No-one could accuse the CMA (Competition and Markets Authority) of sitting on its hands, least of all this year.

As well as investigating several high-profile mergers – including this month alone Aviva (AV.)/AIG Life, SpreadEx/Sporting Image, RedBird IMI/Telegraph Media Group, Pharmacy2U/Lloyds Direct and Hitachi/Thales – the regulator has been busy looking into pricing in the funeral market (again), loyalty pricing by supermarkets, anti-competitive practices in the fragrance market, commission models in the motor finance market and pricing in the infant formula market.

This week, the CMA published its final report on the housebuilding market which as well as blaming the ‘complex and unpredictable planning system’ for part of the persistent failure to meet new home targets found ‘substantial concerns’ over estate management charges, build quality and the suspected sharing of commercially sensitive data between developers.

This last point has prompted the launch of a new investigation to look into whether information-sharing by the housebuilders could be weakening competition in the market by influencing the build-out of sites and the pricing of new homes.

Eight companies and their subsidiaries are now under investigation under the Competition Act of 1998 – Barratt Developments (BDEV), Bellway (BWY), Berkeley Group (BKY), Bloor Homes (privately-owned), Persimmon (PSN), Redrow (RDW), Taylor Wimpey (TW.) and Vistry (VTY).

Unsurprisingly, the share prices of the quoted companies slid on the announcement sending the sector as a whole down around 2% on the day.

There was a crumb of comfort for the housebuilders, as the original study also looked into whether they had been ‘hoarding’ land and deliberately limiting the supply of houses.

After assessing over a million plots, the CMA found instead ‘the practice of banking land was more a symptom of the issues identified with the complex planning system and speculative private development, rather than it being a primary reason for the shortage of new homes’.

The regulator was much less favourable when it came to the growing trend towards building housing estates with privately-managed public amenities like street surfaces and drainage, finding charges were too high and unclear to homeowners with ‘one-off, unplanned charges for significant repair work’ often running into thousands of pounds and causing considerable stress to homeowners.

Nor was it impressed by the growing number of homeowners reporting long lists of snagging issues, concluding the housebuilders ‘don’t have strong incentives to compete on quality and consumers have unclear routes of redress’. 

‹ Previous2024-02-29Next ›