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CMA housing probe to examine uncapped estate management charges and planning rules

  • 25/08/2023
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CMA housing probe to examine uncapped estate management charges and planning rules
The Competitions and Markets Authority (CMA) will launch investigations into the land banks held by housebuilders, estate management charges and planning rules as part of a probe into the housing market.

The regulator released an update on the inquiry into the housebuilding sector that it announced in February, alongside an investigation into the private rental market. 

It announced it would be looking into five areas in greater detail following feedback from housebuilders, campaign groups, councils and devolved administrations. 

The CMA found that a “significant number” of new housing estates which had been build in the last five years had not been taken on by the local authority, meaning homeowners were paying private management companies to maintain amenities. 

The regulator said it was “concerned” about the high or uncapped charges attached to this as well as the quality of the work carried out. 

The CMA also noted that the largest housebuilders held “large swathes of land” which had grown in recent years and could limit competition or slow build out rates. 

The evidence suggested that there were complex planning rules and uncertainties around decision making which could hold back the development of new homes. The CMA suggested this was a particular concern for smaller housebuilders that had less resources. 

Similarly, the inquiry revealed there were barriers for new SME builders when it came to delivering new homes such as a lack of access to land. 

The CMA found that at a national level the housebuilding market was not concentrated and there was competition among larger and smaller housebuilders. However, the CMA said it would look at competitors in specific areas and whether SME builders were able to compete on a local level. 

The CMA will investigate these concerns as well as the economic conditions affecting the sector and give an update in autumn. 


Concerns about landlords 

Regarding its inquiry into the private rented sector, the CMA said complaints were made about a minority of landlords not complying with consumer protection law. 

The regulator said it would be updating guidance for lettings professionals so agents were aware of obligations and the CMA is prepared to launch enforcement action against those not complying. 

The five areas the regulator will focus on include zero deposit schemes, guarantee clauses and retirement housing fees. 

In the case of zero deposit schemes, the CMA said there were concerns that tenants were not aware of their liabilities and faced pressure selling or were not aware of the commission earned by letting agents. 

The regulator will also investigate “sham licences” after it received evidence to suggest that there were landlords who claimed that tenants had licences to occupy rather than assured tenancies. It said there was also a failure to recognise consumer rights under a tenancy. 

The CMA will examine retirement housing fees after it heard about the practice of ‘event fees’ being charged to vulnerable tenants, which is a charge imposed if a retirement property is sub-let or resold. 

As for guarantees, the CMA said it had come across examples of “onerous guarantee clauses” that imposed “wide obligations on tenants”. This included requiring them to provide “extensive evidence of assets” which the CMA said could lead to the unlawful discrimination of people in certain circumstances such as those claiming housing benefits. 


The CMA alone can’t resolve problems 

Sarah Cardell, chief executive of the CMA, said: “The CMA alone can’t resolve the problems in the UK housing market. But we have a role to play and will do our part to help ensure the private rental and housebuilding markets work better for people and businesses. 

“For private renters, we’re taking action to provide updated guidance for lettings agents so that both tenants and landlords are really clear about their own rights and responsibilities. We’ve also identified areas of concern relating to zero deposit schemes, sham licences, onerous guarantee clauses, and possible unlawful discrimination. These warrant further investigation and we stand ready to take enforcement action if needed.” 

She added: “In housebuilding, we’ll press on with our investigation of the five areas that are the focus of our market study so that we can get to the bottom of any potential competition concerns.  

“Once complete, we will consider what actions the CMA can take to tackle any concerns identified or whether there are more effective ways to deal with those concerns such as through recommendations to government for legislative change.” 

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