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(Alliance News) - The UK competition watchdog on Monday said it found "fundamental concerns" within the UK housebuilding market, and has launched an investigation into eight housebuilders.
The Competition & Markets Authority published its final report on the housebuilding market which followed a year-long study, "finding that the complex and unpredictable planning system, together with the limitations of speculative private development, is responsible for the persistent under delivery of new homes".
The CMA said: "There are persistent shortfalls in the number of homes built across England, Scotland, and Wales, with less than 250,000 built last year across Great Britain - well below the 300,000-target for England alone."
It said that around 60% of all houses built in 2021 and 2022 "were delivered by speculative private development, which is when builders obtain land, secure planning permission, and construct homes without knowing in advance who will buy them or for how much. This way of building homes has given builders flexibility to respond to changes in the market. However, the country's reliance on this model has seen the gap widen considerably between what the market will deliver and what communities need."
The CMA said it is investigating Barratt Developments PLC, Bellway PLC, Berkeley Group Holdings PLC, Bloor Homes, Persimmon PLC, Redrow PLC, Taylor Wimpey PLC, and Vistry Group PLC. "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," said CMA Chief Executive Sarah Cardell.
The CMA also noted concerns over estate management charges, as well as the quality of some new housing. Cardell also noted the need for "significant intervention" within housebuilding to ensure the quality of homes. The regulator has also opened a new investigation into "suspected sharing of commercially sensitive information" among housebuilders, which could be influencing the build-out of sites and new home prices.
It added: "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 numbers of 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."
The CMA said that housebuilders don't have strong incentives to compete on quality, facing consumers with unclear routes of redress.
It said it would like to see a housebuilding market that delivers more homes overall, consistently better outcomes on new-build quality and reduced detriment to consumers due to private management of public amenities o new-build estates.
The CMA said it is making recommendations to governments to require councils to adopt amenities on all new housing estates, introduce enhanced consumer protections for homeowners on existing privately managed estates, and establishing a new homes ombudsman as soon as possible and setting a single mandatory consumer code that would enable homeowners to better pursue homebuilders over any quality issues.
Barratt shares fell 1.3% on Monday morning in London to 472.10 pence each. Bellway shares fell 1.9% to 2,708.00p, Berkeley was down 1.3% at 4,651.00p, Persimmon fell 1.7% to 1,388.50p, Redrow was down 2.4% at 647.34p, Taylor Wimpey fell 1.8% to 143.40p and Vistry fell 1.5% to 1,010.00p.
By Tom Budszus, Alliance News slot editor
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