Suspicions of price collusion by Barratt, Redrow and six other builders are also being investigated. Redrow has said it will cooperate with the investigation, while Barratt hasn’t commented.
The Government must accept a significant proportion of the blame for the mess that the housing market is in. The taxpayer-backed Help to Buy scheme was one of the most ill-conceived policies of modern times.
Critics have described it as the “crack cocaine” of the market. The equity loan programme lit a fire under house prices, turbo-charging housebuilder profits, share prices, and boardroom pay, and in turn removing any incentive to improve customer service, quality and affordability.
Unsurprisingly, housebuilders would love to see Help to Buy brought back after it was finally wound down last year.
Yet, the Bank of England cannot escape blame either. In fact, data from the Bank’s own staff no less, suggests policymakers may be the primary cause of runaway house prices.
In 2019, a study by John Lewis and Fergus Cumming, two Bank of England researchers, concluded that lower interest rates account “for almost all real house price rises since 2000”. The CMA meanwhile identifies the complex planning system as a significant factor.
The result of this dysfunctional system is that Britain is facing a housing affordability crisis. Homes are generally considered affordable if the median price is no more than three times the median salary but the typical house in the UK currently costs around nine times average earnings.
On top of that rent affordability in the UK is at its worst in more than seven years, with tenants spending close to 30pc of their incomes on housing.
The situation wouldn’t be quite so dire if rates of new-build homes had improved but they haven’t. Ministers have failed miserably to hold housebuilders to account on targets – something Angela Rayner has promised to change. But if there is one thing that every government over the last 15 years has in common, it’s a failure to hit the numbers ministers say are needed.
Why should this one be any different?