Competition and Markets Authority to focus on land banks in next phase of housebuilding probe

Competition and Markets Authority to focus on land banks in next phase of housebuilding probe

The Competition and Markets Authority (CMA) has today published an update on a market study probing competition concerns in housebuilding in England, Scotland and Wales.

The work involved receiving feedback from key stakeholders in the sector including housebuilders of all sizes, campaign groups, councils, and devolved administrations.

Five areas are to be probed further in the next phase of the market study including estate management charges and land banks.

The CMA will now look at:

  • Estate management charges: Evidence has shown a significant number of new housing estates built over the last 5 years have not been taken on (a process known as adoption) by their local authority – meaning homeowners are required to pay a private management company to maintain amenities such as roads, parks, and street lighting. This has led to concerns about high or uncapped charges for owners and the quality of work carried out in maintaining these amenities.
  • Land banks: Analysis of the housing market shows the largest builders in the UK hold large swathes of land, and that these land banks have grown in recent years, leading to concerns from some stakeholders this may be limiting competition or slowing build-out rates in some areas.
  • Planning rules: Concerns expressed by some stakeholders suggest that complex planning rules and uncertainty of decision making were hindering the delivery of new homes – particularly for smaller housebuilders that have less resources to help manage the planning process.
  • Competition between builders: The market study has found that, at the national level, the housebuilding market does not appear to be particularly concentrated, with a number of large housebuilders competing alongside smaller, regional firms. The CMA is now considering the number of competitors in particular areas and the extent to which small and medium sized housebuilders are able to compete in these local markets.
  • Barriers for new businesses wanting to build homes: The CMA has heard concerns about barriers facing small and medium-sized builders and the particular issues they face when delivering new homes (for example, access to land).

The CMA said it will investigate each of these issues further – while considering the economic conditions affecting the sector – and will provide updates on its work later in the autumn. This will include publishing working papers on estate management charges, land banks, and planning rules.

The CMA will then consider a range of options to best address the issues it has identified, which could include recommending legislative changes to the UK, Scottish and Welsh governments, or launching a market investigation.

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.”

Share icon
Share this article: