The Competition and Markets Authority’s (CMA) review of the UK housebuilding sector has rightly been welcomed as an important and timely study by the new Labour Government, which has this week published its response to the February 2024 report.
The Government has agreed the planning system needs significant reform and is acting as a major blocker to the proper performance of the market, whilst recognising the role of larger developers in delivering its 1.5 million home target.
Reform of the planning system, which has already commenced with a consultation on the updated NPPF (which closed on 24 September), underpins the Government’s economic growth agenda, with an ambition to deliver more homes, affordable homes, and a more balanced distribution of where those homes are located.
Planning, of course, should only be one strand of the Government’s approach and the Budget on 30 October will provide further detail on the policy framework which will drive a national commitment to deliver an unprecedented number of new homes.
In its response, the Government has highlighted the market’s reliance on the ‘speculative model of housebuilding’ which ‘slows build out and constrains supply.’ This should be a key area to watch in the Budget. There is potential for new and innovative funding models designed to accelerate development, with the private sector potentially working more closely with Registered Providers.
Whilst the Government has agreed to undertake further work on several of the CMA’s recommendations, it has fully accepted the advice to establish a single mandatory consumer code for all housebuilders.
This includes activating a New Homes Ombudsman Scheme – which will build on the voluntary New Homes Quality Board which was established in 2022. With 200 developers signed up to the Board, the sector is already engaged in this key area of policy development.
Whilst the CMA’s report acknowledged that solutions to solving the housing crisis are complex and there is no single issue, it is encouraging to see an emerging partnership between Labour policymakers and housebuilders already.
In particular, the Government has acknowledged that larger developers remain critical and will play an important role delivering new communities across the country – although acknowledging the importance of SME housebuilders and the barriers to market entry they currently experience.
The Government’s response to the CMA demonstrates a pragmatic and realistic approach to the challenges and opportunities facing the sector. As policy emerges, we anticipate greater partnership working with the sector who stand ready to deliver.