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(Sharecast News) - Shares in UK housebuilders fell on Tuesday, after a multi-billion pound class action lawsuit was launched on behalf of around 700,000 home owners.
The claim is being brought by Mark McLaren, the proposed class representative of the Home Owners Collective Action, against Bellway, Redrow, Berkeley Group, Persimmon, Taylor Wimpey and Vistry Group as well as privately-owned Bloor Homes and Countryside Partnerships.
The claim states that housebuilders shared sensitive information on prices, buyer incentives and sales activity, which weakened competition and drove up prices.
It is partially based on an earlier investigation by the Competition and Markets Authority. Following a probe into the sector's behaviour between January 2022 and February 2024, housebuilders agreed not to share certain commercial information and to boost compliance.
However, the legal action goes beyond the CMA probe and is seeking compensation of between 2.2bn and 4.5bn for more than 700,000 people who bought new-build homes between October 2015 and June 2026.
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.
"This claim is about standing up for those buyers and ensuring that compensation is delivered to those who deserve it."
As at 1100 BST, blue chip homebuilders Persimmon and Barratt Redow were both trading 2% lower at 1054.5p and 277.5p respectively. FTSE 250 peers Bellway, Berkeley, Taylor Wimpey and Vistry were also down by around 2% each. Countryside Partners is now part of Vistry.
In contrast, AIM-listed litigation funder Burford Capital - which has committed 29m to the proceedings - was up 3% at 303.43p.
McLaren has instructed two law firms, Geradin Partners and Hausefeld & Co, to act on the claim, which must now be approved by the Competition Appeal Tribunal before it can proceed.
Taylor Wimpey, Vestry and Bellway have declined to comment, while Berkeley told Reuters that while it was aware of the claim, it would be inappropriate to comment further. The other companies cited have yet to comment.