Housebuilders agree new code of conduct

Permalink: Housebuilders agree new code of conduct
by Lin Freestone

The Office for Fair Trading (OFT) has ruled that consumers must get better customer protection from housebuilders if they experience delays and faults when buying new homes.

A code of conduct has been agreed by representatives across the housing sector, including the Home Builders Federation, the National House Building Council and the Council of Mortgage Lenders. The new code will offer clear guidelines to ensure that consumers can get problems fixed quickly and with minimum disruption.

The formation of a body to deliver the code of conduct and redress scheme for consumers should be in operation by March 2010.

The OFT has carried out an investigation into completion and pricing in the provision of new homes. Problems experienced by homebuyers include delays in moving in; faults in the new homes; and issues around the sales process. These issues include reservation fees, the clarity of information provided, and potentially unfair terms and conditions in contracts.

The investigation found that the housebuilding industry is generally competitive, with low barriers to entry.

It is believed that the measures will position this important sector of the economy to provide better levels of consumer satisfaction, with long-term benefits to the industry and consumer alike.

The OFT’s study found no evidence that homebuilders are anti-competitive if hoarding land or withholding land with planning permission on which they have not started to build. It concluded that a certain amount of land banking is necessary in order to provide a flow of land throughout the various stages of the development process

If the industry does not make the necessary moves to set up the code of contact, the OFT will recommend further intervention through a statutory redress mechanism. This would have the ability to award compensation for any failings in the sales process, shortcomings in contracts, delays or faults, and would need to be funded by a levy on the industry.