Competition regulator launches home building and renting probes to help buyers and tenants

Competition regulator launches home building and renting probes to help buyers and tenants

The Competition and Markets Authority (CMA) has launched a market study into housebuilding and will start a separate consumer protection project related to rented accommodation, amid widespread concerns about housing availability and costs.

The market study, which will examine housebuilding in England, Scotland and Wales, comes following concerns builders are not delivering the homes people need at sufficient scale or speed. The CMA’s consumer protection work will seek to shed light on the experience of renters and explore whether more could be done to help landlords and intermediaries to understand their obligations.

Given that the market situation in Northern Ireland is significantly different from the rest of the UK, such that Northern Ireland appears unlikely to face the same market or supply-side issues, the housebuilding market study will not include Northern Ireland.

The CMA’s housebuilding market study into housebuilding will focus on four areas:

  • housing quality: looking at how builders are delivering the right sorts of homes that communities and buyers need – including the fairness of estate management fees charged for ‘unadopted’ roads and amenities
  • land management: examining whether the practice of ‘banking’ land before or after receiving planning permission is anti-competitive
  • local authority oversight: exploring how councils oversee the delivery of homes and how developers negotiate affordable home requirements
  • innovation: considering whether factors may be holding builders back from adopting new building techniques or moving towards more sustainable, net zero homes

A market study allows the CMA to use compulsory information-gathering powers to probe the entire market. As well as helping to develop a deeper understanding of how and when housebuilders decide to deliver new homes and the interaction of that with local authority housing targets, the study will consider the issues faced by smaller, regional firms.

A separate project will consider consumer rights for those in rented homes.

The CMA’s consumer enforcement work in housing will focus on:

  • the end-to-end experience from a tenant’s perspective, including finding somewhere to live, renting a property, and moving between homes
  • identifying the consumer protection issues that may arise. The project will examine the relationship between tenants and landlords and the role of intermediaries, such as letting agents

Following a period of targeted stakeholder engagement across England, Scotland, Wales and Northern Ireland, the CMA will report on its initial findings and proposed next steps this summer.

Sarah Cardell, chief executive of the CMA, said: “The quality and cost of housing is one of the biggest issues facing the country. Over the last few years, the CMA delivered real change for leaseholders, with tens of thousands of homeowners receiving refunds after being overcharged unfair ground rents.

“With that work nearly finished, we’re now looking to probe in more detail two further areas – the housebuilding and the rental sectors.

“If there are competition issues holding back housebuilding in Britain then we need to find them. But we also need to be realistic that more competition alone won’t unlock a housebuilding boom.

“In the same vein, we want to explore the experiences people have of the rental sector and whether there are issues here that the CMA can help with.

“We will of course be guided by the evidence, but if we find competition or consumer protection concerns we are prepared to take the steps necessary to address them.”

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