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UK watchdog probes housebuilders for alleged price information sharing

House construction

Britain’s competition watchdog is investigating whether eight major housebuilders have shared confidential pricing information, potentially influencing the cost of new homes. 

This inquiry by the Competition and Markets Authority (CMA) targets some of the largest companies in the sector.

It follows the discovery of evidence indicating the exchange of non-public details such as sales prices and buyer incentives. 

The CMA believes this activity could distort competition, affecting pricing strategies and the pace of new home construction.

This development emerges from a comprehensive year-long study by the CMA into factors contributing to the shortage of new homes, identifying critical issues within the housebuilding market

The watchdog criticised the complex planning system and the restrictive nature of speculative private development as primary obstacles to meeting the national housing target. 

Despite a government goal to construct 300,000 homes annually by the mid-2020s, only 250,000 homes were completed last year, with projections suggesting a decline in future outputs.

The report also highlighted the inadequate resources and unclear objectives within local planning departments.

It led to lengthy and uncertain approval processes that disproportionately impact smaller developers. 

Furthermore, the CMA critiqued the industry's focus on maintaining high sales rates to avoid price reductions at the expense of meeting actual housing needs, particularly concerning affordable homes.

The CMA's findings on profitability raised concerns, noting that the housebuilders' earnings exceeded expectations for a healthy market. 

However, it warned against interventions that could decrease profitability, which might further reduce housing supply.

The ongoing investigation will examine potential competition law violations related to sharing sensitive information among companies.

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It includes Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey, and Vistry. 

However, no conclusions have been drawn yet.

Quality issues were another concern, with numerous homebuyers reporting multiple defects in new homes, some facing serious structural problems. 

The CMA advocated implementing a new homes ombudsman to improve quality standards and ensure better consumer protection. 

It also recommended that local authorities assume responsibility for managing amenities in new housing developments to protect homeowners from excessive private maintenance fees.

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