Housing industry responds to CMA investigation findings

After a year-long investigation, the Competition and Markets Authority (CMA) has concluded that the planning system and under resourced planning departments are the key barriers to housing delivery.

In its report, the CMA also concludes – in line with numerous previous independent investigations - that land banking is a result of the complex planning system, rather than a deliberate industry practice.

Amongst the report’s recommendations, the CMA calls for councils to be required to adopt amenities provided as part of housing developments. It also recommends mandating a single consumer code and New Homes Ombudsman to offer greater protection for homeowners. The Home Builders Federation (HBF) supports both of these recommendations.

HBF issued the following statement: “We wholeheartedly support the recommendation that councils adopt and maintain the amenities housebuilders deliver as part of the development, which is what residents pay their council tax for.

“Home builders do not want to be long term managers of estates and make absolutely no profit from the management companies that are required to be put in place.

“We welcome recognition that the quality of new build homes has improved in recent years and fully support moves to protect consumers with a single consumer code and New Homes Ombudsman, something the majority of the industry has already signed up for voluntarily.

“We are committed to working with the CMA and Government to introduce their recommendations and ensuring we can create an environment within which we can deliver the homes the country needs.”

Richard Beresford, Chief Executive of the National Federation of Builders (NFB), said: “Planning should be enabling homes, better places and competition which benefits not just Britain, but the British consumer. The CMA has correctly identified that the UK planning system does the opposite.”

As well as pouring cold water on many criticisms made towards housebuilders, the CMA report disproved the landbanking myth, highlighted the need for better resourcing of planning departments and total planning reform, plus a need to support small and medium sized builders (SMEs).

Rico Wojtulewicz, Head of Policy, and Market Insight for the NFB and House Builders Association (HBA), said: “The CMA report has confirmed that a broken planning process is the reason we have a lack of social housing, why big builders build too many of our new homes and SMEs are shut out, that homes are in the wrong places and too expensive, there are some issues with quality, and we don’t do placemaking.”

None of this is new or uncontroversial but the UK needed this CMA report to keep hammering home the reality that politicians of all colours are the reason we have a housing and placemaking crisis. It’s time they stopped blaming builders and instead, were held accountable for the mess they have caused and keep causing.”

Brian Berry, Chief Executive of the Federation of Master Builders (FMB) said the into the state of housebuilding is right to highlight the planning system as a problem slowing down delivery of new homes.

“Resources are desperately needed by planning authorities to help small builders through the planning system,” he said. “The CMA findings are a step forward, especially with an acknowledgement that SMEs are disproportionally affected by the planning system. These findings will hopefully give the Government renewed impetus to resolve these long-standing issues which the FMB has been highlighting for many years.

“It is concerning, however, that the report does not provide enough nuance in such a complex market. The report has a very broad definition of SMEs with very little definition given to the range of house builders within the SME market, such as micro developers, custom house builders and new entrants. There are also few international comparisons and where they are included, the findings are fairly tepid, with little realisation for the potential of areas such as custom build, which could be an area of growth for UK builders. In similar countries, such as Germany, they are much further ahead on custom build properties accounting for a much higher percentage of overall housing delivery, which means less reliance on a small group of major housing developers and more diversity of design.”

The National Custom and Self Build Association (NaCSBA) said the report is clear that the failure to deliver arises from a speculative new build market that too often disregards the customer, combined with an ineffective and uncertain planning system. These failures have seen, “…the gap widen considerably between what the market will deliver and what communities need”.

Peter Johns commented: “NaCSBA’s input into the consultation process is clear with the welcome statement within the report that, ‘under the speculative model of housebuilding, housebuilders that build homes for private sale have an incentive to match, but not exceed, the absorption rate. One way of addressing this would be to encourage non-speculative housebuilding models including self- or custom-build homes’.”

NaCSBA added that if the UK is to build the homes that more people want to live in, then we need to do more to allow every form of housing delivery to flourish. This includes the hidden and untapped custom and self build market. A market that exists on scale in every other major market economy.

Andrew Baddeley-Chappell, Policy Director at NaCSBA, commented: “This report highlights the failure of our new build market and the need for urgent change if we are to build the number and type of homes that customers demand. The solutions are clear. We need to open up the market by enabling more new build opportunities for more providers, including custom and self build.”

“To do this the planning system needs to enable more small- and medium-sized plots to come forward and the unhealthy lack of variation and choice on large sites to be addressed. We cannot wait. If we are to see significant change before the end of this decade then change must start now.”