Housebuilders Barratt, Bellway, and Taylor Wimpey are facing a massive class action lawsuit over allegations they colluded to inflate new-build home prices, potentially leaving 700,000 buyers out of pocket by up to £4.5 billion.
The legal challenge, led by Mark McLaren, a former Which? manager, targets seven major housebuilders and alleges they shared sensitive information on prices, buyer incentives, and sales activity between 2015 and 2026. This is said to have weakened competition in the sector, pushing up prices artificially.
Share prices for listed housebuilders plummeted on Tuesday following news of the impending lawsuit: Persimmon fell by 2.6%, Barratt dropped 2.3%, and Bellway lost 2.2% while Vistry declined 1.8% and Berkeley Group was down 1.3%. Taylor Wimpey's shares slid 1.7%.
The class action follows a CMA investigation into the new-build sector that did not find competition law breaches, but uncovered evidence of potentially price-affecting information sharing. Last year, seven housebuilders agreed to stop sharing such details and pay £100 million towards affordable housing without admitting wrongdoing.
Victorious claimants could receive between £3,100 and £6,200 each in compensation. The legal process typically takes six to twelve months, but analysts say proving the case will be tough due to homebuilders' reliance on broader market forces rather than price-setting power.
The Competition Appeal Tribunal must approve the class action before it proceeds, a decision expected within the next year.