Home building and renting probed to help buyers and tenants

With widespread concerns about housing availability and costs, the Competition and Markets Authority (CMA) has launched a new phase of work in the housing sector. The CMA is launching a market study into housebuilding, and will start a separate consumer protection project related to rented accommodation.

The market study comes following concerns builders are not delivering the homes people need at sufficient scale or speed. The CMA’s consumer protection work will seek to shed light on the experience of renters and explore whether more could be done to help landlords and intermediaries to understand their obligations.

Sarah Cardell, Chief Executive of the CMA, said:

The quality and cost of housing is one of the biggest issues facing the country. Over the last few years, the CMA delivered real change for leaseholders, with tens of thousands of homeowners receiving refunds after being overcharged unfair ground rents.

With that work nearly finished, we’re now looking to probe in more detail two further areas – the housebuilding and the rental sectors.

If there are competition issues holding back housebuilding in Britain then we need to find them. But we also need to be realistic that more competition alone won’t unlock a housebuilding boom.

In the same vein, we want to explore the experiences people have of the rental sector and whether there are issues here that the CMA can help with.

We will of course be guided by the evidence, but if we find competition or consumer protection concerns we are prepared to take the steps necessary to address them.

Housebuilding market study

The CMA’s market study into housebuilding will focus on 4 areas:

• housing quality: looking at how builders are delivering the right sorts of homes that communities and buyers need – including the fairness of estate management fees charged for ‘unadopted’ roads and amenities
• land management: examining whether the practice of ‘banking’ land before or after receiving planning permission is anti-competitive
• local authority oversight: exploring how councils oversee the delivery of homes and how developers negotiate affordable home requirements
• innovation: considering whether factors may be holding builders back from adopting new building techniques or moving towards more sustainable, net zero homes

A market study allows the CMA to use compulsory information-gathering powers to probe the entire market. As well as helping develop a deeper understanding of how and when housebuilders decide to deliver new homes and the interaction of that with local authority housing targets, the study will consider the issues faced by smaller, regional firms.

More information can be found on the housebuilding market study case page.

Consumer protection in rented sector

The CMA’s consumer enforcement work in housing will focus on:

• the end-to-end experience from a tenant’s perspective, including finding somewhere to live, renting a property, and moving between homes
• identifying the consumer protection issues that may arise. The project will examine the relationship between tenants and landlords and the role of intermediaries, such as letting agents

Following a period of targeted stakeholder engagement across England, Scotland, Wales and Northern Ireland, the CMA will report on its initial findings and proposed next steps this summer.

More information can be found on the rented housing sector consumer project case page.

Notes To Editors

1. Market studies examine why particular markets may not be working well for consumers. They may lead to a range of outcomes, including: a) making recommendations to the government to change regulations or public policy; b) encouraging businesses in the market to self-regulate; c) taking consumer or competition law enforcement action against firms; d) making a reference for a more in-depth (phase 2) market investigation; e) “clean bill of health”.
2. A market study formally begins with the publication of a Market Study Notice by the CMA.
3. The CMA must within 12 months of publication of a market study notice publish a market study report setting out its findings and the action (if any) it proposes to take.
4. The market study will examine housebuilding in England, Scotland and Wales. The market situation in Northern Ireland is significantly different from the rest of the UK, such that Northern Ireland appears unlikely to face the same market or supply-side issues, and therefore the housebuilding market study will not include Northern Ireland.
5. The CMA’s research project into the private rented sector (across all parts of the United Kingdom) is expected to take three months to complete. This will help inform further work the CMA expects to take – which could include, for example, a call for evidence from tenants and landlords in relation to consumers’ rights under consumer protection law. The project could lead to, for example, enforcement action being taken, or new consumer guidance being issued for tenants and landlords.
6. The CMA’s 2023 to 2024 Annual Plan, the final version of which is due to be published by the end of March, explains that the CMA wants to promote an environment where ‘people can be confident they are getting great choices and fair deals’. It also explains that, over the next three years, the CMA will ‘consistently focus on the areas where consumers spend the most money and time’. This includes focusing on the accommodation sector over the next 12 months, specifically through the housebuilding market study.