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CMA finds fundamental concerns in housebuilding market

The Competition and Markets Authority (CMA) has released it’s ‘Housebuilding Market Study: Final Report.’

Below are a selection of responses from those in the UK property sector.

According to Richard Beresford, chief executive at the National Federation of Builders (NFB), the report confirmed what anybody who deals with planning already knows "that the housing crisis is caused by the planning process and government failure."

Beresford adds: “Planning should be enabling homes, better places and competition, which benefits not just Britain, but the British consumer. The CMA has correctly identified that the UK planning system does the opposite.”

As well as pouring cold water on many criticisms made towards housebuilders, the CMA report disproved the landbanking myth, highlighted the need for better resourcing of planning departments and total planning reform, plus a need to support small and medium sized builders (SMEs).

Ian Fletcher, director of policy (real estate) at the British Property Federation (BPF) says: “The CMA report confirms what many within the industry have long been saying. Namely, that we need a better resourced and more streamlined planning system to deliver not only the homes we need, but vital sustainable economic growth. The report rightly focus on these issues along the effective monitoring and enforcement of local plans. Of greater significance for residential is the call to increase diversity of tenure on larger sites – a recommendation of the Letwin Review, which was never implemented. As this review also concludes, housing, such as Build-to-Rent, does not impact sales absorption rates, and therefore a site can be delivered quicker overall with diversity of tenure.”

Rico Wojtulewicz, head of policy, and market insight for the NFB and House Builders Association (HBA), comments: “The CMA report has confirmed that a broken planning process is the reason we have a lack of social housing, why big builders build too many of our new homes and SMEs are shut out, that homes are in the wrong places and too expensive, there are some issues with quality, and we don’t do placemaking.

"None of this is new or uncontroversial but the UK needed this CMA report to keep hammering home the reality that politicians of all colours are the reason we have a housing and placemaking crisis. It’s time they stopped blaming builders and instead, were held accountable for the mess they have caused and keep causing.”

In response to the CMA report, Marc Vlessing, chief executive at Pocket Living, says: “This report says what we all knew. That the housebuilding sector isn’t working and isn’t delivering the new homes we need. As the CMA has identified there are multiple reasons for this including land supply and planning, with the latter having a disproportionate impact on SME housebuilders. Yet one of the central reasons is the lack of actual housebuilders in the market, with the largest 11 builders controlling over 40%.

"SMEs should be the lifeblood of the industry, yet their presence has collapsed to the point of near extinction leaving only the major volume builders and an affordable housing sector which is floundering, especially in London with starts on site plunging to new lows. Following this report I now urge the Chancellor to act quickly in next week’s budget and urgently implement moves to support the SME housebuilding sector, which has seen numbers fall significantly since the 1980s, as well as go further and faster on planning reform. This is vital if we are to hit 300,000 new homes, it becomes economically and socially critical if we are to hit the real figure of 500,000 new homes per year.”

Lastly, Paula Higgins, chief executive at the HomeOwners Alliance, says: "We have been highlighting the failures in not building enough quality homes for the last decade through our Better New Build Campaign. It's been six years since the government promised to legislate for a New Homes Ombudsman.

"The intention is to mediate disputes between new homebuyers and their developers, rather than forcing them to go to court. Government has partially delivered on this commitment by passing the legislation but has not finished the job by making it mandatory for all developers to join. Although there is a New Homes Ombudsman operating, this is a voluntary scheme and developers can pick and choose which consumer codes to follow. Until the government finishes what it starts, the consumer redress landscape is even more convoluted and out of touch with consumers than ever before."

On the CMA's recommendations to tackle unfair and uncapped charges on new build estates by requiring all councils to adopt all new build estates and give owners on these estates better consumer protections, Higgins adds: "We will continue to press for an amendment to the Leasehold Reform Bill which will have its third reading in Parliament on 27 February. This is a golden opportunity for the government to do right by these homeowners and demonstrate that they can act quickly to stop this dodgy practice becoming the norm. The CMA found that 80% of new homes sold by the eleven biggest builders in 2021 to 2022 subject to estate management charges."

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