A competition watchdog has launched a probe into housebuilding due to “widespread concerns about housing availability and costs”, in a move that could have a significant impact on listed developers.
The Competition and Markets Authority (CMA) said on Tuesday the market study would look at sale of houses of all types, following concerns builders "are not delivering the homes people need at sufficient scale or speed”.
The study will investigate whether housebuilders are delivering quality homes, the fairness of estate management fees and the practice of ‘land banking’: where developers don't build on bought sites to push up prices. It will also study the move towards net zero among housebuilders and what councils can do to make sure housing is affordable. The CMA said it will use its “compulsory information-gathering powers to probe the entire market”.
The study will be complemented by an investigation into the rented sector which the CMA said would address “consumer protection issues” and the relationship between landlords and tenants, a move which could also impact the listed property companies developing homes for rent and estate agents.
The announcement comes after a bruising year for housing developers in which post-Grenfell cladding costs wiped billions off their earnings, while higher interest rates mean the housing market faces its worst downturn since 2008.
In addition, the closure of the controversial Help to Buy scheme at the end of this month has the potential to hit many of the listed housebuilders who depended on the scheme for a fifth of their sales last year.
This is not the first time housebuilders have faced the scrutiny of the CMA. Its new study comes less than four years after the body launched its still ongoing investigation into leasehold mis-selling, which resulted in many listed housebuilders being forced to amend contract terms.
CMA chief executive Sarah Cardwell said: “Over the last few years, the CMA delivered real change for leaseholders, with tens of thousands of homeowners receiving refunds after being overcharged unfair ground rents.
"With that work nearly finished, we’re now looking to probe in more detail two further areas – the housebuilding and the rental sectors. If there are competition issues holding back housebuilding in Britain then we need to find them.”
The Home Builders Federation, a trade body, said that it welcomed the review.
