Regulator tells property firms to sort out local problems - or else…

The Competition and Markets Authority has raised an unusual issue concerning Barratt’s £2.5 billion deal to buy rival house builder Redrow Homes.

The CMA says the move raises competition concerns in one local area - it’s around a Barratt development in Whitchurch, which includes nearby towns such as Nantwich, Ellesmere and Market Drayton.

Having concluded a detailed investigation into the deal – which included assessing competition on the national level and in local areas across Great Britain – the CMA found competition concerns in this one local spot.

It found that both housebuilders currently hold a high combined share of land in the catchment area centred around the Barratt development at Tilstock Road, with the addition of Redrow’s development at Kingsbourne in Nantwich. If the deal goes ahead, the CMA found that it could lead to higher prices and lower quality homes for homebuyers in this catchment area. 

However, the CMA found that once the deal is complete, the merged business will continue to face competition from rivals nationally and in all other overlapping local areas (including from other large and smaller regional housebuilders, with additional constraints coming from homes sold via the second-hand market).

While this deal did not raise UK-wide competition concerns, the CMA says it is aware there may be further consolidation amongst housebuilders in the UK and is committed to carefully assessing mergers in the housebuilding market further, both on a national and local level.

Barratt and Redrow now have been given the opportunity to submit proposals to address the CMA’s concerns.

A CMA spokesperson says: “Prospective homebuyers must not be disadvantaged as a result of deals like this one – with the potential loss of competition leading to even higher house prices or lower quality homes. Our initial investigation found concerns specifically in one area in and around Whitchurch, the companies now have the opportunity to agree workable solutions which address our concerns rather than move to a more in-depth investigation.”