A regulator has told Barratt and Redrow to address concerns over an expected “substantial lessening of competition” in one local market so that the pair’s £2.5bn merger can proceed.

The Competition and Markets Authority (CMA) has today raised concerns that the deal, which was approved by shareholders of both housebuilders in May, might disadvantage homebuyers in an area around Whitchurch, Shropshire, if a resulting loss of competition leads to higher house prices or lower quality homes.

 The CMA has now given the housebuilders until 15 August to come forward with proposals to address the watchdog’s concerns. If they don’t, the CMA will launch an in-depth ‘phase two’ investigation which could ultimately lead to the deal being blocked.