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  • Mal McCallion

Building docks



Big news from the Competition and Markets Authority (CMA), which has spent a year casting its eyes over land banks – owned by property developers but sitting idle – and wondering why, with so much space to build upon, the UK can possibly have a housing market crisis.

 

They’re now launching a full-blown enquiry into eight housebuilders – let the record show these are named as Barratt, Bellway, Berkeley, Bloor, Persimmon, Redrow, Taylor Wimpey and Vistry – for potentially sharing confidential market data with each other, to ensure that their properties maintain their prices (and therefore profitability).

 

In short, to manipulate the market to avoid oversupply in any specific geographical areas.

 

Oversupply in specific geographical areas is basically what makes houses more affordable. By throttling the supply of homes – either taking years longer to complete schemes or prioritising building elsewhere until other developers have long-sold their plots – this ensures that homes remain as unaffordable as they can make them. It also depresses overall availability and means that more people can’t get on the housing ladder at all.

 

I remember attending a conference a number of years back, where a representative of a major housebuilder was on stage explaining why his company was in lockstep with the Government on housing policy. “Listen, the Government and ourselves are absolutely aligned on wanting to cram as many properties onto any given plot as possible,” he told the audience of hundreds. “They want to be seen to be delivering the numbers. But their voters also don’t want the prices of their houses to go down, nor for tons of other people to live near them.” This, he chuckled, meant “we can regulate the pace as much as we like!”

 

The quality’s not been great either. A “substantial minority”, according to the CMA, had serious problems such as collapsing staircases and ceilings.

 

Then there are the service charges. Clipping hedges is a massive money-maker for … well, the arms-length ‘maintenance companies’ that the housebuilders employ to monopolistically care for their developments’ topiary. In a classic, hands-clasped-to-face-in-disbelief statement from the House Builders Federation, they huffed “Housebuilders do not want to be long-term managers of estates and make absolutely no profit from the management companies that are required to be put in place.”

 

The CMA has left enough room for planning laws and local authorities to be scapegoated upfront as the +real+ reason that these poor housebuilders can’t get their projects away. The National Federation of Builders said “Planning has stopped new homes being built, especially social houses ... We didn't need a CMA report to confirm this, but it certainly helps drag the politicians over the coals for their utter failure on housing, planning, and the impact on the consumer through ever increasing housing costs.”

 

That this issue is finally being investigated is great news. That it will take ages to get through, and then any negative conclusions be challenged by mega-rich developers long into the future, is less so. However, until this nettle is actively grasped we’re all going to end up with issues in our communities that are a direct result of housing unavailability – from obvious signs, like homelessness, to those less visible, like mental health challenges for our children.

 

Data out this week from the HomeOwners Alliance shows that 4m of 7.5m renters in the UK, mostly young, think they’ll never own a home. That’s a massive chunk of the country. The sooner developers are forced to get building – and stop banking – the better.

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