The Competition and Markets Authority said it had uncovered evidence during a far-reaching study into housing market delivery that indicated some house builders may be sharing commercially sensitive information with their competitors.
It added that it was concerned that this could be influencing the build-out of sites and the prices of new homes.
Eight house builders whose activities are being investigated
- Barratt Developments
- Bellway
- The Berkeley Group
- Bloor Homes
- Persimmon
- Redrow
- Taylor Wimpey
- Vistry Group
Sarah Cardell, CMA chief executive, said: “The CMA has also today opened a new investigation into the suspected sharing of commercially sensitive information by housebuilders which could be influencing the build-out of sites and the prices of new homes.
“While this issue is not one of the main drivers of the problems we’ve highlighted in our report, it is important we tackle anti-competitive behaviour if we find it.”
The CMA said that it had not reached a view yet as to whether there was sufficient evidence of an infringement or infringements of competition law for it to issue a statement of objections to any party under investigation.
Investigators said they would now consider any representations they receive before any decision is taken as to whether competition law has been infringed.
The CMA housing market report also published today concluded that that the complex and unpredictable planning system, together with the limitations of speculative private development, has been responsible for the persistent under-delivery of new homes in Britain.
Critically, the CMA found that land banking was not adversely impacting overall delivery.
The study also found substantial concerns about estate management charges – with homeowners often facing high and unclear charges for the management of facilities such as roads, drainage, and green spaces.
Concerns have been found, too, with the quality of some new housing after the number of owners reporting snagging issues increased over the last 10 years.
Cardell added: “House building 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.”
CMA housing market review findings
Planning Rules: the planning systems in England, Scotland and Wales are producing unpredictable results and often take a protracted amount of time for builders to navigate before construction can start.
The report highlights that many planning departments are under-resourced, some do not have up to date local plans, and don’t have clear targets or strong incentives to deliver the homes needed in their area. They are also required to consult with a wide range of statutory stakeholders – these groups often holding up projects by submitting holding responses or late feedback to consultations on proposed developments.
Speculative Private Development: the report found another significant reason behind under delivery of homes are the limitations of private speculative development. The evidence shows that private developers produce houses at a rate at which they can be sold without needing to reduce their prices, rather than diversifying the types and numbers of homes they build to meet the needs of different communities – for example providing more affordable housing.
Land Banks: the CMA assessed over a million plots of land held by house builders and found the practice of banking land was more a symptom of the issues identified with the complex planning system and speculative private development, rather than it being a primary reason for the shortage of new homes.
Private Estate Management: the CMA found a growing trend by developers to build estates with privately managed public amenities – with 80% of new homes sold by the eleven biggest builders in 2021 to 2022 subject to estate management charges.
These charges are often high and unclear to homeowners. While the average charge was £350 – one-off, unplanned charges for significant repair work can cost thousands of pounds and cause considerable stress to homeowners. The report said many home owners were are unable to switch estate management providers, receive inadequate information upfront, and have to deal with shoddy work or unsatisfactory maintenance, and face unclear administration or management charges which can often make up 50% or more of the total bill.
Quality: housebuilders don’t have strong incentives to compete on quality and consumers have unclear routes of redress. Analysis also suggests that a growing number of home owners are reporting a higher number of snagging issues. The CMA’s consumer research and other evidence revealed that a substantial minority also experienced particularly serious problems with their new homes, such as collapsing staircases and ceilings.
For full report click here.
The CMA said its believed a substantial intervention was needed in the housebuilding market to address the issues.
These include 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.
It also wants to see enhanced consumer protections for homeowners on existing privately managed estates – including making it easier for homeowners to switch to a more competitive management company.
.gif)
.GIF)
