A collective legal action representing up to 700,000 people who purchased new-build homes between October 2015 and June 2024 targets the UK's seven largest housebuilders, alleging they shared commercially sensitive information to inflate prices. The case, brought by a single representative on behalf of this class, seeks compensation of between £3,100 and £6,200 per homeowner, resulting in a potential industry bill of £2.2bn to £4.5bn.
Background to the Lawsuit
The case stems from a Competition and Markets Authority (CMA) investigation launched in February 2024, which found evidence that housebuilders' internal documents suggested the sharing of commercially sensitive information that could influence pricing. Although the CMA closed its investigation in October 2024 without a final conclusion—after builders agreed to pay £100m into affordable housing schemes and publish new industry guidance—law firms specializing in class actions identified the potential for a compensation claim. The Competition Appeal Tribunal will now decide whether the case can proceed.
Alleged Breaches and Industry Impact
The specific allegations involve the sharing of non-public information such as agreed prices (distinct from asking prices), incentives like kitchen upgrades or stamp duty assistance, and visitor numbers to sales sites. Industry analyst Neal Hudson suggests the concerns relate to "chumminess" between salespeople at different outlets rather than "wholesale sharing of information at a corporate level." If proven, competition law would entitle buyers to compensation.
Structural Issues in UK Housebuilding
The UK's housing market is dominated by volume housebuilders, who control land and resources. In Germany, over 50% of housebuilding involves individuals buying plots and commissioning local builders, while in the UK, this figure is just 7%. Public housebuilding collapsed from the 1980s, and the number of smaller builders fell from about 10,000 to 2,800 by the mid-2010s. This concentration gives large developers significant power over supply and pricing.
Profit vs. Output
Between 2012 and 2015, a boom period for private builders, profits before tax at the biggest builders rose by nearly 200%, while their output of homes increased by only 33%. The speculative model controls the release of homes to maximize profits, often resulting in slower building rates even when demand is high.
Broader Industry Challenges
The lawsuit comes amid other scandals affecting new-build homes, including poor quality, hidden estate management charges, leasehold issues, and excessive executive pay. Builders also face rising costs from Ukraine, Brexit, and inflation, as well as multibillion-pound bills for post-Grenfell cladding remediation. Higher mortgage rates have reduced buyer demand. The seven builders collectively built 73,000 homes in 2023-24, and some are already financially strained.
Calls for Reform
Peter Apps, author of Show Me the Bodies: How We Let Grenfell Happen, argues that the dominance of big builders must be broken for any new model to flourish. The case could serve as a catalyst for much-needed industry reform, addressing structural issues that have led to low building rates and high house prices.
