The Government must increase its annual new homes target by 50% if it is to solve the UK's housing crisis, the Economic Affairs Committee has said.

In its report, 'Building more homes', the cross-party House of Lords Committee stated 300,000 new homes must be developed each year "for the foreseeable future".

In addition, the study recommended freeing up councils and housing associations to build large numbers of homes for rent and for sale.

The Committee also criticises the Government's housing policy on a number of issues, such as:

• Setting a new homes target which will fail to meet the demand for new homes or moderate the rate of house price increases

• Restricting local authorities' access to funding to build more social housing

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• Creating uncertainty in the already dysfunctional housing market by frequent changes to tax rules and subsidies for house purchases, reductions in social rents, and the extension of Right-to-Buy

• A narrow focus on home ownership which neglects those who rent their home.

Chairman of the Committee, Lord Hollick, said if the housing crisis is to be solved, local government and housing associations must "get back into the business of building".

"We are facing an acute housing crisis with home ownership and increasingly renting–being simply unaffordable for a great many people," he said. "The only way to address this is to increase supply. The country needs to build 300,000 homes a year for the foreseeable future. 

"The private sector alone cannot deliver that. It has neither the ability nor motivation to do so. Local authorities are keen to meet this challenge but they do not have the funds or the ability to borrow to embark on a major programme to build new social homes.

"The Government are too focussed on home ownership which will never be achievable for a great many people and in some areas it will be out of reach even for those on average incomes. 

"Government policy to tackle the crisis must be broadened out to help people who would benefit from good quality, secure rented homes. If the housing crisis is to be tackled the Government must allow local authorities to borrow to build and accelerate building on surplus public land."

(LM/JP)