The Federation of Master Builders has criticised peers after the House of Lords passed an amendment to the Housing and Planning Bill forcing SME housebuilders to make affordable housing payments on sites with fewer than 10 homes.
FMB chief executive Brian Berry warned that the legislation would be “a barrier” to the delivery of more housing.
Earlier this week, the government suffered an eleventh defeat on the Housing and Planning Bill when the Lords voted in favour of an amendment proposed by Labour peer Baroness Janet Royall.
She described as “critical” the ability of councils to demand payment on small sites, particularly in rural areas where large-scale development is unusual.
But the FMB claimed that the proposal would be “counterproductive”.
Mr Berry said: “We understand the need for more affordable homes in rural areas and government policy must address this need but the intention to hit all small-scale housing developments will be counterproductive.”
The threshold for making affordable housing payments on new residential development had previously been set at 15 units.
“This was part of a long-standing recognition that it is not appropriate to place the same demands on the smallest sites and the smallest firms, as it is on major developments and multi-national companies,” Mr Berry said.
“We’ve seen a long-term decline in the number and output of SME housebuilders, a trend that has accelerated during the downturn and has almost certainly reduced the overall capacity of the industry, and in turn reduced our ability to build our way out of the housing crisis.
“There’s little doubt that the historically unprecedented demands now being placed on small developers are a major barrier to this. To our members, this amendment will appear little more than a direct attack on SME housebuilders.”
The Lords also approved an amendment requiring new housing to meet the carbon compliance standard from 2018.
The bill had its third reading in the House of Lords yesterday, the last stage before it received royal assent later this year.