On 22 October 2024, the UK government responded to the Competition and Markets Authority’s (CMA) market study on housebuilding, acknowledging the CMA's conclusions that the market is failing to provide enough high-quality, affordable homes and that the current speculative model hinders competition and innovation.
We previously wrote about those conclusions here, and the CMA's key recommendations here.
Below we have set out the CMA's key recommendations and how the UK Government has indicated that it intends to proceed with respect to each of them:
1. Mandatory adoption of public amenities on new housing estates – the Government intends to consult further on how to proceed, including with local authorities, and appears to have at least some concerns about the affordability of this for local government.
2. Introduce stronger consumer protection rules, with "robust enforcement" for households that have private property factoring arrangements – the Government accepted this "in principle", including stating that it will consult on secondary legislation (in England and Wales) to implement measures such as a legal right to challenge the reasonableness of estate management charges or ask a tribunal to appoint a new manager.
3. Ban new embedded management arrangements – the Government has indicated that it expects to consult on such a ban in England together with mandatory adoption as part of a suite of measures to remedy a perceived imbalance between companies and homeowners.
4. Introduce a single mandatory consumer code for all UK housebuilders with mandatory access to the New Homes Ombudsman Scheme – the Government accepted this recommendation and stated that secondary legislation will be brought forward "in due course" to implement the statutory NHO Scheme.
5. Ban "drip pricing" (i.e. gradually adding charges for "additional" services which are effectively mandatory, such as essential fixtures and fittings) – the Government considers that this is no longer required as such pricing practices have now been outlawed by the Digital Markets, Competition and Consumers Act. The Government will continue to monitor how housebuilders present genuinely optional extras.
6. Require an independent body to develop and run a single consumer satisfaction survey for all housebuilders and require housebuilders to participate and publish their key quality metrics – the Government stated that it will consider how to approach this in a way that "minimises undue regulatory burdens, particularly on small and medium-sized housebuilders".
One theme of the Government's response is a desire to allow the Leasehold and Freehold Reform Act 2024 to bed in before undertaking further changes to primary legislation.
The Government also emphasised its broader plans for planning reform (itself a key CMA recommendation) as well as its plans to build 1.5 million new homes and to increase social and affordable housing, fund 300 additional planning officers, support small and medium enterprises (SMEs), and promote diverse developments.
The Scottish Government has not yet issued a formal response to the CMA's study.
If you would like any advice or support relating to any of the issues raised in this blog, please contact Charles Livingstone, Jamie Dunne, or your usual Brodies Housebuilding team contact.
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