The UK Competition and Markets Authority ("CMA") has identified "fundamental concerns" in the housebuilding sector and has made a series of recommendations for the UK, Scottish, and Welsh governments to consider, rather than progressing to a more detailed investigation where it would have the possibility of imposing binding orders addressing these concerns.

The CMA has the power to conduct statutory market studies seeking to examine the causes of why markets may not be working well, even where businesses are not suspected of breaching competition rules. After conducting a year-long market study into the housebuilding sector, the CMA has identified a series of issues, including the "complex and unpredictable" planning system, the limitations of speculative private development, concerns with private estate management charges, and a lack of competition on quality for new housing stock. To address these issues, the CMA has made a number of ambitious recommendations to lawmakers:

  • Encouraging "non-speculative housebuilding models," including self- or custom-build homes, in addition to increasing the delivery of publicly funded housing by local authorities or housing associations;
  • Reforming the planning system, including streamlining the system to increase the ability of housebuilders to begin work on projects sooner and bring forward marginal projects which may not have previously been viable;
  • Limiting private management arrangements on new housing estates and providing protections to households living under these arrangements; and
  • Introducing a mandatory consumer code and a New Homes Ombudsman Scheme, and increasing transparency requirements in relation to costs associated with new homes.

While the CMA has indicated that it received some comfort from the national and devolved administration governments at the commencement of the market study that they would be receptive to recommendations, it remains unclear over what timeframe the relevant governments are likely to respond, particularly given that some of the recommendations could potentially raise politically difficult issues in an election year at the national level.

Separately, the CMA revealed that it has opened a new competition investigation after it identified evidence during the market study which, according to the CMA, suggests that eight housebuilders may be unlawfully sharing information in relation to sales prices, incentives, and rates of sale. This follows a number of recent cartel developments in the sector, including an infringement decision issued in March 2023 finding suppliers of demolition and asbestos services engaged in unlawful bid rigging, and an investigation announced in September 2023 into the supply of chemicals in the construction industry.

There is a risk that these investigations will expand over time to include conduct by others in the sector, as the CMA works its way through interviews with market participants and trawls through likely hundreds of thousands of the parties' internal documents. It is a useful reminder for businesses in the sector to review their competition law training and compliance frameworks.

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