HOUSEBUILDERS FACE £4.5BN CLASS ACTION SUIT OVER PRICE COLLUSION

Seven major British housebuilders face a class action lawsuit seeking compensation of between £2.2bn and £4.5bn on behalf of more than 700,000 people who purchased new-build homes between 2015 and 2026. The claim, led by Mark McLaren, a former legal affairs manager at Which?, names Barratt, Bellway, Berkeley Group, Persimmon, Taylor Wimpey, Vistry Group and Bloor Homes as defendants. Court documents allege the firms shared sensitive information on prices, buyer incentives and sales activity, thereby weakening competition and inflating new-build prices. Share prices in the named housebuilders fell on the day the claim became public, with Persimmon declining 2.6 per cent and Barratt falling 2.3 per cent.

The lawsuit follows a Competition and Markets Authority investigation into the residential construction sector. The CMA's inquiry found evidence that companies might be sharing commercially sensitive details affecting home prices. In response, the seven housebuilders agreed last year to binding commitments prohibiting the sharing of sensitive pricing information. The firms also agreed to pay £100m collectively to affordable housing schemes across all four UK nations, though they did not admit any wrongdoing as part of the settlement. The residential construction market was estimated at £88.6bn in the most recent year, with new-builds accounting for more than three-quarters of that total.

The case requires approval from the Competition Appeal Tribunal before proceeding, a process that typically takes between six and 12 months. Law firms Geradin Partners and Hausfeld are representing the claimants. Geradin Partners confirmed in January that a claim would be filed during 2024. If successful, compensation would amount to between £3,100 and £6,200 per affected homeowner.