A significant class action lawsuit is poised to target seven of Britain’s largest housebuilders, potentially seeking up to £4.5 billion in compensation for homebuyers.
The legal challenge, spearheaded by Mark McLaren, a former parliamentary and legal affairs manager at consumer group Which?, alleges that consumers were forced to pay inflated prices for new-build properties due to anti-competitive practices by the firms.
The action names Barratt Redrow, Bellway, The Berkeley Group, Bloor Homes, Persimmon, Taylor Wimpey, Vistry Group, and its Countryside Partnerships division.
It is being brought on behalf of over 700,000 individuals who purchased new-build homes across Great Britain between October 2015 and 24 June this year.
The claim now awaits approval from the Competition Appeal Tribunal.
This development follows an ongoing investigation by the Competition and Markets Authority (CMA) into whether these housebuilders shared commercially sensitive information for a two-year period, concluding in February 2024.
open image in galleryThe CMA dropped further action in return for an agreement by the firms to pay £100 million into affordable housing programmes and make binding commitments not to share information.
The class action case being led by Mr McLaren alleges that property buyers paid more for new build homes than they should have because of reduced competition between the major builders, and claims that it believes this was affecting buyers as far back as October 2015.
Mr McLaren, who is being represented by competition law firms Geradin Partners and Hausfeld as co-counsel, believes each affected homeowner could be due compensation of between £3,100 and £6,200 each – totalling between £2.2 billion and £4.5 billion.
Mr McLaren said: “Buying a home is one of the biggest financial commitments most of us will make.
“If, as seems to be the case, housebuilders shared sensitive pricing and sales information with one another instead of competing properly, homeowners across Great Britain may well have been left out of pocket as a result.
“This claim is about standing up for those buyers and ensuring that compensation is delivered to those who deserve it.”
Scott Campbell, a partner at Hausfeld, said: “For most homeowners, bringing an individual claim simply isn’t realistic, as the cost and complexity put it out of reach.
“That’s why this collective action is so important.
“It provides a practical route for hundreds of thousands of consumers to seek compensation where they may otherwise have had no way of doing so.”
The housebuilders have been approach for comment.
The CMA said last year it launched the probe amid concerns the firms were sharing commercially sensitive information, which could have impacted the development of sites and prices of new homes.
The watchdog there were signs they had exchanged details about sales including pricing, number of property viewings and incentives offered to buyers such as upgraded kitchens or stamp duty contributions.
But the agreement secured with the builders meant the regulator did not need to rule on whether the companies broke competition law.