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The UK’s competition watchdog has launched an investigation into eight housebuilders over whether they shared commercially sensitive information after a year-long study into why Britain builds too few homes.
The announcement of the probe on Monday came as the Competition and Markets Authority blamed the persistent failure to build enough new houses on a “complex and unpredictable planning system” and the fact that housebuilding output is heavily reliant on “speculative private development”.
As a result of evidence unearthed during its study, the regulator said it had opened the probe into Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey and Vistry. The CMA said it had not reached any conclusion yet that the companies had infringed competition law.
Sarah Cardell, chief executive of the CMA, said the watchdog would investigate “suspected sharing of commercially sensitive information by housebuilders which could be influencing the buildout of sites and the prices of new homes”.
The news of the probe knocked the shares of the homebuilders, with Taylor Wimpey dropping 2.8 per cent, Persimmon sliding 2.4 per cent, Vistry falling 1.7 per cent, Barratt off 1.6 per cent and Berkeley down 1.1 per cent.
Only about 250,000 homes were built across the UK last year, short of the government’s target of 300,000 annually in England alone.
The study, which examined issues including housing quality and land management, was launched a year ago after prompting by levelling up secretary Michael Gove.
At the time of the launch, the CMA pointed to “widespread concerns about housing availability and costs” and whether builders were “delivering the homes people need at sufficient scale or speed”.
Its finding on Monday that one of the key roadblocks to housebuilding is the planning system will strengthen the industry’s call for major reform at a time of high tensions between housebuilders and the government over planning policy.
The agency found that so-called land banking by developers was not “significantly distorting competition” in the market. The practice of holding a stockpile of land has been a point of criticism against housebuilders. The finding that land banks are mainly a “symptom” of the slow planning system will probably be welcomed by the industry.
Cardell said information sharing among housebuilders was “not one of the main drivers of the problems we’ve highlighted in our report” but that it was “important we tackle anti-competitive behaviour if we find it”.
Tom Smith, competition lawyer at Geradin Partners and former CMA legal director, said the investigation “could result in large fines and potential follow-on litigation” for the companies.
The CMA also raised concerns about quality control problems and estate management charges, “with homeowners often facing high and unclear charges for the management of facilities such as roads, drainage and green spaces”. It urged the government to create new quality standards and an ombudsman to give consumers more recourse.
It found that there were limitations to the ability of private speculative development to deliver adequate housing supply, since “evidence shows that private developers produce houses at a rate at which they can be sold without needing to reduce their prices”.
The Home Builders Federation did not immediately respond to a request for comment.
