CMA probe/investigation into housing

[MrXxxx]

https://www.gov.uk/government/news/cma-finds-fundamental-concerns-in-housebuilding-market

About time...why has it taken so long?

[One percent]

It’s a way to relax planning laws so that huge swathes of the countryside can be covered in houses to home the new British.  

[MrXxxx]

According to Bloomberg the UK housebuilders have been running a cartel...shock me who would have thought that, and why have successive governments despite their 300k building targets [and not meeting these] not acted sooner....is it that they have had vested interests/been complicit in this fraud of the electorate?

 

QUOTE:

CMA Findings

The report found that this speculative approach to building, coupled with complex and unpredictable planning rules across the three nations, has been responsible for the persistent under delivery of homes:

• Planning Rules: the planning systems in England, Scotland and Wales are producing unpredictable results and often take a protracted amount of time for builders to navigate before construction can start. The report highlights that many planning departments are under resourced, some do not have up to date local plans, and don’t have clear targets or strong incentives to deliver the numbers of homes needed in their area. They are also required to consult with a wide range of statutory stakeholders – these groups often holding up projects by submitting holding responses or late feedback to consultations on proposed developments [Bull$hit].
• Speculative Private Development: the report found another significant reason behind under delivery of homes are the limitations of private speculative development. The evidence shows that private developers produce houses at a rate at which they can be sold without needing to reduce their prices, [the first real reason, with the second being how easily they can landbank and maintain their planning permission status by pouring rudimentary foundations!] rather than diversifying the types and numbers of homes they build to meet the needs of different communities (for example providing more affordable housing).
• Land Banks: the CMA assessed over a million plots of land held by housebuilders and found the practice of banking land was more a symptom of the issues identified with the complex planning system and speculative private development, rather than it being a primary reason for the shortage of new homes [Bull$hit].
• Private Estate Management: the CMA found a growing trend by developers to build estates with privately managed public amenities – with 80% of new homes sold by the eleven biggest builders in 2021 to 2022 subject to estate management charges. These charges are often high and unclear to homeowners. Whilst the average charge was £350 – one-off, unplanned charges for significant repair work can cost thousands of pounds and cause considerable stress to homeowners. The report highlights concerns that many homeowners are unable to switch estate management providers, receive inadequate information upfront, have to deal with shoddy work or unsatisfactory maintenance, and face unclear administration or management charges which can often make up 50% or more of the total bill.
• Quality: housebuilders don’t have strong incentives to compete on quality and consumers have unclear routes of redress. Analysis also suggests that a growing number of homeowners are reporting a higher number of snagging issues (at least 16). The CMA’s consumer research and other evidence revealed that a substantial minority also experienced particularly serious problems with their new homes, such as collapsing staircases and ceilings.

Information Sharing

The CMA found evidence during the study which indicated some housebuilders may be sharing commercially sensitive information with their competitors, which could be influencing the build-out of sites and the prices of new homes.  While the CMA does not consider such sharing of information to be one of the main factors in the persistent under-delivery of homes, the CMA is concerned that it may weaken competition in the market.

The CMA has therefore launched an investigation under the Competition Act 1998 into Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey, and Vistry. The CMA has not reached any conclusions at this stage as to whether or not competition law has been infringed.

Edited February 26 by MrXxxx

[Boon]

Share prices of the housebuilders suggest this is just a softball investigation which is not gonna have any teeth. Maybe some kind of fine and some kind of loose promise to change things in the future, but the housebuilders are well capitalised on average so not gonna matter.

I mean, there are too many vested interests against any heavy-handed action being taken.

I wonder what this commercial sensitive information is that is so secret? To me it's gonna be hard to get a charge like that to stick, and to me is more of a false flag so it can look like they are doing something about it.

[Frank Hovis]

2 hours ago, MrXxxx said:

The evidence shows that private developers produce houses at a rate at which they can be sold without needing to reduce their prices

 

That is basic business practice.

Why would any company do otherwise?

[onlyme]

They've had a cartel on new build pretty much ever since the big companies had an almost complete stangle hold on the land banks.

Absolutely been rigging the market signials (selling price) through incentives (this new proposal for 99% mortgages being just another).

 

[MrXxxx]

36 minutes ago, Frank Hovis said:

 

That is basic business practice.

Why would any company do otherwise?

Agree however where the primary resource [land] is legislated and so as a result restricted, it is not operating in a 'Free market'. This then suggests an unfair [monopolistic] advantage to those who can acquire the finite resource and then benefit from merely holding it, as against adding value from developing it [or preventing others from doing so].

[Wight Flight]

A chief exec of one of the big firms used to have a fortnightly meeting at Downing Street.

Nothing wrong with that, obviously. I don't know if other bosses attended.