Competition watchdog recommends streamlining planning system and introducing “clear” housing targets

The Competition and Markets Authority has recommended a "streamlining" of the planning system to boost housebuilding and has called for “clear, consistent” housebuilding targets after finding a persistent under-delivery of new homes.

In a report detailing the findings of the CMA's housebuilding market study in England, Wales and Scotland, the competition watchdog found that planning rules are producing "unpredictable results and often take a protracted amount of time for builders to navigate before construction can start".

The report comes as the Government failed to meet its housebuilding target of 300,000 homes in England last year, missing the target by 50,000 homes.

It also comes two months after the Government implemented its revised National Planning Policy Framework, which included reforms that made local housing targets non-mandatory.

According to the report, the planning backlog is the result of many council planning departments being under-resourced, lacking up-to-date local plans, and lacking clear targets or strong incentives to deliver the number of homes needed in their area.

The report added that the requirement for councils to consult with a range of statutory stakeholders, who "often hold up projects by submitting holding responses or late feedback to consultations on proposed developments" is also a problem.

The study, which was launched in February 2023, also found that issues contributing to low delivery of homes involved speculative private development and land banking.

It claimed that the limitations of speculative private development – which is when builders obtain land, secure planning permission, and construct homes without knowing in advance who will buy them or for how much – are contributing to the under-delivery of homes.

Private developers produce houses at a rate at which they can be sold without needing to reduce their prices rather than diversifying the types and numbers of homes they build to meet the needs of different communities, the report noted.

It said that a "substantial intervention" in the market is necessary to address the issue and made a series of recommendations to the Government in areas it believes could improve market outcomes "without significant trade-offs with other policy objectives".

The watchdog recommended:

• Requiring councils to adopt amenities on all new housing estates.
• Introducing enhanced consumer protections for homeowners on existing privately managed estates – including making it easier for homeowners to switch to a more competitive management company.
• Establishing a New Homes Ombudsman as soon as possible and setting a single mandatory consumer code so homeowners can better pursue homebuilders over any quality issues they face.

It also set out proposed 'options for consideration' for the Government, which included:

• Ensuring local authorities put in place local plans and are guided by clear, consistent targets that reflect the need for new homes in their area.
• Streamlining planning systems to significantly increase the ability of housebuilders to begin work on new projects sooner - while not watering down protections such as for the local environment. Measures to improve the capacity of council planning departments would also enable them to process more applications.
• Introducing measures to increase the build-out of housing sites by incentivising builders to diversify the tenures and types of homes delivered.

The report said that even with the implementation of its recommendations, evidence suggests that the market may still not deliver enough homes.

Sarah Cardell, Chief Executive of the CMA, said: "Housebuilding in Great Britain needs significant intervention so that enough good quality homes are delivered in the places that people need them.

"Our report – which follows a year-long study – 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.

"We would also expect to see fewer people paying estate management charges on new estates and the quality of new homes to increase. But even then, further action may be required to deliver the number of homes Great Britain needs in the places it needs them."

Adam Carey