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UK Watchdog Launches Probe into Housebuilders Amid Housing Crisis

By  |  February 26, 2024

The Competition and Markets Authority (CMA) has raised alarm bells over the chronic shortage of homes in Britain, driving up prices and exacerbating affordability issues. In a bid to address this pressing concern, the CMA has called for significant intervention to ensure the construction of more high-quality homes while also announcing an investigation into potential anticompetitive practices among major housebuilders.

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    The Call for Intervention: Chief Executive of the CMA, Sarah Cardell, emphasized the urgent need for action, stating that “Housebuilding in Great Britain needs significant intervention so that enough good quality homes are delivered in the places that people need them.” The regulator highlighted the necessity for both increased construction efforts and streamlining of the complex planning system, which has long been cited as a fundamental barrier to meeting housing demands.

    Investigation into Anticompetitive Practices: In addition to urging structural reforms, the CMA disclosed its intention to scrutinize whether housebuilders engage in the sharing of commercially sensitive information, potentially undermining competition within the industry. Major players such as Barratt, Bellway, Berkeley, and others are set to undergo investigation, with concerns over their market dominance and potential collusion.

    Read more: UK’s CMA Launches Market Study Into Competition In Housebuilding

    Industry Response and Political Implications: While the Home Builders Federation refrained from commenting on the CMA’s data-sharing probe, it acknowledged the critical role of addressing planning system bottlenecks. The housing crisis has long been a contentious political issue, with the Conservative Party facing internal divisions over conflicting interests in rural and urban development. With housing affordability increasingly alienating younger voters, opposition parties like Labour are capitalizing on promises of planning system reform.

    Housing Shortage Statistics: Official census data revealed a stark reality, with 37.3% of households in England and Wales renting their accommodation, marking a significant increase from the previous decade. Despite government pledges to deliver one million new homes by an impending election year, the actual construction falls short of targets, with less than 250,000 homes built across England, Wales, and Scotland last year.

    The housing crisis unfolds against a backdrop of economic challenges, including rising interest rates and soaring living costs, further impeding individuals’ ability to access homeownership. The prospect of a regulatory probe adds another layer of uncertainty for the sector, raising concerns among investors and stakeholders about its potential impact on market dynamics.

    As Britain grapples with a deepening housing crisis, the CMA’s investigation into housebuilders and its call for intervention underscore the gravity of the situation. Addressing both supply-side constraints and potential anticompetitive behavior is crucial to fostering a more equitable and sustainable housing market.

    Source: XM