Competition watchdog: ‘Significant intervention’ needed in housebuilding market

The Competition and Markets Authority (CMA) has launched an investigation into the UK’s largest housebuilders as it warns of “fundamental concerns” in the housebuilder market, which it suggests is stifling supply and keeping prices high.

The CMA yesterday released the findings of its review into the housebuilding market and warned that the planning system and the limitations of speculative private development have seen too few homes built.

It also expressed concerns around estate management charges and the build quality of some new homes.
Additionally, the CMA said it found evidence during the study that indicated some housebuilders may be sharing commercially sensitive information with their competitors, which it said could be influencing the build-out of sites and the prices of new homes. 

While the CMA does not consider such sharing of information to be one of the main factors in the persistent under-delivery of homes, the regulator said it is concerned that it may weaken competition in the market.

It has therefore launched an investigation under the Competition Act 1998 into Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey, and Vistry. 

The CMA has not reached any conclusions at this stage as to whether or not competition law has been infringed.

Additionally, the CMA’s report recommended that councils should be required to adopt amenities on all new housing estates and there should be enhanced consumer protections for homeowners on existing privately managed estates – including making it easier for homeowners to switch to a more competitive management company. 

It also proposed 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.

Sarah Cardell, chief executive of the CMA, said: “Housebuilding in Great Britain needs significant intervention so that enough good quality homes are delivered in the places that people need them.

“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.”