Consumer watchdog calls for ‘significant’ interventions into housing

CMA releases report on house building

The Competition and Markets Authority (CMA) has published its final report on the housebuilding market in Great Britain – finding that a ‘complex and unpredictable planning system’ and reliance on ‘speculative’ private development approach is failing to meet demand.

The report calls for fundamental interventions by policy makers to streamline the planning system and increase consumer protection to redefine the incentives of the UK’s current building system, which are failing to tackle anti-competitive behaviour.

A new investigation has been opened as a result of the report into the sector’s biggest operators after it found evidence that suggested some were sharing non-public information, including sales prices and details of incentives for buyers.

David Hopkins, CE of Timber Development UK, said in response to the report:

“Today’s report from the CMA shows how nearly two decades of austerity has created a local government and planning system unable to cope or deliver the housing so sorely needed in the UK – with supply lagging far behind demand.

“The result of severe underinvestment is a system which struggles to tackle anti-competitive practices, has led to an 85% decline in the number of small house builders, and created poor outcomes for consumers.

“While this has allowed a small group of entrenched interests to cash in on housing, it has come at the expense of every person in the UK – whether directly, for those buying their first home, or indirectly, through rising inequality and social problems.

“This housing crisis means home ownership is simply out-of-reach for younger generations – with house prices as high as nine times the typical household income, and rents rapidly rising due to tight supply.

“Our system as a whole, rather than supporting low-carbon, quality construction, encourages companies in the supply chain to maximise profits, subcontract their risks, and minimise investment into improving productivity.

“What we need to see – from both political parties – are policies which place low-carbon growth at the heart of the housing system. Smart investment in our public sector could now unlock a significant backlog of pent up economic growth.”

The CMA is calling in this report for policy makers to fundamentally reshape the housing system in the UK so it can deliver more homes, higher quality construction, and improved amenities.

Some of the key recommendations made by the CMA to support consumers include requiring councils to adopt amenities on all new housing estates, enhanced consumer protections, and a New Homes Ombudsman.

On the planning system, key recommendations include strengthening local plans – without watering down environmental protections – to allow for some developments to be streamlined, improving the capacity of council planning departments, and incentivising builders to diversify the tenures and types of homes delivered.

These interventions, the CMA notes, would include a significant increase in non-speculative house building that has previously been led by local councils and housing associations.

More information – including the full final report – can be found via the CMA’s housebuilding market study case page.