Britain's home builders are competitive and nine out of 10 buyers are satisfied with the quality of their new home; that is the conclusion of a year long study into the industry by the Office of fair Trading (OFT).

The study refutes allegations that builders hoard land banks and restrict supply to push up prices.  In fact, the report concludes that there is no indication that any builder has the ‘market power' to restrict supply or inflate prices. Prices, it says, are set through homebuilders competing for sales against each other and are significantly constrained by the prices of existing homes. 

On the size of land banks held by developers, the report concludes that builders need a stock of land as a direct result of the convoluted planning process and says:  "The time lag and uncertainty involved in obtaining planning consent and building are such that a land bank will naturally span over a number of years".

Nevertheless, the report concludes that many homebuyers experience faults or delays and the OFT has called on the industry to adopt a new code of conduct and introduce a new redress scheme for consumers.  It expects the new scheme to come in to force by March 2010 and, in a veiled threat, said that it would recommend legislation on the issue if an effective redress scheme was not in place by then. 

The most common problems cited by the OFT include delays in moving in and faults in new homes, although most (90 per cent) described the construction quality of their new home as good or very good.

The industry has already started work on a new consumer protection scheme and Jonathan Fair, Chief Executive of Homes for Scotland, the representative body for the Scottish home building industry, said:  "Home builders and organisations such as Homes for Scotland have been instrumental in promoting a new industry sponsored code of conduct to ensure even higher standards. The excellent progress that has been made on this front has now been agreed with the OFT".  It is expected that the scheme will include a means of compensating homebuyers for any delays or faults.

John Fingleton, OFT Chief Executive, commented:  "Our study gives the homebuilding market a largely clean bill of health, with no evidence that individual homebuilders have the ability to restrict supply in order to inflate prices, or hoard land for anti-competitive reasons.  However we believe that the homebuyer needs more protection when buying a new home, and we have worked hard with the industry to help it develop appropriate self-regulation".