The Competition and Markets Authority has launched an investigation into eight major housebuilders after finding evidence they could be “sharing commercially sensitive information” with their rivals.
The watchdog will investigate Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey and Vistry after a year-long review into housebuilding practices across England, Scotland and Wales.
Sarah Cardell, chief executive of the CMA, said the suspected information-sharing “could be influencing the build-out of sites and the prices of new homes”, as well as weakening competition in the market.
The watchdog said it “has not reached any conclusions at this stage as to whether or not competition law has been infringed”.
A Bellway spokesperson said: “We are reviewing the CMA’s report. Bellway has engaged and co-operated fully with the CMA throughout its market study and will continue to do so.
“Bellway is committed to exceptional customer care. We remain focused on the delivery of high-quality new homes that meet local demand and enhance the communities we build in as we work to increase the supply of UK housing.”
The CMA’s report also found the “complex and unpredictable” planning system, together with the limitations of speculative private development, is responsible for a persistent under-delivery of new homes.
Its recommendations included:
- 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.
Cardell 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.”
Support for CMA recommendations
The Home Builders Federation, the representative body of the housebuilding industry in England and Wales, said it “wholeheartedly” supports the recommendations for councils to adopt and manage amenities, as well as moves to protect consumers with a single consumer code and a new homes ombudsman.
A spokesperson for the HBF said: “Housebuilders do not want to be long-term managers of estates and make absolutely no profit from the management companies that are required to be put in place.”
Elsewhere, the watchdog concluded the practice of land-banking was a symptom of issues identified with the planning system and speculative private development, rather than a primary driver behind a shortage of new homes.
The federation said: “We welcome recognition that the planning system is a fundamental barrier to delivery and adds unnecessary delay and cost into the development process, and the need for local authorities to have plans in place and properly resourced planning departments. We also welcome the CMA’s recognition that housebuilders do not land-bank unnecessarily, that supports a number of similar investigations over recent years.”
Industry rallies behind SMEs
Within its study, the CMA found the planning systems in England, Scotland and Wales is producing unpredictable results and that often take a protracted amount of time for builders to navigate before construction can start.
The occurrence is leading to a “disproportionate impact” on SME housebuilders, according to the industry.
Marc Vlessing, chief executive of Pocket Living said: “This report says what we all knew. That the housebuilding sector isn’t working and isn’t delivering the new homes we need. As the CMA has identified, there are multiple reasons for this including land supply and planning, with the latter having a disproportionate impact on SME housebuilders.
“Yet one of the central reasons is the lack of actual housebuilders in the market, with the largest 11 builders controlling over 40%. SMEs should be the lifeblood of the industry, yet their presence has collapsed to the point of near extinction, leaving only the major volume builders and an affordable housing sector which is floundering, especially in London with starts on site plunging to new lows.”
Vlessing further urged chancellor Jeremy Hunt to act quickly in next week’s Budget and implement moves to support the SME housebuilding sector, which has seen numbers fall significantly since the 1980s, as well as go further and faster on planning reform.
He added that: “This is vital if we are to hit 300,000 new homes. It becomes economically and socially critical if we are to hit the real figure of 500,000 new homes per year.”
Photo © Geoffrey Swaine/Shutterstock
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