Image showing lots of colourful small wooden houses

Housebuilders are applauding a report by the Competition and Markets Authority (CMA) that pins the blame for the UK’s housing shortage on the country’s planning system, not on construction companies.

A few weeks ago, the CMA released the final results of its year-long investigation into the housebuilding market. While the initial media focus was on potential collusion among eight major builders, the industry’s deeper interest lies in the report’s findings on planning. Read on to find out more.

The planning bottleneck

There are persistent shortfalls in the number of homes built across England, Scotland, and Wales, with less than 250,000 built last year across Great Britain. That’s well below the 300,000-target for England alone. And, since the Housing Secretary, Michael Gove, weakened planning regulations last year, more than 65 local authorities have scrapped their local development plans.

What’s causing this?

According to the CMA report, the biggest hurdle to delivering new homes is the complex and unpredictable planning system. The report highlights that many planning departments are under resourced, do not have up to date local plans and have neither clear targets or strong incentives to deliver the numbers of homes needed in their area. They are also required to consult with a wide range of statutory stakeholders – groups that often hold up projects by submitting holding responses or late feedback to consultations on proposed developments.

Another problem identified in the report is the limitations of speculative private development. The evidence on this shows that private developers produce houses at a rate at which they can be sold without needing to reduce their prices, rather than diversifying the types and numbers of homes they build to meet the needs of different communities (for example providing more affordable housing).

When it comes to the idea that housebuilders are land-banking (deliberately stockpiling land rather than developing it), the CMA’s looked at over a million plots and found the practice of banking land was more a symptom of the issues identified with the complex planning system and speculative private development, rather than it being a primary cause of the housing shortage.

Other issues raised by the study included substantial concerns about estate management charges (with homeowners often facing high and unclear charges for the management of facilities such as roads, drainage, and green spaces) and issues associated with the quality of some new housing after the number of owners reporting snagging issues increased over the last 10 years.

Time for change

To address these issues, the CMA have made several recommendations, including:

  • Local authorities should create and adhere to local plans with targets reflecting the need for new housing.
  • The government should streamline the planning process and bolster the capacity of local planning departments.
  • Incentives should be introduced to encourage builders to develop a wider range of housing types and tenures on approved sites.
  • The government should require councils to maintain amenities on new housing estates and introduce enhanced consumer protections for homeowners in existing, privately managed estates.

Housebuilders back the reforms

Leading figures in the housebuilding industry have been enthusiastic in their support for these proposals. For instance, Steve Turner, Executive Director of the Home Builders Federation, gave this statement:

“We welcome recognition that the planning system is a fundamental barrier to delivery and adds unnecessary delay and cost into the development process, and the need for local authorities to have plans in place and properly resourced planning departments. We also welcome the CMA’s recognition that house builders do not land bank unnecessarily, that supports a number of similar investigations over recent years.       

“We wholeheartedly support the recommendation that councils adopt and maintain the amenities housebuilders deliver as part of the development, which is what residents pay their council tax for. House-builders do not want to be long term mangers of estates and make absolutely no profit from the management companies that are required to be put in place.

“We are committed to working with the CMA and government to introduce their recommendations and ensuring we can create an environment within which we can deliver the homes the country needs.”

Overall, the housebuilding industry views the CMA report as a validation of their concerns and a potential catalyst for reform which, if followed through, could finally serve to address the UK’s housing shortage.

Read more on the report’s findings here.


Feature image: Freepik