CMA launches inquiry into housebuilding

The Competition and Markets Authority has launched a market study into housebuilding amid concerns over availability and affordability of homes. 

Issues that the regulator will focus on include housing quality, land management, how local authorities oversee development and whether housebuilders are being held back from innovating.

The CMA said the study, which it announced in January this year would be its next inquiry, is a result of concerns builders are not delivering the homes people need quickly enough. 

It will also carry out a separate consumer protection project looking at what more could be done to help landlords understand their obligations to renters. 

Sarah Cardell, chief executive of the CMA, said: “The quality and cost of housing is one of the biggest issues facing the country. 

“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.”

Cardell said the regulator wanted to “explore the experiences people have of the rental sector”. She said the CMA would be “guided by the evidence” and if competition or consumer protection concerns are found it will “take the steps necessary to address them”.

The housebuilding study will look at four issues specifically:

• Housing quality: How are housebuilders delivering the right sort of homes in the right places, including the fairness of estate management fees charged for ‘unadopted’ roads and amenities.
• Land management: Including studying if the practice of ‘banking’ land before or after receiving planning permission is anti-competitive. 
• Local authority oversight: How they oversee the delivery of homes and how developers negotiate affordable home requirements will be part of the study.
• Innovation: What could be holding builders back in terms of adopting new building techniques and making homes more sustainable, or net zero.  

The CMA will report on its initial findings and proposed next steps this summer. A market study uses compulsory information gathering powers to pull together research on the functioning of a market. While it does not directly result in enforcement action against companies, it can give rise to policy recommendations to government, and be a precursor to enforcement action if anti-competitive activity is uncovered.