The housebuilding sector needs “significant intervention” from government to correct failures across the planning system and private development, according to the Competition Markets Authority.
The watchdog’s is also concerned about estate management charges and the quality of new homes, it says in its year-long final report into the industry.
It found that “the complex and unpredictable planning system, together with the limitations of speculative private development, is responsible for the persistent under delivery of new homes”.
The body also raised questions “about estate management charges – with homeowners often facing high and unclear charges for the management of facilities such as roads, drainage, and green spaces.
“Concerns have been found, too, with the quality of some new housing after the number of owners reporting snagging issues increased over the last 10 years”.
The regulator says these issues led to “persistent shortfalls” in the number of homes built across England, Scotland, and Wales, with less than 250,000 built last year across the UK – “well below the 300,000 target for England alone”.
Major problems the report covers include:
- Planning — The planning systems in England, Scotland and Wales are producing unpredictable results and often take a protracted amount of time for builders to navigate before construction can start. Many planning departments are under resourced, some do not have up-to-date local plans, and don’t have clear targets or strong incentives to deliver the numbers of homes needed in their area
- Speculative private development — Private developers produce houses at a rate at which they can be sold without needing to reduce their prices, rather than diversifying the types and numbers of homes they build to meet the needs of different communities – leading to a shortage of affordable housing
- Private estate management — Charges for public facilities are often high and unclear to homeowners. Many homeowners are unable to switch estate management providers, receive inadequate information upfront, have to deal with shoddy work or unsatisfactory maintenance
- Quality — Housebuilders don’t have strong incentives to compete on quality and consumers have unclear routes of redress
Competition Markets Authority chief executive Sarah Cardell says: “Housebuilding in Great Britain needs significant intervention so that enough good quality homes are delivered in the places that people need them.
“Our report – which follows a year-long study – is recommending a streamlining of the planning system and increased consumer protections.
“If implemented, we would expect to see many more homes built each year, helping make homes more affordable.
“We would also expect to see fewer people paying estate management charges on new estates and the quality of new homes to increase.
“But even then, further action may be required to deliver the number of homes Great Britain needs in the places it needs them.”
The regulator also opened a probe into eight housebuilders — including Persimmon, Taylor Wimpey and Barratt Developments — after it found evidence “which indicated some housebuilders may be sharing commercially sensitive information with their competitors, which could be influencing the build-out of sites and the prices of new homes”.
The report comes after housing secretary Michael Gove pressed the regulator to open a probe into the housing sector in December 2022, after the government was forced to back down from its target to build 300,000 homes a year, which was changed from mandatory to advisory, following threats of a rebellion from its own MPs.
