The housing minister has hinted during an evidence session in the House of Lords that the government might be willing to consider a stamp duty break to encourage downsizers.

Speaking last week at the final public meeting of the House of Lords Built Environment Committee’s inquiry into meeting UK housing demand, Christopher Pincher touched on a topic much debated among mortgage and property professionals: the need to encourage downsizing and create housing that is suited to the requirements of an aging population.

The delivery of new homes works best if you have a clear housing strategy — something we have lacked

Pincher said: “The challenge is that in the early 1990s something like 31% of properties were under-occupied — they were too big for the numbers of people rattling around inside them. Now that percentage is 38%, so it has grown by a material number in that period, and the substantive number was very large to start with.

“So there are a very significant number of properties where we see under-occupation. I think there is an opportunity to encourage downsizing; to encourage the growth of the later living sector in order to free up homes in the middle of the market.”

When questioned about whether the government might consider a stamp duty break for downsizers, Pincher said it was a question for the chancellor but added: “I’m keen to make sure that we look at all the barriers that exist… it’s an important area and I want to make sure that we address it.”

Meeting this demand will be a question of numbers, but also of balancing where and what kind of buildings people want to live in

The recently formed Built Environment Committee is set to report back to the government with recommendations on how to ensure that ministers keep their manifesto pledge to build 300,000 new homes a year.

The committee was first established in April and is expected to publish its report on meeting UK housing demand by the end of the year, after the peers have considered evidence collected from developers, architects, local planning departments, council leaders and ministers.

Opening the inquiry, the committee’s chair, Baroness Lucy Neville-Rolfe, set out the scale of the issues at stake: “The number of households in England is projected to rise by 3.7 million over the next 20 years. This increase will be unsustainable and damaging to society unless the corresponding need is met.

We need to move away from a planning culture that is still in its roots small-scale and about development control

“Meeting this demand will be a question of numbers, but also of balancing where and what kind of buildings people want to live in.”

Speaking in the first oral evidence session of the inquiry last month, Good Home Inquiry chair David Orr highlighted the failure of successive ministers to tackle the problem.

He said: “The delivery of new homes works best if you have a proper, clear housing strategy — something that we have comprehensively lacked in this country for decades.

“Very often we are reacting to local circumstances, doing things piecemeal and trying to make a failing system work, rather than having a clear set of long-term objectives that everyone can get behind and work towards delivering. I know that people like me say this kind of thing all the time — that we need a housing strategy — and people say it is too hard, because the politics will not allow it.

“I do not agree. I think that if you have a clearer housing strategy with some room for manoeuvre, it gives you a starting point for people to make decisions about how things work effectively together.”

You can see a marked decline in the number of local housebuilders

He added: “We have obsessive discussions about changing the planning system or the planning process. I think we need a more fundamental challenge than that, which is to change the planning culture, to move away from a planning culture that is still in its roots small-scale and about development control rather than about long-term placemaking and thinking about what legacy we are passing on to future generations.”

In a later session, Federation of Master Builders chief executive Brian Berry argued the case for the government to do more to remove the obstacles facing small and medium-sized developers.

“Part of the reason for not meeting the [300,000 homes a year] target is the lack of capacity in the housebuilding industry,” he said. “It has become more polarised, with the volume housebuilders dominating the housing market, and that is reflected in the number of SME housebuilders.

“In the late 1980s, 40% of all new homes were built by SME housebuilders. Three or four years ago that had dropped to 12%. You can see a marked decline in the number of local housebuilders.”

Referring to a survey of FMB members, Berry said: “At the moment, the number one problem is the availability of small sites. The planning system does not allow for sufficient small sites for micro housebuilders to take advantage of. This year, of course, we have seen problems with material shortages, which all sectors have been affected by.

There is an opportunity to encourage downsizing; to encourage the growth of the later living sector in order to free up homes in the middle of the market

“Sixty-one per cent of our members said that the planning system is also a barrier, and for SME housebuilders it is the complexity of the planning system, the uncertainty and the cost. SME housebuilders are unable to shoulder, in the same way that the volume housebuilders can, the extra responsibilities and onerous conditions that they have to navigate.

“At the moment, there is a problem with skilled labour, which is not unique to the building industry, but there was the problem of a shortage of skilled labour before the pandemic. Access to finance, which had been a key problem for local housebuilders up until the last two years, has improved.”

He added: “We were hopeful about the planning reforms the government was planning to introduce. They are on pause, which creates a sense of unease about the direction of travel.”