Housebuilders working together to keep prices high, watchdog claims

Lawyers say the CMA investigation could result in huge legal fines for the companies allegedly involved, ITV Correspondent Lucy Watson reports

A number of buyers and owners of newly-built properties in the UK will be investigated, the competition watchdog said, amid fears builders are working together to keep prices high.

The Competition and Markets Authority (CMA) said Monday they found evidence eight 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 CMA said that while it "does not consider such sharing of information to be one of the main factors in the persistent under-delivery of homes", it is "concerned that it may weaken competition in the market."

Under the Competition Act 1998, the CMA said it is looking into the UK's eight largest housebuilders: Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey, and Vistry.

The report also raised concerns about estate management charges, which it said may come with inadequate protections for consumers.

Homebuyers may be poorly informed when it comes to important details about such arrangements and their long-term implications, the watchdog said.

It found a growing trend by developers to build estates with privately-managed public amenities – with 80% of new homes sold by the 11 biggest builders in 2021 to 2022 subject to estate management charges.

Bills can be high, with a large proportion relating to administration or management fees, and future bills may be unpredictable and potentially very high as amenities degrade over time, the CMA said.

The CMA raised concerns about the quality of homes being produced. Credit: PA

The charges can relate to the maintenance of public spaces like greens or children's play areas.

But homeowners across the country have complained of the high cost of these maintenance charges compared to the work that needs doing if it even gets done at all.

Estate management companies have huge sway in the market and have little reason to deliver services at a reasonable price or to an acceptable level of quality, the CMA added.

While the average charge was £350, one-off, unplanned charges for significant repair work can cost thousands of pounds and cause considerable stress to homeowners, the CMA said.

The report also noted the extreme complexity of switching estate management providers and the lack of information homeowners are given upfront.

Analysis also suggests that a growing number of homeowners are reporting a higher number of snagging issues, the watchdog said.

New housing estates often come with complicated estate management obligations. Credit: PA

The CMA’s consumer research indicated that a substantial minority had also experienced particularly serious problems with their new homes, such as collapsing staircases and ceilings.

The watchdog said it wants to see a housebuilding market that delivers consistently better outcomes on new-build quality, with consumers having an effective route to redress, as well as reduced detriment to consumers arising from the private management of public amenities on new-build estates.

It is making recommendations to the UK, Scottish and Welsh Governments in areas where there could be opportunities to improve market outcomes without significant trade-offs with other policy objectives.

The CMA said it is also inviting the governments to consider options to support the adoption of public amenities on estates currently under private management arrangements.

A Department for Levelling Up, Housing and Communities spokesperson said: "It is vital to address the unfair situation facing homeowners on freehold estates. That is why through the Leasehold and Freehold Reform Bill they will have greater rights to challenge unreasonable estate rent charges and change the management of services if necessary."

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