It also launches probe into housebuilders' suspected information sharing
In an examination of the UK’s housebuilding sector, the Competition and Markets Authority (CMA) has pinpointed the complex and unpredictable planning process, along with the constraints of speculative private development, as key factors behind the continuous shortfall in new home constructions.
The regulator’s final report, stemming from a year-long study, underscores a pressing need for systemic reforms to boost housing supply and improve quality standards.
“Housebuilding in Great Britain needs significant intervention so that enough good quality homes are delivered in the places that people need them,” said Sarah Cardell (pictured), chief executive of the Competition and Markets Authority.
“Our report 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.”
We’ve found fundamental concerns in the housebuilding market, following our market study in England, Scotland and Wales.
— Competition & Markets Authority (@CMAgovUK) February 26, 2024
Read more: https://t.co/NyhnvHYnfr#HousingSector #Housing
The CMA report also sheds light on the growing issue of estate management charges, revealing that homeowners often face high and ambiguous fees for the upkeep of communal facilities. This situation is compounded by the quality concerns of newly constructed homes, with an increasing number of homeowners reporting defects.
Additionally, the CMA has launched a new investigation into several major housebuilders for allegedly sharing commercially sensitive information, which could potentially influence market competition and housing prices. Although this practice is not deemed a primary cause of the housing supply issues, it raises concerns over competitive fairness in the sector.
The competition watchdog will conduct a probe into eight housebuilders: Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey, and Vistry.
The CMA’s findings further indicate a production of less than 250,000 homes last year across Great Britain, falling significantly short of the 300,000 annual target set for England alone. The study identifies a diverse range of housebuilders in the market, from large, national companies to smaller, regional entities, highlighting a reliance on speculative private development that fails to meet community needs effectively.
Key issues identified include the complexity of the planning systems in England, Scotland, and Wales, which often result in unpredictable outcomes and delays in construction starts. The report also criticises the speculative nature of private development and the practice of land banking as symptomatic of broader systemic problems, rather than primary causes of the housing shortage.
In response, the CMA proposes several measures to improve the housing market, including requiring councils to adopt amenities on all new housing estates, enhancing consumer protections, and establishing a New Homes Ombudsman. These recommendations aim to deliver more homes, particularly in high-demand areas, improve new-build quality, and reduce consumer detriment from the private management of public amenities.
While the CMA’s proposals are geared towards immediate improvements, it acknowledges that more fundamental interventions may be necessary to meet Great Britain’s housing needs comprehensively. This could involve increasing non-speculative housebuilding by local councils and housing associations, among other policy measures.
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