UK competition watchdog opens investigation into eight housebuilders over information sharing – business live

The CMA’s final report into the UK housebuilding market – released alongside news of the competition probe – highlights a number of problems with the sector.

Having conducted a year-long study into the sector, the watchdog has identified several areas where it is failing:

• 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 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.

• 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 housebuilders 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. Whilst 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 highlights concerns that many homeowners are unable to switch estate management providers, receive inadequate information upfront, 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 homeowners are reporting a higher number of snagging issues (at least 16). 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.

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Britain’s competition watchdog has launched an investigation into Britain’s housebuilders, over concerns that they are sharing commercially sensitive information with each other.

The Competition and Markets Authority (CMA) had announced an investigation under the Competition Act 1998 into Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey, and Vistry, having seen evidence that some housebuilders may be sharing information.

Such behaviour could influence the build-out of sites and the prices of new homes and weaken competition in the housing market – an area where too few houses are being build – the CMA fears.

Sarah Cardell, chief executive of the CMA, says it is “important we tackle anti-competitive behaviour if we find it.”

News of the investigation comes as the CMA also publishes its final report on the housebuilding market in Great Britain.

The report blames the persistent under-delivery of new homes on the “complex and unpredictable planning system” and the “limitations of speculative private development” (where builders obtain land, secure planning permission, and construct homes without knowing in advance who will buy them or for how much).

Les than 250,000 new homes were built last year across Great Britain – well below the 300,000-target for England alone, the CMA points out.

The CMA also voices “substantial concerns” about estate management charges – where homeowners face high and unclear charges for the management of facilities such as roads, drainage, and green spaces.

The watchdog also found concerns over the quality of some new housing, an area where many owners have reported problems in the last decade.

More to follow….

Also coming up today

Trade ministers from around the world are gathering in Abu Dhabi for a World Trade Organization meeting.

The WTO hope to set new global commerce rules, but chief Ngozi Okonjo-Iweala struck a cautious tone ahead of the meeting, telling reporters:

“Politically it’s quite a tough time.

I’m hopeful we will still be able to pull out some of the deliverables.”

For the UK, Kemi Badenoch will be pushing for tariff-free trade, and holding talks with Gulf States to progress talks on a free-trade agreement, the Department for Business and Trade (DBT) says.

Israel’s central bank is setting interest rates, and is expected to cut borrowing costs as the war with Hamas hits its economy.

While in the US, Amazon is replaces Walgreens Boots Alliance in the Dow Jones Industrial Average share index.

The agenda

• 9am GMT: Bank of England holds its annual BEAR research conference:

• 11am GMT: CBI distributive trends survey of UK retail

• 2pm GMT: Bank of Israel interest rate decision