Anticipating Change: Insights into the CMA's Housebuilding Market Study and Potential Reforms

The Competition and Markets Authority ("CMA")'s ongoing housebuilding market study is taking significant strides towards potentially reshaping the UK housing sector. With the publication of three key 'Working Papers' focused on land banking, planning, and estate management, the CMA provides valuable insights into possible conclusions and recommendations of its final report, due in February 2024.

Progress and Potential Outcomes

Since its launch in February 2023, the CMA’s study has identified several market features that could be potentially harmful to consumers. In its final report, the CMA may decide to take no action, propose non-legally binding solutions, or refer certain features for a market investigation with the potential to impose legally binding remedies. The areas of land banking, planning and estate management have emerged as focal points for potential reform.

Land Banking

The CMA’s analysis of land banks suggests a concentrated control of developable land in specific geographic areas, potentially harming consumers. With a consultation open until tomorrow (06 December 2023), stakeholders have a brief opportunity to influence the CMA’s approach, particularly in the 26 identified areas across the UK. The outcomes could range from regulatory interventions to possible forced divestment of banked land.

Planning

The planning system’s role as a potential barrier to market entry and expansion, especially for small and medium-sized enterprises ("SMEs"), is under the CMA’s lens. The working paper proposes reforms aimed at increasing predictability, reducing complexity and strengthening Local Planning Authority targets. Potential recommendations include support for SMEs, a rule-based system for planning applications, and stronger enforcement of local plans.

Estate Management

The decline in local authorities adopting communal amenities in new housing estates has led to increased private maintenance charges with limited control for homeowners. The CMA is considering reforms to enhance transparency, accountability, and consumer choice in estate management, as well as the standardisation and mandatory adoption of public amenities by Local Authorities.

Conclusion

As the CMA’s final report deadline approaches, stakeholders in the housebuilding sector have a critical window to influence the study's direction or prepare for impending changes. The working papers not only offer a glimpse into potential reforms but also highlight the CMA’s current stance on key issues in the housing market.

The CMA’s housebuilding market study is set to play a pivotal role in shaping the future of the UK housing industry. With the final report on the horizon, understanding the nuances of the CMA’s findings and preparing for potential legislative and market changes is crucial for all industry stakeholders.