New Build firms slammed over quality, charges and lack of competition

The UK house building industry needs “significant intervention” from government to address planning, quality and financial problems according to the Competition and Markets Authority. 

The watchdog found 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 authority says it’s also concerned “about estate management charges – with homeowners often facing high and unclear charges for the management of facilities such as roads, drainage, and green spaces. Concerns have been found, too, with the quality of some new housing after the number of owners reporting snagging issues increased over the last 10 years”.

The regulator says these issues led to “persistent shortfalls” in the number of homes built across England, Scotland, and Wales, with under 250,000 built last year across the UK – “well below the 300,000 target for England alone”.

On planning, the CMA says the system produces unpredictable results and often takes a protracted amount of time before construction can start. 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.

On speculative private development, the authority says there’s a shortage of affordable homes because private developers produce houses at a rate at which they can be sold without needing to reduce prices, rather than meeting the needs of communities.

On private estate management the CMA claims that charges for public facilities are often high and unclear to buyers, with many owners unable to switch estate management providers or obtain adequate information upfront on maintenance options. 

And on build quality, the authority says the house builders have few real incentives to compete on quality and consumers have unclear routes of redress.  

Competition Markets Authority chief executive Sarah Cardell says: “Housebuilding in Great Britain needs significant intervention so that enough good quality homes are delivered in the places that people need them.  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 CMA has also opened an investigation into eight named house building firms because of “potential exchanges of confidential, commercially sensitive information relating to sales prices and sale rates between some of the UK's major house builders.”

Cardell adds: "Now we don't believe that that's a key driver of the fundamental poor outcomes in this market, but it is clearly critically important that all companies comply with competition law so today, we're also announcing the launch of a new Competition Act investigation to look into that further."

The house builders being investigated are Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey and Vistry.

The CMA stresses that it’s not yet reached any conclusions as to whether or not competition law has been broken.