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Housebuilders investigated over suspected collusion to push up prices

uk residential construction
uk residential construction

Britain’s biggest housebuilders are under investigation for suspected illegal information sharing amid fears that collusion in the industry has pushed up prices.

The Competition and Markets Authority (CMA) on Monday announced an investigation into “suspected sharing of commercially sensitive information by housebuilders which could be influencing the build-out of sites and the prices of new homes.”

Sarah Cardell, chief executive at CMA, said: “It is important we tackle anti-competitive behaviour if we find it.”

The watchdog will investigate the practices of Barratt Developments, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey, and Vistry.

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Specifically, regulators will investigate whether developers have colluded on house prices, while also looking into the rate at which new homes are built and incentives offered to buyers, such as complimentary white goods.

The CMA has not reached any conclusions at this stage as to whether or not competition law has been infringed.

Shares fell on the news. Barratt was down 1.3pc in early trade, Persimmon was 1.2pc lower, Taylor Wimpey declined 1pc, Redrow dropped 0.75pc, Berkeley was 0.5pc lower and Bellway slipped 0.3pc.

The investigation follows a year-long study of the market to understand why too few homes are being built.

Ms Cardell said the inquiry had concluded the market “needs significant intervention so that enough good quality homes are delivered in the places that people need them.”

The CMA blamed the UK’s “complex and unpredictable planning system” and the “speculative” nature of private development for the “persistent under delivery of new homes”.

Fewer than 250,000 homes were built across the UK last year, far below the Government’s target of 300,000 annually in England alone.

The CMA found that planning systems across Britain were “unpredictable”, with many local authorities under-resourced and several without an up to date local plan for housing. A local plan outlines the number and locations of homes to be built in order to meet wider government building targets.

The watchdog also raised concerns about the rise in estate management fees charged to people who buy new builds on private estates, as well as the declining quality of many new builds.

It said the number of minor issues with new builds was increasing, while “a substantial minority also experienced particularly serious problems with their new homes, such as collapsing staircases and ceilings.”

Housing Secretary Michael Gove asked the CMA to investigate the market in 2022 to ensure it was operating effectively.

At the time of the launch, the CMA said there were “widespread concerns about housing availability and costs” and whether builders were “delivering the homes people need at sufficient scale or speed”.

A Bellway spokesman said: “We are reviewing the CMA’s report. Bellway has engaged and cooperated fully with the CMA throughout its market study – and will continue to do so.”

A Redrow spokesman said: “Redrow has fully cooperated with the CMA throughout its market study. We remain focused on the delivery of high-quality and much-needed new homes.”

A Taylor Wimpey spokesman said: “The CMA’s report identifies proposed changes to the market that we welcome, particularly around the planning process and recognition that housebuilders do not landbank. Taylor Wimpey notes the investigation opened today and we will cooperate fully with the CMA in relation to this.”

Berkeley and Vistry declined to comment.

Bloor Homes and Persimmon were contacted for comment.

A Department for Levelling Up, Housing & Communities spokesman said: “We welcome the CMA’s final report following its full market study into housebuilding and the report will now be carefully considered.

“Despite the economic challenges we remain on track to build 1 million homes this Parliament.”

The Government will provide a formal response to the report within 90 days.