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From Crisis to Construction: Government Responds to CMA’s Housebuilding Market Study with Key Policy Reforms

In February, the Competition and Markets Authority (CMA) published its final report on the housebuilding market, following a year-long investigation. As of 22nd October, the government has released its policy paper responding to the CMA’s findings on housebuilding in England, Scotland and Wales.



The government welcomed the CMA's conclusions, acknowledging that the housebuilding market has failed to deliver for consumers, a failure that has persisted for decades. The policy paper opens by emphasising the severity of the UK's housing crisis, highlighting the 1.3 million households on social housing waiting lists and noting that under-30s are now less than half as likely to own homes as previous generations.


The government's response outlines several critical issues contributing to the market's failure, including excessive fees, inadequate recourse for consumers, poor information and the exploitation of both renters and homeowners. Structural weaknesses, such as an overreliance on a speculative housebuilding model and a planning system bogged down by slow decision-making were also cited as significant barriers to progress. These challenges, the government states, limit competition, stifle innovation and hinder the supply of affordable homes. Reform, the policy paper stresses, is essential to create a market that can meet the scale, speed and affordability required by communities.


The CMA report made 11 recommendations, addressing concerns ranging from the private management of public amenities on housing estates to improving the quality of new homes and services from housebuilders. The government has pledged to consider these recommendations and the options for reforming areas such as planning and estate management.


Key Government Reforms in Response to CMA Study:


Reforming the Planning System: The government agrees with the CMA that significant planning reform is crucial. Initial steps include revising the National Planning Policy Framework (NPPF). A consultation, which ran from July to September 2024, sought input on increasing planning fees, updating criteria for local plan interventions and reviewing thresholds for Nationally Significant Infrastructure Projects (NSIPs). The aim is to provide the housebuilding sector with greater certainty, reduce disproportionate burdens on small and medium-sized enterprises (SMEs) and clarify the roles of statutory consultees.


A New Approach to Housing Needs Assessment: To meet housing demand, the government has proposed a new, more objective method for assessing housing needs. This would standardise housing targets across the UK, prioritising areas with the greatest housing need and least affordability. The government's ambition to deliver 1.5 million new homes in five years underpins this approach. To streamline the process, local planning authorities will have less flexibility, with the government’s method becoming the default.


Strengthening Developer Contributions: Reforms are also proposed to enhance the system of developer contributions. These changes aim to ensure that new developments provide necessary affordable housing and infrastructure to support growing communities.


Support for SME Housebuilders and Small Sites: In response to the CMA's call for more support for SME housebuilders, the government is consulting on ways to improve small-site policies within the NPPF. This includes promoting mixed-use developments that can accelerate build-out rates and foster more vibrant communities.


The Planning and Infrastructure Bill: To further accelerate housing delivery, the government announced a new Planning and Infrastructure Bill. Key features include modernising planning committees to enhance decision-making, expanding local planning authorities' capacity and reforming compulsory purchase processes to speed up development. The Bill may also introduce measures to fund nature recovery through development projects.


National Development Management Policies & Building Capacity: The final piece of the government's reform agenda will be a consultation on National Development Management Policies. Additionally, to bolster the planning system’s capacity, 300 new planning officers will be funded through a stamp duty surcharge on non-UK residents. The government is also exploring measures to address slow build-out rates, especially on larger development sites.


In conclusion, the government’s response to the CMA’s housebuilding market study signals a major shift in how the housing sector will be shaped in the coming years. With key policy reforms aimed at streamlining the planning system, supporting SME housebuilders and accelerating the delivery of affordable homes, these changes present both challenges and opportunities for developers. As the planning landscape evolves, it is crucial to stay informed and adaptable.


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At Bluestone Planning we not only specialise in securing planning permissions for residential developments but also in helping clients navigate the evolving landscape of planning policies. With the government’s latest response to the CMA’s housebuilding market study and the introduction of key reforms, our team is ready to guide you through these changes. From understanding the new planning system reforms to ensuring your projects align with national and local objectives, we provide expert advice to help you stay ahead. Whether you're focused on developing small sites or optimise urban land we can help you make the most of the government’s policy initiatives.


For more information on how we can assist with your development projects or to discuss how these new policy reforms may impact your plans, contact us at Bluestone Planning by calling +44 1235 766825 or emailing admin@bluestoneplanning.co.uk 

 

 

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