terms of economy of scale the very model that they, without exception, operate – a single-trader, mono-tenure model – fundamentally acts as a barrier to significantly increasing supply. Oliver Letwin in his “Independent review of build out” succinctly points out that a housebuilder’s business model relies on a build-out rate that is dictated by a local absorption rate that will not impact on market price (were it to do so their model would be fundamentally flawed), therefore this tends to slow down rather than speed up build-out rates.

[…]