Competition watchdog probes land banks in housing investigation
The UK competition watchdog has said it will probe land banking by the country’s biggest housebuilders as it identified a number of concerns regarding the sector.
The Competition and Markets Authority (CMA) formally started a probe into the housebuilding sector and the private rental market in February.
It said it was looking into the housebuilding industry amid worries that developers were not delivering homes at an adequate pace or scale.
“Having seen four previous housing market reviews in the last 25 years, we believe this one is very unlikely to lead to a different outcome or material changes for the sector,” analysts at Peel Hunt said in reaction the the news.
“This CMA review has been politically driven, as the conservative government has turned anti-housing under the current secretary of state, in light of the Chesham and Amersham by-election in June 2021,” a note from Peel Hunt read.
“The lack of housing and poor current affordability has been driven by supply bottlenecks, in particular planning. The deficit looks set to grow further, although a new Labour government may provide the industry with a shot in the arm.”
The CMA outlined five main areas it is investigating in relation to UK housebuilding.
It said this will include estate management charges, where homeowners pay private companies to maintain things such as parks and roads.
The regulator will also look at issues regarding land banks, amid concerns over whether some large portfolios held by bigger firms are slowing competition or housing availability in some areas.
It is also looking into wider concerns regarding planning rules, competition between builders and barriers for new businesses wanting to build homes.
In relation to the rental market, the CMA said it was taking action to provide updated guidance for letting agents regarding the rights and responsibilities of tenants and landlords.
The CMA also identified concerns related to zero deposit schemes, sham licences, onerous guarantee clauses, and possible unlawful discrimination.
It said it will investigate further and will take enforcement action if needed.
Sarah Cardell, chief executive of the CMA, said: “The CMA alone can’t resolve the problems in the UK housing market.
“But we have a role to play and will do our part to help ensure the private rental and housebuilding markets work better for people and businesses.
“In housebuilding, we’ll press on with our investigation of the five areas that are the focus of our market study so that we can get to the bottom of any potential competition concerns.
“Once complete, we will consider what actions the CMA can take to tackle any concerns identified or whether there are more effective ways to deal with those concerns such as through recommendations to government for legislative change.”
By Henry Saker-Clark, PA Deputy Business Editor