UK seeks to overhaul homebuilding rules

Britain's government said it would remove obstacles to building new houses as it tries to tackle a chronic shortage of homes and put its economy on a sounder footing.

At the centre of a new programme to boost Britain's poor productivity record are powers for the government to step in and draw up housing plans if local authorities fail to do so.

Town halls that dragged their feet on planning decisions might be fined, the government said as it moved to reduce the delays for housing projects that are often caused by local objections.

The plan follows the first government budget since Prime Minister David Cameron's Conservative Party won national elections in May.

The housing rule changes are the programme's centrepiece. British house prices have surged in the past two years to record highs, pushed up in part by government measures to make it easier for people to get mortgages.

The government hopes that a nimbler land and housing market will make it easier for people to own homes close to their work and give firms more freedom of location.

Planning permission will be granted automatically for housing developments on suitable brownfield sites, land formerly used for industrial or commercial purposes.

"That has really been an ongoing problem for many years in [Britain] for the housebuilding side, but also for new business," said John Van Reenen, a director of the Centre for Economic Performance at the London School of Economics.

The plan was also welcomed by some investors.

"We all know that [Britain] needs to build masses more homes, but for years all we've had is policies to help ever-increasing numbers of people to buy too few properties," said Andrew Allen, the head of global property strategy at Aberdeen Asset Management. "There's plenty of money from investors waiting in the wings to invest and indeed fund the much-needed residential schemes."

John Hawksworth, the chief economist at PwC, said the government should rethink its reluctance to borrow to fund investment and take advantage of rock-bottom borrowing costs to radically improve housing.

"The government could be bolder in this area," he said.