Michael Gove has written to the Competition & Markets Authority (CMA) urging it to conduct a study into the house-building sector.
His letter dated 9th November was his second such letter of this type, having previously made the same request back in May, the last time he held the same office, when Boris Johnson was still prime minister.
In his latest letter to the CMA’s interim chief executive, Sarah Cardell, he writes: “It is critical that we have a housebuilding sector that operates effectively to deliver the homes that people need. Housing plays a key role in achieving our Levelling Up ambitions. Buying a home is one of the most important decisions a family takes, with huge financial implications, so making sure this market is working in the interests of consumers is of the highest importance. 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.
“Reflecting on the above, and in the context of increasing economic pressures, which are impacting on individual citizens and businesses alike, it feels timely that the CMA should be considering a market study. In the event such a study progressed, the government would welcome recommendations for measures we, industry and the regulators could take to make sure the housing market is operating effectively.
“We appreciate that you are an independent organisation. Nevertheless, my view is that this study is an important priority for the public.”
Whether the study goes ahead will be up to the next CMA board meeting in January.
In her reply, Sarah Cardell reveals that CMA staff “have been developing proposals for work in this area, including a possible market study for the board’s consideration in January”.
She adds: “Market studies, which can take up to one year to complete, can lead to a range of outcomes, including policy recommendations to government. The UK government’s openness to such recommendations in respect of the housebuilding sector is therefore an important factor in the board’s consideration of proposals for a market study.”
Reacting to the news, Tom Fyans, interim chief executive of countryside campaign group CPRE, said: "It’s high time the government took on unscrupulous housing developers who monopolise sites with planning permission and use every trick in the book to maximise profits at the expense of local communities. The housing industry can no longer be allowed to control the supply of land to drive up prices.
"CPRE encourages this government-commissioned study by the Competition &Markets Authority to consider how best to incentivise a new generation of truly affordable and social homes. The current system giving carte blanche to developers to plaster the countryside with unneeded, unattractive executive homes has demonstrably failed.
"It’s encouraging to see ministers prioritise housing and infrastructure designed to create thriving neighbourhoods rather than remaining fixated on top down targets. If these measures deliver on protecting the environment and giving local people a greater say on the developments appropriate for their neighbourhood then it may truly level up the planning system so that it delivers for people’s need, not developers greed."
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