Competition watchdog ready to start housing sector probe after Gove call

The Competition & Markets Authority could launch a study of the housebuilding sector in January following a formal request from Michael Gove yesterday.

The watchdog’s interim chief executive Sarah Cardell, in a letter replying to the housing secretary, said the body has been working on proposals to look at the industry, including a one-year study, and could put it before its board next month.

Gove has repeatedly called for the CMA to study the sector, last March accusing housebuilders of operating like a “cartel”.

He wrote to Cardell last month to say it is “critical that we have a housebuilding sector that operates effectively to deliver the homes that people need”.

He added: “The last housebuilding market study took place 14 years ago and since then, there have been significant changes in both the market and the challenges facing the country as a whole – such as net zero, changes to the structure of the market following the financial crisis and changing demographic trends.”

He said the government would welcome policy recommendations from the CMA “to make sure the housing market is operating effectively”.

The housing secretary also wrote to the CMA in May saying that he was interested in the barriers facing SMEs who want to enter the market or expand “including the role that the land market and planning system play in these dynamics, and whether the market structure is holding back innovation.”

Gove’s call for CMA intervention follows his comments last year that the housebuilding industry operates “essentially” as a “cartel”, a comment that prompted the Home Builders Federation to hit back in response.

Cardell said the government’s openness to recommendations regarding the housebuilding industry will be “an important factor” in the board’s consideration of proposals for a market study.

She added: “One of the requirements for delivering the homes people need is a thriving, competitive housebuilding sector.

“With this in mind, CMA staff have been developing proposals for work in this area, including a possible market study for the board’s consideration in January.

“As we discussed, a market study would be a substantial piece of work, and it is crucial that careful consideration is given to its scope, to ensure suitable focus and efficiency.”