An investigation by the Competition and Markets Authority (CMA) into seven major housing developers has resulted in a likely £100 million boost for affordable housing projects – although none of the developers admit any liability or wrongdoing for the conduct subject to investigation.
Barratt Redrow, Bellway, Berkeley Group, Bloor Homes, Persimmon, Taylor Wimpey and Vistry have agreed to pay the sum, which will benefit affordable housing programmes across the UK, as well as agreeing to legally binding commitments that will prevent anti-competitive behaviour and promote compliance.
The investigation was launched last year following concerns that the companies were exchanging details about sales including pricing, the number of property viewings, and the incentives offered to buyers such as upgraded kitchens or contributions to stamp duty.
The developers have proposed a package of commitments to address the CMA’s concerns, which will be subject to a consultation that will end on 24 July. Under the proposals, the seven companies will make the combined £100 million payment, work with the Home Builders Federation and Homes for Scotland to develop industry wide guidance on information sharing, and agree not to share certain types of information with other house builders except in limited circumstances.
If accepted, the commitments will become legally binding and the CMA will not decide whether the developers broke competition laws.
‘This payment will directly support the delivery of affordable housing across the UK, helping to fund hundreds of new homes for those who need them such as low-income households, first-time buyers and vulnerable people’, the CMA said in a statement.
“It is important that competition works well in the housebuilding market to keep prices fair, improve the quality of homes and support the delivery of essential infrastructure. This outcome sends a clear message to other companies that the CMA will take action where it has concerns that the law is being broken.”
Sarah Cardell, chief executive at the CMA, added:
“Housing is a critical sector for the UK economy and housing costs are a substantial part of people’s monthly spend, so it’s essential that competition works well. This keeps prices as low as possible and increases choice.
“As a result of the CMA’s investigation, housebuilders are taking clear and comprehensive steps to ensure they comply with the law and don’t share competitively sensitive information with their rivals.
“Alongside these measures, the housebuilders we investigated have agreed to pay £100 million towards affordable homes programmes, which will help communities up and down the country.”
The CMA will now consult on the proposed commitments before deciding whether to accept them. Any payments will be made within three months of the decision being agreed, and the CMA decides to accept the commitments it will not issue a statement regarding the developers’ conduct.
‘In our view this is a case of wrists slapped, line drawn and move on’, said Anthony Codling, managing director of equity research at RBC Capital Markets.
“The government is keen to get more homes built, therefore slapping housebuilders with a big fine would not help grow volumes, and housebuilders themselves want to sell more homes, and we remain of the view that in the main house builders are price takers rather than price setters.”
Should the proposal be accepted, registered bodies including housing associations, charities and local authorities will be able to bid for funds from the designated programmes to support the capital costs of building affordable homes for rent or sale.
