Regulator finds ‘fundamental concerns’ in housebuilding market after year-long investigation

The UK is not building enough homes, according to a damning report released by the competitions watchdog, which has launched an investigation into some of the FTSE’s biggest house builders. 

Today’s investigation was launched after concerns were raised about competition in the housebuilding sector and the country’s inability to meet rising demand for new homes.

The Competition Market Authority (CMA) said the year-long study identified a number of issues with the market, including complex planning regulations holding back housebuilding, poor quality of homes constructed and high estate management charges.

A major concern flagged was the “persistent shortfalls” in the number of homes built across England, Scotland, and Wales. 

The CMA said: “less than 250,000 were built last year, well below the 300,000 target for England alone”.

The report said around 60 per cent of all houses built in the years 2021 to 2022 were delivered by “speculative private development” and the country’s reliance on this model had “seen the gap widen considerably between what the market will deliver and what communities need.”

Sarah Cardell, chief executive of the CMA, said: “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 said it believed the housebuilding market in the country needed “significant intervention” to help meet housing targets and produce much-needed homes.

An investigation has also been launched into some of the country’s biggest house builders, including Barratt, Bellway and Vistry. 

The CMA said it “found evidence” during the study which indicated some housebuilders may be sharing commercially sensitive information with their competitors. 

“Which could be influencing the build-out of sites and the prices of new homes,” they added. 

This morning’s revelations come amid a challenging time for the UK’s property sector. 

High mortgage rates and inflation has battered the bottom line of many major firms and led to a slow down in demand for new homes. 

City A.M. has contacted mentioned parties for a comment.