Housebuilding and rental sectors to be probed by competition watchdog

The competition watchdog aims to put the housebuilding and rental sectors under the spotlight.

A market study into housebuilding has been launched by the Competition and Markets Authority (CMA) and a separate consumer protection project related to rental homes will also be started.

The market study follows concerns that builders are not delivering the homes people need at sufficient scale or speed, the CMA said.

The CMA’s consumer protection work will also seek to shed light on the experience of renters and explore whether more could be done to help landlords and intermediaries to understand their obligations.

🏘️The quality and cost of #housing is one of the biggest issues facing the country.

That’s why we’re looking into the housebuilding sector across England, Scotland and Wales: https://t.co/dHROs4ByKS pic.twitter.com/VOzrOrhF8a

— Competition & Markets Authority (@CMAgovUK) February 28, 2023

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

“Over the last few years, the CMA delivered real change for leaseholders, with tens of thousands of homeowners receiving refunds after being overcharged unfair ground rents.

“With that work nearly finished, we’re now looking to probe in more detail two further areas – the housebuilding and the rental sectors.

“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.

“In the same vein, we want to explore the experiences people have of the rental sector and whether there are issues here that the CMA can help with.

“We will, of course, be guided by the evidence, but if we find competition or consumer protection concerns we are prepared to take the steps necessary to address them.”

The market study will examine housebuilding in England, Wales and Scotland.

The market situation in Northern Ireland is significantly different from the rest of the UK, the CMA said.

The CMA’s market study into housebuilding will focus on four areas: housing quality; land management; local authority oversight; and innovation.

The watchdog will look at the fairness of estate management fees charged for “unadopted” roads and amenities.

It will also look at whether the practice of “banking” land before or after receiving planning permission is anti-competitive.

The watchdog will explore how councils oversee the delivery of homes and how developers negotiate affordable home requirements.

And it will consider whether factors may be holding builders back from adopting new building techniques or moving towards more sustainable, net-zero homes.

A market study allows the CMA to use compulsory information-gathering powers to probe the entire market.

As well as helping develop a deeper understanding of how and when housebuilders decide to deliver new homes and the interaction with local authority housing targets, the study will also consider the issues faced by smaller, regional firms.

The CMA must, within 12 months of publication of a market study notice, publish a report setting out its findings and any proposed action.

Meanwhile, the CMA will look at consumer protection in the rental sector across the whole of the UK, in a research project which will take about three months to complete. This will help inform further work.

The CMA will examine tenants’ experiences, including finding somewhere to live, renting a property, and moving between homes.

The project will also examine the relationship between tenants and landlords and the role of intermediaries, such as letting agents.