Housebuilding firms accused of purposefully inflating prices
With a monopoly over the housebuilding market, larger firms have been accused by MPs of ‘landbanking’ in an effort to keep prices high.
With a quarter of all new-build homes in the UK in 2015 built by just three companies, MPs believe that the dominance of Persimmon, Taylor Wimpey and Barratt may be fuelling Britain’s housing woes. This is due to purchasing land, but then delaying construction, in an effort to sustain the high prices that are preventing first-time buyers from joining the property market.
While MPs state that there is no direct evidence that the firms are colluding with one another, or purposefully withholding construction on land for which they have already obtained building permits, the figures have left a number of industry experts perplexed.
In mid-2016, there were an estimated 684,000 units with planning permission, yet no construction on the plots had commenced, forcing Communities Secretary Sajid Javid to plead that housebuilding firms “release their stranglehold on [the] supply”.
With an ever-increasing population, Britain has been falling further and further behind targets laid down by the government in years previous – and the problem is only set to get worse.
While many MPs advocate the provision of smaller building sites to medium-sized firms with less political clout to encourage faster building rates, there are few companies with same resources as those who currently dominate the market.
It is, however, important to point out that the larger housebuilding companies themselves are not breaking the law even if they are ‘landbanking’, as they are under no legal obligation to, within a limited timeframe, build on land that they have purchased.
The major house-builders are also under fire for charging extortionate rates for ground rates on new-build leasehold homes, as well as being accused of selling contracts for ground rent management to third party companies who take advantage of new homeowners.
While this is not a problem that affects long-time homeowners, those who ultimately need to sell their house fast due to a change in careers or space requirements may be forced to lower their asking prices below market value in order to attract buyers.
Worried that you won’t sell? Why not ask National Homebuyers for advice, as we buy any house. Call 08000 443 911 or request a call back to find out how much you could get for your property.