What major industry players and analysts think of the competition regulator鈥檚 report into the industry
A year-long report by the Competition Markets Authority (CMA) into the state of the housebuilding industry in England, Scotland and Wales has been published, concluding that 鈥渢he housebuilding market is not delivering well for consumers and has consistently failed to do so over successive decades鈥�.
The report makes several recommendations, including establishing a new homes ombudsman 鈥渁s soon as possible, and setting a single mandatory consumer code so homeowners can better pursue homebuilders over any quality issues they face鈥�.
It also recommends requiring councils to adopt amenities on all new housing estates and the introduction of enhanced consumer protections for homeowners on existing privately managed estates 鈥� including making it easier for homeowners to switch to a more competitive management company.
The published report also included alleged breaches of the Competition Act by eight UK housebuilders
Here鈥檚 what major industry players and analysts are saying about the report鈥檚 findings:
Ian Fletcher, director of policy (real estate) at the British Property Federation, says: 鈥淭he CMA report confirms what many within the industry have long been saying.
鈥漀amely, 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 focuses on these issues along with the effective monitoring and enforcement of local plans
鈥漁f greater significance for residential is the call to increase diversity of tenure on larger sites 鈥� 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.鈥�
Steve Turner, executive director of the Home Builders Federation, says: 鈥淭he CMA report recognises the challenges the industry faces when looking to deliver homes. We welcome recognition that the planning system is a fundamental barrier to delivery and adds unnecessary delay and cost into the development process, and the need for local authorities to have plans in place and properly resourced planning departments. We also welcome the CMAs recognition that house builders do not land bank unnecessarily, that supports a number of similar investigations over recent years.
He adds: 鈥淲e wholeheartedly support the recommendation that councils adopt and maintain the amenities housebuilders deliver as part of the development, which is what residents pay their council tax for. Housebuilders do not want to be long term managers of estates and make absolutely no profit from the management companies that are required to be put in place.
鈥淲e welcome recognition that quality of new build homes has improved in recent years and fully support moves to protect consumers with a single consumer code and New Homes Ombudsman, something the majority of the industry has already signed up for voluntarily.鈥�
>>See also:
>>See also:
Rico Wojtulewicz, head of policy and insight for the National Federation of Builders, says: 鈥淭he 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 fear of land use steers us away from placemaking.
鈥淣one 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鈥檚 time they stopped blaming builders and instead, were held accountable for the mess they have caused and keep causing.鈥�
He adds: 鈥漈he worry is that the government thinks it has already put measures in place to meet some CMA recommendations, when the reality is they have merely tinkered, which is history repeating itself. For example, higher planning fees are not ringfenced for planning departments and there is no penalty for failing to provide a minimum service level. Design codes and other reforms don鈥檛 speed up statutory consultee delays or allocate more land for placemaking. Infrastructure policy to support development remains untouched. And the government has removed the mandatory targets for councils to deliver a minimum number of homes. I hope the CMA is ready to report again in five year鈥檚 time.鈥�
Brian Berry, Chief Executive of the Federation of Master Builders (FMB) says: 鈥漈he CMA findings are a step forward, especially with an acknowledgement that SMEs are disproportionally affected by the planning system. These findings will hopefully give the Government renewed impetus to resolve these long-standing issues which the FMB has been highlighting for many years.鈥�
鈥淚t is concerning, however, that the report does not provide enough nuance in such a complex market. The report has a very broad definition of SMEs with very little definition given to the range of house builders within the SME market, such as micro developers, custom house builders and new entrants.
鈥漈here are also few international comparisons and where they are included, the findings are fairly tepid, with little realisation for the potential of areas such as custom build, which could be an area of growth for UK builders. In similar countries, such as Germany, they are much further ahead on custom build properties accounting for a much higher percentage of overall housing delivery, which means less reliance on a small group of major housing developers and more diversity of design.鈥�
Marc Vlessing, chief executive at Pocket Living, says: 鈥淭his report says what we all knew. That the housebuilding sector isn鈥檛 working and isn鈥檛 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鈥檚 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.鈥�
Rona Bar-Isaac, head of competition at Addleshaw Goddard, says: 鈥淭he CMA had raised a number of concerns in its provisional report including in relation to land-banking and the development of sites in the context of the existing planning regime. It has decided to propose options for the government to solve these issues rather than carrying on to a market investigation where the CMA can use its own powers. This may be driven by the CMA鈥檚 concerns about the need for planning reform. What is very interesting though is that the CMA has seen evidence in the market study that there may be anti-competitive behaviour going on between housebuilders and it has today launched an investigation into the eight largest housebuilders as a result.鈥�
She adds: 鈥淭he focus on the barriers presented by the planning system are not a surprise and are a feature that industry participants and policy makers have been commenting on for many years. The interesting question will be whether CMA鈥檚 in-depth work produces a useful policy steer. The CMA鈥檚 focus on estate management can also be seen as a development of its previous consumer work in the property sector. However, the opening of what appears to be a reasonably wide investigation into sharing of commercially sensitive information, whilst slightly downplayed in the CMA鈥檚 press release, will be a material concern for market participants, including by opening scope for a potential follow on damages case.鈥�
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