Extra protection for homebuyers

The UK homebulding market is "broadly competitive", the OFT says.

Buyers of new homes are to get more help if they suffer delays moving into their property or find faults, after a probe into UK housebuilders.

A code of conduct and redress scheme will be set up after the Office for Fair Trading (OFT) said homebuilders must give better customer protection.

But the OFT dismissed worries about "landbanking", finding no evidence of firms hoarding land to boost profit.

The UK housebuilding market was "broadly competitive", the OFT said.

Findings welcomed

Landbanking - the holding of a large amount of land with planning permission - was necessary, rather than anti-competitive, the report concluded.

"Landbanking reflects the need for firms to have a pipeline of land at different stages in the development process," the OFT said.

There was no evidence that individual firms could restrict supply in order to inflate prices or to hoard land for anti-competitive reasons, it added.

The findings were welcomed by some industry representatives.

"After months of probing, the OFT's report is a real boost for the industry," said Stewart Baseley, executive chairman of the Home Builders Federation.

"It is a credit to home builders that following such an in-depth examination they have received such a clean bill of health."

However the Royal Institution of Chartered Surveyors said that while there was no evidence of landbanking, it was "clear that the system allows the practice to take place".

"Unless there is a serious attempt to reform the planning system and allow smaller firms greater opportunities, house building levels will continue to disappoint and demand which can not be satisfied will continue to escalate," said RICS director of external affairs, Gillian Charlesworth.

Improve protection

After finding that many homebuyers had faults with properties or delays moving in, the OFT concluded buyers needed "more protection when buying a new home".

"We have worked hard with the industry to help it develop a new approach to self-regulation that will improve consumer protection.," John Fingleton, chief executive of the OFT said.

The report added that many of the faults with newly built homes were quickly fixed.

But it said that some homeowners suffered "significant detriment, distress and inconvenience" if there were major faults or several problems with their property - especially it they related to heating or plumbing.

The sales process for new homes was also "not without problems", it added.

And reservation fees and the clarity of information given to homebuyers had prompted some concerns, the OFT said.

'Joined up thinking'

The Home Builders Federation, the National House Building Council and the Council of Mortgage Lenders are among those agreeing to create a code of conduct and scheme to give dissatisfied owners some redress.

The scheme will include clear guidelines to ensure that consumers can get problems fixed quickly and with minimum disruption.

A statutory system will be introduced - paid for by the industry - if this is unsuccessful, the OFT said.

The code of conduct and redress scheme mirrored what was already been done voluntarily in estate agencies , said a spokesman for RICS.

"We urge the government to join up property regulation and redress to avoid the problem of confusion for consumers faced with numerous schemes for property transactions."

Meanwhile Rod MacEachrane, chairman of the Code Steering Group, said the recognised that further improvement in addressing customer satisfaction remained "one of the key challenges we face".

An earlier report by the OFT suggested seven in 10 buyers of newly-built homes found faults with the property

But most of the problems were only minor issues with decorating, glazing, plasterwork or appliances and did not cost the buyer anything to fix.