There should be less focus on increasing the number of planning permissions going through the system and more reforms helping small and medium sized house builders access land, report says.

A new report by the Centre for Policy Studies (CPS) has called for changes to the planning system to open up the market and allow better access for SMEs as part of the effort to diversify the housing supply.

Housing Guarantee highlights the fact that the top 10 house builders currently build 40% of all new homes, with the top six controlling around 33% of the market.

The six biggest house builders alone currently have roughly one million plots in their strategic land banks, which is nearly the equivalent of the target supply across England over the next five years.

According to the CPS, smaller builders often face challenges obtaining land and risk being squeezed out of the system. While they built around 40% of homes in the 1980s, today they build 10%.

To date, attempts to increase the housing supply have focused on increasing the number of planning permissions going through the system. However, according to the CPS’ report, the 2010 planning reforms led to permissions rising to over 350,000 which only resulted in 200,000 new homes being built.

To increase the number of houses being delivered, Housing Guarantee recommends introducing panels of local house builder SMEs that public sector land is sold to.

It also recommends changing permissions to delivery contracts based on an agreed timeline. Where house builders cannot deliver this, they would have to pass the land on at an agreed price to local SMEs.

The report also calls for a renewed emphasis on the Housing Delivery Test, ensuring councils are assessed on the basis of numbers of homes built, not on planning permissions granted.

Report author and CPS head of policy, Alex Morton, said: ‘The Government’s planning reforms are very welcome. But we need to focus on delivery and learn from previous attempts to fix England’s housing supply problems.

‘The reforms we are proposing would help create a new, better planning system that focuses on ensuring delivery, working alongside the other proposals Government is bringing forward.

‘We have a once-in-a-generation opportunity to fix these issues, and with a Planning Bill under way, now is the time for action.’

Minister of State for Housing, Chris Pincher MP, commented: ‘This CPS report is a very welcome contribution to the debate around both house building and planning reform. I am particularly pleased that the report has highlighted the important role that SMEs can and should play in delivering more homes and helping the United Kingdom’s economy build back better.

‘A successful SME sector is crucial in our shared objectives of planning reform and increased house building.’