Shake-up on cards after watchdog report
The Competition and Markets Authority has made recomendations for the property market while the Leasehold and Freehold Reform Bill was under discussion. Sharon Dale reports.
THIS week saw the Competition and Markets Authority reveal concerns over the housebuilding market. It concluded that a complex and unpredictable planning system, together with the limitations of speculative private development, is responsible for the persistent under delivery of new homes.
It criticised estate management charges that see homeowners often facing high and unclear charges for the management of facilities such as roads, drainage, and green spaces. There are also concerns over the quality of some new housing after the number of owners reporting snagging issues increased over the last 10 years.
Sarah Cardell, chief executive of the CMA, said: “Housebuilding in Britain needs significant intervention so that enough good quality homes are delivered in the places that people need them.
“Our report 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 has also 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.
The report adds that there are persistent shortfalls in the number of homes built across the UK with less than 250,000 built last year across Britain well below the 300,000-target for England alone.
It also reveals that the planning systems in the UK are producing unpredictable results and often take a protracted amount of time for builders to navigate before construction can start.
It makes the point that many planning departments are underresourced and some do not have up-to-date local plans or clear targets.
The growing trend of developers building estates with privately managed public amenities is seen as an issue as 80 per cent of new homes sold by the eleven biggest builders in 2021 to 2022 were subject to estate management charges.
The CMA recommends that councils adopt amenities on all new housing estates and they want to see a New Homes Ombudsman setting a mandatory consumer code so homeowners can better pursue homebuilders over issues.
They also suggest that local authorities boost capacity in planning departments, adopt local plans and are guided by targets while streamlining the planning systems so building projects can get underway sooner.
Brian Berry, chief executive of the Federation of Master Builders, said: “The CMA investigation into the state of housebuilding is right to highlight the planning system as a problem slowing down delivery of new homes. Resources are desperately
needed by planning authorities to help small builders through the planning system.”
He adds that there is potential for more areas to adopt custom build and says: “In other countries, such as Germany, they are much further ahead on custom build properties accounting for a much higher percentage of overall housing delivery, which means less reliance on a small group of major housing developers.”
The Leasehold and Freehold Reform Bill had its report stage and third reading in Parliament this week.
When enacted, there will be a ban on leaseholds for most new houses. These tenures and resulting bills for ground rent, service charges and administration have caused financial misery for leasehold homeowners.
A new redress scheme for those on private estates has been added to the Bill, along with the right for freeholders on estates to apply to appoint a substitute manager where their estate management company is failing.
However, developers will be able to continue selling houses via leasehold if they form part of a retirement community.
Campaigners and some MPs have criticised the limitations of the Bill, which does not ban leasehold for all flats and houses.
They are also frustrated that there has been a refusal to make commonhold a right, which Labour supports.This sees residents in apartment buildings own their flats while collectively owning the freehold of the building.
The good news is that when the Bill is enacted, existing lease extensions will be increased from a maximum of 90 or 50 years to 990 years with a peppercorn ground rent and there will be transparency over service charges.
Secretary of State for Levelling Up, Housing and Communities, Michael Gove, said: “We are making sure that we squeeze every possible income stream that freeholders currently use, so that in effect, their freeholders capacity to put the squeeze on leaseholders ends.”