CMA Signals New Scrutiny of Private Renting and New‑Build Housing

The Competition and Markets Authority has released an update on two major investigations that affect where people live – a consumer‑protection project into the private rented sector and a market study into housebuilding – both of which were launched in February 2023. The regulator says it will move into a more intensive phase of work, aiming to protect tenants and ensure competition in the supply of new homes.

In the rental market the CMA’s initial engagement revealed a mixed picture. While many landlords and letting agents provide a good service, a significant minority appear to be breaching consumer‑protection law. To address this, the authority will refresh its guidance for lettings professionals so that tenants and landlords understand their rights and responsibilities, and it has warned that enforcement action could follow any breaches.

The regulator has singled out five areas for deeper investigation. First, zero‑deposit schemes – which remove the need for an upfront cash deposit – may leave tenants unaware of their liabilities and have been linked to pressure‑selling and undisclosed agent commissions. Second, some landlords are alleged to issue sham licences rather than assured tenancies, thereby denying tenants the protections they are entitled to. Third, the CMA has identified onerous guarantee clauses that can force tenants to provide extensive evidence of assets. Fourth, there are concerns about unlawful discrimination, such as adverts that exclude housing‑benefit claimants – the so‑called “no‑DSS” adverts. Finally, the authority is looking at “event fees” charged to vulnerable tenants moving into specialist retirement housing to see whether elderly consumers are being exploited.

The housebuilding market study, which covers England, Scotland and Wales, will now focus on five key themes after consulting a wide range of stakeholders, including housebuilders of all sizes, campaign groups, local authorities and devolved administrations. One focus is estate‑management charges: evidence shows that many new estates built over the past five years have not been adopted by the local authority, leaving homeowners to pay private companies for the upkeep of roads, parks and street lighting, often at high or uncapped rates.

Another area of concern is the size of land banks held by the largest builders, which have grown in recent years and may be limiting competition or slowing the rate of new builds. The CMA will also examine the impact of complex planning rules and the uncertainty surrounding planning decisions, which can hinder smaller builders with fewer resources. While the national market does not appear highly concentrated, the regulator wants to assess competition at a local level and understand the barriers that small and medium‑sized builders face, particularly in accessing land.

The authority has already identified that private management of amenities on new‑build estates and the large land banks could form the basis of a market‑investigation reference, and it has opened a consultation on this possibility, which closes on 18 September 2023. Depending on what it uncovers, the CMA may recommend legislative changes to the UK, Scottish and Welsh governments, encourage self‑regulation, take enforcement action or launch a full market investigation.

For renters, the update offers reassurance that issues such as no‑DSS adverts, confusing deposit alternatives and dubious licence arrangements are now on the regulator’s radar, and clearer guidance should make it easier to know their rights. Homeowners on privately managed estates and prospective buyers of new‑build homes may eventually benefit from tighter scrutiny of management charges and land‑banking practices, potentially leading to fairer costs and a more competitive supply of housing. As CMA chief executive Sarah Cardell has acknowledged, the regulator cannot fix the housing market alone, but it is prepared to play its part.