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Antony Antoniou – Luxury Property Expert

CMA investigating major developers for price fixing

CMA investigating major developers for price fixing

Price Fixing Investigation Hits Major UK Housing Developers

Valuer Concerns Vindicated

For over a year, property experts have been urging first-time buyers with small deposits to hold off on purchasing new-build homes. The rationale behind this advice was a long-held suspicion that valuers were reluctant to challenge the pricing set by major housing developers, fearing potential legal repercussions from these corporate giants.

Many valuers vehemently objected to these claims, asserting their independence and integrity. However, recent developments have proven such concerns to be well-founded. The Competition and Markets Authority (CMA) has launched an investigation into alleged price-fixing practices among eight prominent UK housing developers.


Accused Developers Named and Shamed

The developers under scrutiny by the CMA are:

– Barratt Developments PLC
– Bellway PLC
– The Berkeley Group PLC
– Bloor Homes Limited
– Persimmon PLC
– Redrow PLC
– Taylor Wimpey PLC
– Vistry Group PLC

The mere fact that the CMA has publicly announced its investigation into these major players speaks volumes about the severity of the allegations. While the probe is ongoing, questions are already being raised about potential malpractices within the industry.

Incentives: A Veil of Deception?

One particular area of concern highlighted by property experts is the use of substantial incentives offered by developers on new-build homes. While gifted deposits of around 5% have long been a standard practice, recent incentives on properties valued at £500,000 have reportedly reached staggering levels of £50,000, £60,000, or even £70,000.

The crux of the issue lies in the fact that these substantial incentives are not recorded on the Land Registry. This lack of transparency is viewed as a form of misinformation, as future buyers may rely on these artificially inflated sale prices when making their own purchasing decisions, potentially overpaying by tens or hundreds of thousands of pounds.

To combat this deception, experts are calling for all incentives to be recorded on the property’s title deed, ensuring full disclosure and transparency for subsequent buyers.

Land Banking: A Stranglehold on Supply

Another major grievance levelled against major developers is their practice of land banking. It is estimated that these corporations currently hold over 1 million parcels of land, both with and without planning permission, effectively controlling the housing market’s supply.

Despite being granted a significant portion of planning permissions in London, the majority of these approved developments are never actually built. This deliberate withholding of land and housing supply is seen as a strategic move by developers to manipulate market prices, playing financial games at the expense of everyday homebuyers and their families.

A Call for Enforced Completion Times

To address this issue, property experts are advocating for the introduction of enforced completion times for approved developments. Under such a system, developers would be compelled to either develop the land within a specified timeframe or be forced to sell it, preventing the artificial restriction of housing supply.

This measure aims to curb the ability of major developers to speculate on finite building land, a practice that ultimately harms aspiring homeowners seeking affordable housing opportunities.

Public Detriment: The Cost of Corporate Greed

The potential ramifications of the alleged malpractices by major housing developers extend far beyond the immediate financial impact on homebuyers. Those who have purchased new-build properties within the last few years may have overpaid significantly, and the added interest on these inflated borrowings will compound the financial burden for years to come.

Ultimately, it is the public and future generations who bear the brunt of such dishonest behaviour, as the dream of homeownership becomes increasingly out of reach for many.

Industry Reform: A Pressing Need

While the CMA’s investigation is a step in the right direction, property experts argue that more comprehensive reforms are needed to address the systemic issues plaguing the housing industry. The dominance of major developers and their ability to manipulate supply and pricing have suffocated smaller players, stifling competition and leaving homebuyers at the mercy of corporate interests.

As the investigation unfolds, calls for greater transparency, accountability, and regulatory oversight within the housing sector are likely to intensify. The public’s interest must be prioritised over corporate greed, ensuring that the fundamental right to affordable housing is protected for all.

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