The Competition and Markets Authority (CMA) has published the Final Report to its year-long Housebuilding Market Study, stating that the planning system and speculative private development seriously contribute to the persistent under-delivery of homes.
As a result of the study, the CMA has put forward proposals to the UK’s governments to broker change, and is opening an investigation into the eight major housebuilders, following evidence they share data which could influence prices and build-out rates in an anti-competitive strategy.
Report findings
The report found that two-fifths of the homes built annually (less than 250,000 across England, Scotland and Wales combined) were built by the few, largest housebuilders, with more then 50,000 delivered by smaller regional SME builders. A total of 60% of all homes built between 2021-2022 were built by speculative developers.
The CMA report found that while land banking was more of a symptom of the market than a controlling strategy, it was the planning system and the speculative development model that were the main reasons behind the persistent under-delivery of homes.
It found that the planning systems in the three nations frequently produced protracted and unpredictable results. Under-resourced departments and a combination of a lack of clear targets and up-to-date plans compounded the problems. It also noted that the burden of negotiating planning lay most heavily on SME builders.
In regards to the speculative housing delivery model, if found that developers build homes at a rate by which they can be sold without affecting prices, rather than diversifying their offering to meet the needs of different communities.
The CMA is calling on government to support the delivery of more homes overall, with better quality and few private management issues.
Implications for custom and self build
In terms of custom and self build, the CMA has proposed that encouraging builders to diversify the types and tenures of the homes that they build will increase build out. It also recommends that governments should increase the number of homes that are delivered by small sites. Both of these measures would significantly benefit the custom and self build sector.
