Taylor Wimpey, Barratt, and Persimmon are among some of the biggest names in housebuilding set to come under investigation after the UK competition watchdog found evidence that rivals may be sharing commercially sensitive information that could be influencing the prices of new homes coming to the market.

The move to open an investigation follows an extensive review of the sector by the Competition and Markets Authority (CMA) into the barriers leading to the persistent undersupply of new homes by the sector. The regulator has highlighted a number of "fundamental concerns", chief among them the UK's cumbersome planning permission system as well as its heavy reliance on speculative private sector development.

“Housebuilding in Great Britain needs significant intervention so that enough good quality homes are delivered in the places that people need them," CMA chief executive Sarah Cardell said.

READ MORE: Vindication and reprobation as housebuilders come under competitive spotlight

“Our report – which follows a year-long study – is recommending a streamlining of the planning system and increased consumer protections. If implemented, we would expect to see many more homes built each year, helping make homes more affordable."

The CMA noted that less than 250,000 new homes were built across England, Scotland and Wales last year, well below the target of 300,000 for England alone. Meanwhile, latest figures from the Scottish Government show a 6% decrease in completions of all tenures of homes and a 24% decline in new starts during the year to the end of September 2023.

In the course of its review, the CMA found evidence to suggest that some builders were sharing non-public information such as sales prices and details of buyer incentives with their competitors. The watchdog said this behaviour could influence decisions around pricing levels, as well as the rate at which companies build new homes.

“The CMA has also today opened a new investigation into the suspected sharing of commercially sensitive information by housebuilders which could be influencing the build-out of sites and the prices of new homes," Ms Cardell said. "While this issue is not one of the main drivers of the problems we’ve highlighted in our report, it is important we tackle anti-competitive behaviour if we find it.”

READ MORE: Founder 'devastated' as housebuilder collapses, 217 jobs lost

The companies under investigation include Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey, and Vistry. The CMA said it has not reached any conclusions as to whether or not competition law has been infringed.

Within the main body of the report, the CMA found that many local planning departments are under-resourced and lack clear targets or incentives to deliver the number of homes needed in their area. This means developers are dealing with protracted and unpredictable planning processes before construction can begin, with smaller companies disproportionately affected.

The report is also critical of "speculative private development” that has led to builders producing homes at a rate at which they can be sold without needing to reduce prices. 

Approximately 60% of all houses built in 2021 to 2022 were delivered by speculative private development, which is when builders obtain land, secure planning permission, and construct homes without knowing in advance who will buy them or for how much. The CMA said this approach has given builders flexibility to respond to changes in the market, but reliance on this model has seen the gap widen "considerably" between what the market will deliver and what communities need.

The CMA also noted that housebuilders do not have a strong incentive to compete on quality as its analysis suggested that a growing number of homeowners are facing more than 16 snagging issues after purchase. A "substantial minority" of these experienced particularly serious problems with their new homes, such as collapsing staircases and ceilings.

Furthermore, the study also found substantial concerns about estate management with homeowners "often facing high and unclear charges" for the management of facilities such as roads, drainage, and green spaces. Some 80% of new homes sold by the 11 biggest builders in 2021 to 2022 were subject to estate management charges.