Competition investigation launched into the housing sector

The Competition and Markets Authority (CMA) has launched an investigation into the cost and availability of housing in England, Scotland and Wales.

The market study will look into whether housebuilders are failing to deliver the homes people need at sufficient scale and speed.

The CMA will also start a consumer protection project looking at the experience of those living in rented accommodation and whether more could be done to help landlords and intermediaries understand their obligations.

Sarah Cardell, chief executive of the CMA, said: “The quality and cost of housing is one of the biggest issues facing the country.

“If there are competition issues holding back housebuilding in Britain then we need to find them. But we also need to be realistic that more competition alone won’t unlock a housebuilding boom.”

The CMA’s market study into housebuilding will focus on four key areas.

The first area is housing quality, such as whether builders are delivering the sort of homes that buyers and communities need, as well as looking at the fairness of estate management fees charged for unadopted roads and other amenities.

It will also look at land management and whether developers’ practice of ‘banking’ land, either before or after receiving planning permission, is anti-competitive.

Other areas include the extent to which local authorities oversee the delivery of homes, and the requirements for builders to include affordable homes.

Finally, it will consider innovation and whether there are circumstances holding back housebuilders from adopting new building techniques or moving towards more sustainable, net zero homes.

The consumer enforcement work in the rented sector will focus on the end-to-end experience from a tenant’s perspective, including finding somewhere to live, renting a property, and moving between homes.

It will also identify any consumer protection issues that may arise, looking at the relationship between tenants and landlords, as well as the role of intermediaries, such as letting agents.

The CMA is able to use compulsory information-gathering powers to examine the housing market to see why it may not be working well for consumers.

The process will enable it to develop a deeper understanding of how housebuilders decide to deliver new homes and their interaction with local authority housing targets.

The study will also consider the issues faced by smaller, regional house-building firms.

Market studies can lead to a range of outcomes, including making recommendations to the government to change regulations or public policy, encouraging businesses to self-regulate, taking consumer or competition law enforcement action against firms, or conducting a more in-depth study.

The CMA must publish its report into the market setting out its findings and any action it plans to take within 12 months.

For the rented sector, the CMA will report on its initial findings and proposed next steps this summer.