Competition watchdog launches investigation into house builders over failure to build enough homes

The competition watchdog has launched an investigation into eight house builders for the failure to build enough homes and warned ‘significant intervention’ is needed to end the housing crisis.

The Competition and Markets Authority (CMA) said difficulties with the planning system and the limits of speculative private development capped the number of homes delivered while a lack of competitive incentives was leading to more residents experiencing quality issues.

Fewer than 250,000 homes were built across England, Scotland, and Wales, last year – well below the 300,000 homes-target for England set by the government.

The watchdog has now opened an investigation into whether eight housebuilders – Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey, and Vistry – shared commercially sensitive information with their competitors, which could be influencing the build-out of sites and the prices of new homes. No conclusion has been reached at this stage, the CMA said.

“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, chief executive of the CMA.

“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.”

The watchdog found around two-fifths of the homes built between 2021 to 2022 were delivered by the largest, national housebuilders while more than 50,000 homes were delivered by thousands of smaller, regional builders.

Around 60% of all houses built over that period 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.

While this method offered builders flexibility to respond to changes in the market, the country’s reliance on the model has seen the gap widen between what communities need and the number of homes delivered to end the housing crisis.

The planning system also prevented more homes being built and needs to be streamlined. The CMA uncovered under-resourced finding planning departments without up-to-date local plans and clear targets or incentives to deliver the necessary homes. 

Investigators also assessed more than a million plots of land held by housebuilders but concluded that land banking was a symptom of planning and speculative development issues rather than a primary reason for the shortage of new homes and the wider housing crisis.

But a lack of incentives for housebuilders to compete on quality and unclear routes of redress are leaving homeowners facing quality issues. The watchdog said a “substantial minority had experienced serious problems with their new homes including collapsing staircases and ceilings. 

The CMA has now launched an investigation into whether eight housebuilders have been sharing commercially sensitive information which could be influencing house prices after uncovering evidence in the year-long study.

CMA chief executive Cardell 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.”

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