The analysis from Cardiff University and Henley Business School, which is published by the UK Collaborative Centre for Housing Evidence, shows how Taylor Wimpey, Barratt Developments and Persimmon used the risk of withholding housing supply to renegotiate contributions to local authorities and win government subsidies.

Dr Chris Foye at Henley Business School and Dr Edward Shepherd at Cardiff University analysed more than a decade’s worth (2007-2018) of transcripts of calls between the largest three housebuilders and their investors alongside annual reports and performance metrics.

Their findings reveal how these businesses represented their strategy to those who would directly benefit from higher profits via the payment of dividends.

According to the report, all three companies were transparent with shareholders about using their market power to withhold housing supply, change the terms of agreements made with local authorities in their favour, and to bring about favourable government mortgage policies like Help to Buy.

These policies, the authors argue, inflated the price of new builds and disproportionately benefitted the larger housebuilders. The three companies were also open with shareholders about how little competition they faced in the land market, which allowed them to keep down the price they paid for land and therefore maximise profits.

The findings show these actions led to profit margins of between 17-32% per year for shareholders since 2014.

Dr Chris Foye, researcher at Henley Business School, said: “Over the last decade, the government in England has relied on a handful of large housebuilders to deliver new supply, bailing them out and supporting them with major government subsidies.

“Yet housing supply, and especially affordable housing supply, continues to lag demand, and much of it is of poor quality. The considerable power housebuilders wield over housing markets and policy has allowed them to be abnormally profitable, without dramatically increasing their levels of supply.”

Dr Edward Shepherd, researcher at Cardiff University’s School of Geography and Planning, said: “Although our research is focused on the activity of the volume housebuilders in England, our findings are also likely to be relevant to Wales where the big three also operate.

“Volume housebuilders have been able to wield power over policy in part because there has been a receptive political environment. However, there is nothing inevitable about the status quo – it is the product of political decisions.

“As the housing development pipeline in Wales shrinks further, the government should stop relying on these large housebuilders, and instead take a much more active and positive role in housing delivery across a range of more affordable tenures.”

The report, ‘Why have the volume housebuilders been so profitable?’ is published by the UK Collaborative Centre for Housing Evidence which is funded by the UKRI Economic and Social Research Council and UKRI Arts and Humanities Research Council.