Britain’s biggest housebuilders, including Barratt Redrow and Taylor Wimpey, face a multibillion-pound class action lawsuit over claims that they colluded over higher prices for homebuyers.
The lawsuit is being led by Mark McLaren, a former legal affairs manager at the consumer group Which?, on behalf of more than 700,000 consumers who bought a new-build between 2015 and 2026, against Barratt, Bellway, Berkeley Group, Persimmon, Taylor Wimpey, Vistry Group and Bloor Homes.
Shares in housebuilders fell on Tuesday on news of the claim. Persimmon stock dropped 2.6%; Barratt fell 2.3%, Bellway lost 2.2%, Vistry 1.8%, Berkeley 1.3% and Taylor Wimpey 1.7%. Bloor is privately owned.
The total compensation sought is estimated at between £2.2bn and £4.5bn, equivalent to between £3,100 and £6,200 for each affected homeowner, according to the law firms Geradin Partners and Hausfeld, which are representing McLaren.
The claim requires approval from the Competition Appeal Tribunal before it can proceed, which usually takes between six and 12 months.
Court documents allege the housebuilders shared sensitive information on prices, buyer incentives and sales activity, weakening competition and driving up new-build prices, Reuters reported.
The class action comes after a Competition and Markets Authority (CMA) investigation into the sector which found evidence that companies might be sharing commercially sensitive details that affected the price of homes.
The watchdog settled last year, securing binding commitments from the seven housebuilders not to share sensitive pricing information. The firms also agreed to pay £100m to affordable housing schemes.
While the companies did not admit any wrongdoing, they agreed to make the combined payment, which will be split between affordable housing programmes across the four UK nations.
Geradin Partners said in January that a claim would be filed this year. The size of the residential construction market was estimated at £88.6bn last year, with new-builds accounting for more than three-quarters of that sum. “Anti-competitive behaviour in a market of this size is liable to have a significant impact on all those buying a new-build home,” it said.
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McLaren said at the time: “Buying a home is one of the most important and most expensive purchases a person will ever make. Homebuyers should be confident that the housing market is transparent and competitive so that they pay a fair price for their new home, not an inflated one.”
Anthony Codling, housing analyst at RBC Capital Markets, said: “We believe that homebuilders are price takers not price setters and compete against the much larger existing homes market. In our view the claim is difficult to prove, and we note that the CMA’s recent investigation into housebuilders did not conclude that the competition act had been infringed.”
The housebuilders have been contacted for comment. Vistry, Bellway and Taylor Wimpey declined to comment.
