UK competition regulator to probe housebuilding market

The UK competition watchdog has launched a market study of the housebuilding sector on the back of “widespread concerns about housing availability and costs”.

The Competition and Markets Authority on Tuesday said it would look at whether builders were “delivering the homes people need at sufficient scale or speed”. Its year-long study will focus on housing quality, land management, local authority oversight and innovation.

The regulator said that although its work would not “unlock a housebuilding boom”, it could lead to policy recommendations or enforcement action against companies.

The intervention comes as housebuilders adapt to a downturn in the sector that risks weighing on the supply of new homes for years to come.

The Home Builders Federation (HBF), a trade body, last week warned that a combination of government policies and higher mortgage rates could lead the number of new properties completed each year in England to fall to its lowest level since the second world war.

Last year, prime minister Rishi Sunak watered down a government target to build 300,000 homes each year in England by 2025 in an effort to stave off a rebellion by Tory MPs over planning reforms. The changes would have simplified rules around construction in some parts of the country, including traditional Conservative heartlands in the south.

As part of its year-long review, the CMA said it would look at how councils were overseeing the delivery of new homes and how developers were negotiating affordable home requirements.

In a separate three-month project, the regulator will also probe the private rental sector, which has in the past year seen a large contraction in supply and sharp increases in rent.

The CMA said it would take action if it uncovered competition or consumer protection issues affecting tenants and homeowners as part of either study. But it warned its action alone was unlikely to generate a rush of new supply.

CMA chief executive Sarah Cardell said: “If there are competition issues holding back housebuilding in Britain then we need to find them. But we also need to be realistic that more competition alone won’t unlock a housebuilding boom.

“In the same vein, we want to explore the experiences people have of the rental sector and whether there are issues here that the CMA can help with. We will of course be guided by the evidence, but if we find competition or consumer protection concerns we are prepared to take the steps necessary to address them.”

The HBF said it “welcomed” the CMA review but pointed to red tape as a key constraint on builders’ ability to meet official targets.

Managing director Neil Jefferson said: “Independent analysis of the policy and regulatory regime the industry has to work within and the considerable constraints on delivery, especially for smaller builders, should provide food for thought for ministers as they consider how they meet their supposed commitment to build 300,000 homes a year.”

The CMA’s work follows its crackdown on the leasehold property market, where tenants do not own their homes outright, which resulted in developers amending contract terms and charges.

Separately, the watchdog on Tuesday published new draft guidance designed to ease antitrust restrictions on climate change initiatives, after businesses voiced concerns that collaboration on sustainability policies risked exposing them to charges of collusion.