With the report now published, we ask Alex about the outcome of the report and what this means for the housebuilding industry.
Let's get straight to it, what was the outcome?
Well, to summarise, there were two key takeaways from the CMA report. The first found that “the housebuilding market is not delivering well for consumers and has consistently failed to do so over successive decades” to quote the CMA.
Secondly, they also discovered that eight housebuilders allegedly breached the Competition Act, so they are now investigating whether or not these companies shared sensitive information.
What issues did the report identify?
Between 2021 and 2022 approximately two fifths of homes were developed by the country’s largest housebuilders, whilst around 500,000 homes were built by smaller, regional housebuilders.
There has been a consistent drop in the number of houses being built, with less than 250,000 homes developed across England, Scotland, and Wales last year. That’s less than the 300,000 target for England alone.
Let's dive deeper, what did the CMA say about planning rules?
Unpredictable results are being produced by planning systems, which is costing housebuilders valuable time trying to navigate them before construction works can start.
The report found that planning departments were under resourced, with some even working from out of date local plans; lacking clear targets and incentives for developers to deliver the required amount of homes in their areas.
Statutory stakeholders often hold up projects through late feedback submissions on proposed developments too, which makes it difficult for housebuilders to reach their targets (it's a requirement for them to consult with a variety of statutory stakeholders).
What does the report say about private developments?
Rather than creating a broader range of homes that vary in size and quantity, in line with the different needs of the communities housebuilders are developing on, limitations of private developments is another reason for the under delivery of homes.
What about the management of these private estates?
The report flagged up that there’s been a growing trend of developers constructing estates with privately managed public amenities.
Between 2021 and 2022, 11 of the biggest housebuilders sold 80% of the country’s new builds which were subject to estate management charges.
Charges for unplanned repair work, which can potentially cost homeowners thousands of pounds and considerable stress, was addressed by Sarah Cardell - Chief Executive of the CMA - who said; "Housebuilding in Great Britain needs significant intervention so that enough good quality homes are delivered in the places that people need them".
She also said that the CMA would "expect to see fewer people paying estate management charges on new estates and the quality of new homes to increase – but even then, further action may be required to deliver the number of homes Great Britain needs in the places it needs them.”
And the quality?
The report mentioned that a ‘substantial minority’ of homeowners encountered serious issues with their new build, such as collapsing ceilings and staircases.
Additionally, a higher number of snagging issues are being reported by more and more homeowners.
The analysis shows there’s unclear routes of redress for consumers, whilst housebuilders don’t have strong enough incentives to compete on quality.
Something seriously needs to change to ensure that everyone is happy and that new properties are able to be developed to the highest safety and quality standards.
What changes did the CMA recommend in their report?
The idea of a new homes ombudsman was suggested, with the idea that it would set a single mandatory consumer code for homeowners looking to better pursue housebuilders over any issues they may have with their new build.
Something I’ve been saying for a long time is that the planning system needs to be more streamlined, which the CMA also echoed in their report, including the notion of increasing consumer protections - including making it easier for homeowners to switch to a more competitive management company.
If this does come to the fold, there will be an influx of new homes developed each year which could really help the shortage and also improve affordability for new home buyers.
And finally, the CMA suggested that there should be a requirement for councils to take hold of amenities on all new housing estates.
Who are we?
Sillence Hurn’s Chartered Building Surveyors are RICS qualified with extensive experience of building surveying across London and the South of England.
From advice around feasibility, cost planning, undertaking the work in the current market, specifying works, overseeing and managing the implementation of changes, our chartered building surveyors will be able to identify any upgrades and advise you on the best measures going forward.
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Email us at enquiries@sillencehurn.co.uk or call our Southampton team on 02380 014786 / London at 020 3143 2128
