The OFT has carried out a market study into the housebuilding industry which says that although the sector is broadly competitive, many buyers can experience difficulties with new homes.
These include delays moving in, faults in new homes, issues with fees, and potentially unfair terms and conditions in contracts.
To address these concerns house builders have agreed to form a body to deliver a code of conduct and consumer redress scheme. It is expected to be in operation by March 2010.
The OFT says that if the industry doesn’t make sufficient progress or deliver an effective solution, house builders will need to put a redress scheme in place.
Consumers will get compensation for failings in the sales process, delays or faults, which will be funded by an industry levy.
John Fingleton, chief executive of the OFT, says: “We have found the homebuilding market to be generally competitive, with no evidence that individual homebuilders have the ability to restrict supply.
“But we have concluded that home buyers need more protection when buying a new home and we have worked hard with the industry to help it develop a new approach to self-regulation that will improve consumer protection.”
He adds: “We believe this measure 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.”