Investigation to Start into Suspected Anti Competitive Conduct by Housebuilders

EIGHT HOUSEBUILDERS are to be investigated for sharing commercially sensitive information by the Competition and Markets Authority (CMA).

The eight housebuilders whose activities are being investigated are:

• Barratt Developments plc and its group companies
• Bellway plc and its group companies
• The Berkeley Group plc and its group companies
• Bloor Homes Limited and its group companies
• Persimmon plc and its group companies
• Redrow plc and its group companies
• Taylor Wimpey plc and its group companies
• Vistry Group plc and its group companies

The regulator has warned that the housebuilding sector “needs significant intervention”. It has raised concerns over newbuild quality, costs levied on homeowners for unclear estate management charges and planning permission delays.

The share prices of the housebuilder businesses being investigated fell as the news was announced.

The CMA investigation follows a year-long review of housebuilding in England Scotland and Wales. The review was prompted by Michael Gove, Secretary of State for Levelling Up, Housing and Communities who wrote to the CMA in 2022.

Now, the CMA Chief Executive Sarah Cardell, has written again to Michael Gove saying “the housebuilding market is not delivering well for consumers and has consistently failed to do so over successive decades.”

Housebuilders Investigated

Publishing its full report into the housebuilders: Housebuilding Market Study, the CMA identifies the drivers holding back the quantity and quality of newbuild housing.

It pinpoints the planning system, the land market and “incentives and behaviours of housebuilders”.

The report finds that the planning system and the “limitations of speculative private development have seen too few homes built.” It follows consistent shortfalls in the number of new homes built each year. An annual construction target (ditched last year) of 300,000 new homes has never been reached – there were 133,213 new homes built in 2023.

“Substantial concerns” were also highlighted about estate management charges faced by homeowners. These are for basic facilities such as roads, drainage and green spaces.

The quality of new homes is also raised as a concern.

The report says “there is weak competitive pressure in the market to drive high levels of quality and innovation”. The number of snagging issues has risen is the last decade and many homeowners are dissatisfied with the customer service offered by housebuilders to address them.

Sarah Cardell, chief executive of the CMA, said: “Our report – which follows a year-long study – is recommending a streamlining of the planning system and increased consumer protections. If implemented, we would expect to see many more homes built each year, helping make homes more affordable.

“We would also expect to see fewer people paying estate management charges on new estates and the quality of new homes to increase. But even then, further action may be required to deliver the number of homes Great Britain needs in the places it needs them.”

CMA Recommendations to Government

Recommendations the CMA study makes to governments include:

• Requiring councils to adopt amenities on all new housing estates.
• Introducing enhanced consumer protections for homeowners on existing privately managed estates – including making it easier for homeowners to switch to a more competitive management company.
• Establishing a New Homes Ombudsman as soon as possible and setting a single mandatory consumer code so homeowners can better pursue homebuilders over any quality issues they face.

The proposed options for consideration by governments include:

• Ensuring local authorities put in place local plans and are guided by clear, consistent targets that reflect the need for new homes in their area.
• Streamlining the planning systems to significantly increase the ability of housebuilders to begin work on new projects sooner, while not watering down protections such as those for the local environment. Measures to improve the capacity of council planning departments would also enable them to process more applications more quickly.
• Introducing measures to increase the build-out of housing sites by incentivising builders to diversify the tenures and types of homes delivered.

COMMENT

Politicians are the Problem

Rico Wojtulewicz, head of policy and market insight for the NFB and House Builders Association (HBA), said: “The CMA report has confirmed that a broken planning process is the reason we have a lack of social housing, why big builders build too many of our new homes and SMEs are shut out, that homes are in the wrong places and too expensive, there are some issues with quality, and we don’t do placemaking.”

None of this is new or uncontroversial but the UK needed this CMA report to keep hammering home the reality that politicians of all colours are the reason we have a housing and placemaking crisis. It’s time they stopped blaming builders and instead, were held accountable for the mess they have caused and keep causing.”

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