CMA to review NHBC undertakings

The CMA is to review long-standing undertakings relating to the National House-Building Council.

The National House-Building Council (NHBC) provides new home structural warranties for over 1.6 million homes in the UK, covering around 80% of new homes.

The undertakings were given in 1995, following an investigation by the Monopolies and Mergers Commission (MMC), which found that some NHBC rules restricted competition from companies looking to offer alternative warranty schemes.

As a result, NHBC amended its rules to remove the restrictions and enable its members to use other warranty providers. It also agreed not to make any further changes to its rules which might have an adverse effect on competition without written consent from the competition authorities.

The NHBC has now requested that the Competition and Markets Authority (CMA) review the undertakings. It argues that there is now more competition from other providers and that housebuilders purchasing new home structural warranties now have greater choice. The NHBC also says that changes to regulation and consumer protection have removed the need for it to approve other home warranty schemes used by the NHBC’s registered builders – as it is currently required to do by the undertakings.

Buying a new home is one of the largest financial decisions that consumers make. The review will look at how the market for new home structural warranties currently operates to protect home buyers in order to see if there has been a change in circumstances which would justify the removal or variation of the undertakings. The CMA will not be considering wider issues relating to the NHBC as part of this review.