CMA launches market study into housebuilding

The Competition and Markets Authority (CMA) recently announced that it has launched, through publication of a market study notice under section 130A of the Enterprise Act 2002, a market study into housebuilding in England, Scotland and Wales.

The CMA intends to use this market study to consider how well the housebuilding sector functions, how well it performs for consumers and other stakeholders, including local communities, and how it might work better. This follows apparent concerns from some that builders are not delivering the homes people need at sufficient scale or speed.

The CMA intends to conduct an analysis of the structure and functioning of the housebuilding market. It will consider whether the behaviour of any market actors is leading to unnecessary costs or distortions in the market.

It will also look at whether buyers at different stages in the housebuilding process can exercise effective choice given the level of transparency at key stages in the process, and whether ·there is effective competition between housebuilders. Particular issues that the CMA intends to examine include housing quality and the fairness of estate management charges, the impact of the practice of “land banking”, the role of local authorities and the planning permission process, and any barriers to entry for small and medium sized builders.

The CMA invites evidence and views on the issues that it intends to examine during the market study, including on whether the CMA should make a market investigation reference, by 20 March 2023. It has set out a list of questions relating to the operation of the market, constraints on buyers’ choices, market interactions, exploitation of market power and barriers to entry and expansion.

The CMA intends to publish an update on the market study in summer 2023. It must announce within six months whether or not it is intending to make a market investigation reference. It must publish its final report on the market study within 12 months.

The full CMA press release (which also confirms the a separate project considering consumer rights for those in rented homes) can be seen here

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