Deputy chief executive of Home Group says private housebuilders cannot solve housing crisis
The deputy chief executive of housing association Home Group has hit out at private housebuilders, saying they do not have the ability or inclination to build the homes needed to solve the UK housing crisis.
Speaking at a Policy Exchange fringe event at the Labour Party conference, Joe Docherty said that housebuilders had “a duty to their shareholders, not to society” and said that government attempts to get them to build more were “like pushing on a string.”
He said: “It is the job of the [housebuilder] chief executive to increase their return on capital. If a chief executive built an unlimited amount he would get to an inflexion point where that return started to fall. So they simply won’t do it.”
Docherty also called on the government to invest more cash in building affordable homes, as housing associations were running out of balance sheet capacity to borrow money from the private sector to build houses.
He said Home Group’s own gearing was at 66%, just 4% shy of putting it in excess of the loan covenants from its banks, meaning it was all but impossible to borrow more.
“There has been this theoretical search going on for how to build affordable homes without spending any grant. Unfortunately it’s just a matter of arithmetic. It can’t happen. It can only really come from the public purse,” he said.