Housebuilders probed over sharing prices privately…

Some of the UK’s biggest housebuilders are being investigated over whether they have been sharing information which could influence house prices.

The Competition and Markets Authority has launched the probe after a year-long investigation into housebuilding in England, Wales and Scotland.

It also said “significant intervention” in the market was needed to ensure enough homes were built to meet demand.

The watchdog also raised concerns over the quality of new homes.

The CMA said that its investigation had uncovered evidence suggesting “information sharing”, which “could be influencing the build-out of sites and the prices of new homes”.

CMA chief executive Sarah Cardell told the BBC: “Through our investigation we’ve seen evidence of potential exchanges of confidential, commercially sensitive information relating to sales prices and sale rates between some of the UK’s major housebuilders.

“Now we don’t believe that that’s a key driver of the fundamental poor outcomes in this market, but it is clearly critically important that all companies comply with competition law so today, we’re also announcing the launch of a new Competition Act investigation to look into that further.”

The housebuilders being investigated are:

  • Barratt
  • Bellway
  • Berkeley
  • Bloor Homes
  • Persimmon
  • Redrow
  • Taylor Wimpey
  • Vistry

The CMA said it had not yet reached any conclusions as to whether or not competition law had been broken.

But it said that any sharing by housebuilders of non-public information – such as house prices, incentives to buy and rates of sales – may have the “effect of preventing, restricting or distorting competition”.

Housebuilding companies listed on the London Stock Exchange saw their share prices fall in early trading. Persimmon shares fell by 2.8% to £13.74 each, closely followed by Taylor Wimpey down 2.7% at 142p.

A spokesperson for Taylor Wimpey said the housebuilder “notes the investigation opened today and we will co-operate fully with the CMA in relation to this”.

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

Redrow, which recently agreed to be taken over by Barratt for £2.5bn, said that it had “fully co-operated with the CMA throughout its market study” and continues to work with the watchdog.

Berkeley declined to comment.

A spokesperson for Bloor Homes, said: “We have been transparent with the CMA throughout the year-long study and are currently reviewing the findings.” The firm said it would continue to work with the regulator during the investigation.

The BBC has contacted Barratt, Persimmon and Vistry for comment.

In its wider report into the housebuilding market in England, Wales and Scotland, the CMA said there were “persistent shortfalls” in the number of homes being built.

“Too few houses are being built, especially in the areas in which they are most needed, which is having a negative effect on affordability,” it said.

Last year, fewer than 250,000 homes were built across the whole of the UK, far below a target of 300,000 for England alone.

In its 2019 manifesto, the Conservative Party promised to build 300,000 homes a year by the mid-2020s and pledged to make the planning system “simpler”.

In late 2022, Housing Secretary Michael Gove asked the CMA to conduct a market study into the UK housebuilding market, which the watchdog began in February the following year.

The CMA found that the planning system was one of the key factors slowing down construction of new homes, describing it as “complex and unpredictable”.

It said planning often takes a long time for builders to navigate before construction can start. It found that many planning departments are under resourced, don’t have up-to-date local plans and lack clear targets or incentives to deliver a certain number of homes in their area.

Builders also often have to consult with a wide range of people and slow responses to planning proposals can delay construction.

The CMA said that recommendations to streamline the planning system as well as other measures would mean more homes could be built each year and help “make homes more affordable”.

But it said: “Even then, further action may be required to deliver the number of homes Great Britain needs in the places it needs them.”

Management fees

The report also highlighted the high costs that people who live on new-build housing estates pay for private estate management companies to maintain public amenities, including roads, sewers and open spaces.

It said that increasingly, private companies provide and charge for these kind of services, whereas in the past, local authorities would oversee them.

It means that some homeowners are paying for both private estate management and council tax.

The CMA said the amount charged by estate management companies each year varies, from £60 to just under £1,000 in some cases.

It said the average charge was £358 in 2022 though that could increase significantly in subsequent years.

In some cases, a higher proportion of the money that homeowners pay to these management companies goes towards fees rather than actual maintenance work.

“Our analysis of data from management companies and submissions from homeowners has shown that such fees can amount to around 60% of the total amount charged,” said the CMA.

The watchdog also found that while some homeowners were made aware of estate management arrangements and their charges before buying a house, they were not informed about the long-term implications for selling the property at a later date.