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Business News

House builders to be regulated by code of conduct

The Office of Fair Trading has largely given house builders a clean bill of health with a landmark report, but has recommended establishing a body and code of conduct to address consumers' grievances.

The report, Home Building in the UK, said the sector is “broadly competitive”, which pleased house builders that had feared a crackdown on their land banks. On the whole, the OFT found that barriers to entering the market remain low and that prices are set through homebuilders competing for sales and are significantly constrained by existing house prices.

The industry has agreed to set up a representative group for consumers that will be operational by March 2010 to address what the OFT has identified as problems for consumers when buying a new home, such as delays in moving in, faults in new homes and potentially unfair terms in contacts.

The new body would deliver a code of conduct and redress scheme for consumers. However, if the industry fails to deliver such as solution, the OFT recommends a statutory redress mechanism with the ability to award homebuyers with compensation.

John Fingleton, OFT chief executive, said: “We have found the homebuilding market to be generally competitive, with no evidence that individual homebuilders have the ability to restrict supply in order to inflate prices or to hoard land for anti-competitive reasons.” However, he added: “We have concluded that homebuyers need more protection when buying a new home.” The OFT launched the study in June 2007 after a recommendation in the Barker review of 2003.