New build market set for a huge shake-up with watchdog to tackle quality issues
An investigation into the UK’s housebuilding industry has called for a shake-up of the way homes are built so more and better houses can be constructed and the quality of new builds is improved
The report, by the Competition and Markets Authority (CMA), found “fundamental concerns” about how home buyers are treated and warned that “substantial intervention” is needed to address the problems.
It called for a new Homes Ombudsman to be set up to allow people to hold housebuilders to account over the poor quality of many new built homes. It said the number of owners reporting snagging issues had increased over the last decade.
It said its research and other evidence revealed that a substantial minority also experienced serious problems with their new homes, including collapsing staircases and ceilings.
It blamed the current planning system for being too complex and said the limits of speculative private development “have seen too few homes built”.
The watchdog said it had opened a new investigation into the “suspected sharing of commercially sensitive information by housebuilders” which could be influencing the number and location of potential development for build sites.
Companies under investigation included Barratt, Bellway, Berkeley, Persimmon, Redrow, Taylor Wimpey, Bloor Homes and Vistry. The CMA said the new investigation into eight housebuilders was not “one of the main drivers of the problems we’ve highlighted” but said it was important it tackle anti-competitive behaviour.
The CMA probe was launched last year after Michael Gove, the Housing Secretary, expressed concerns about “housing availability and costs”.
It found “persistent shortfalls” in the number of homes built across England, Scotland, and Wales, with less than 250,000 built last year across Great Britain – well below the 300,000-target for England alone.
Sarah Cardell, CMA chief executive, said: “Housebuilding in Great Britain needs significant intervention so that enough good quality homes are delivered in the places that people need them.
“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.
It found that six out of 10 homes built between 2021 and 2022 were delivered by “speculative private development” where builders obtain land, planning permission and then build homes without knowing whether customers will buy them and for how much.
“This way of building homes has given builders flexibility to respond to changes in the market. However, the country’s reliance on this model has seen the gap widen considerably between what the market will deliver and what communities need,” the CMA said.
Planning departments are “under resourced” with out-of-date local plans without “clear targets or strong incentives to deliver the numbers of homes needed”. Homebuild plans are frequently held up by objections from local groups or late feedback.
The CMA said it is concerned about the “poor outcomes for new home owners” with many facing “high and unpredictable charges” for privately managed public amenities such as roads, sewers and green spaces.
“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.
It calls for councils to adopt amenities on all new housing estates as well as greater consumer protections for homeowners on existing privately managed estates – including making it easier for homeowners to switch to a more competitive management company.
The CMA said it looked at over one million plots of land held by housebuilders and found 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”.
