On 24 October, the OFT announced that it has commissioned Marketing Sciences, a market research company, to survey one thousand new-build home owners as a part of its home building market study. The home building market study, announced in July 2007, will examine the £20 billion per annum UK industry.

The Study

The study is aimed at considering competition and consumer concerns. It does not go as far to examine the question of where developments should be built or the environmental impact of new build homes. It will be restricted to look at the following two main areas:

  1.  Delivery of housing – is suitable land being brought through the planning approval process effectively? Is land that has planning permission being converted into new homes successfully and effectively?
  2. Customer satisfaction – focusing on the properties available.

The OFT has stated that the study is necessary due to the significance of the new home building market in the UK economy and the evidence which exists to suggest that it is not working well for the consumer.

The Survey

The survey aims to identify potential competition and consumer concerns within the private home building market. In order to do this, the survey will ask homeowners, that have purchased a new-build in the past two years a number of questions about their experience, the quality of their home, their level of satisfaction and the adequacy of redress if there is a problem. The selected homeowners will be surveyed in their own homes by an interviewer. Although the study proposes to consider the issue of consumer satisfaction across the UK as a whole, issues relating to competition and the impact of the planning framework will focus primarily on England. It is suggested that Scotland, Wales and Northern Ireland face similar issues to England in this respect and so, the Scottish, Welsh and Northern Irish administrations will be encouraged to take into account the OFT's findings and recommendations and consider them when framing any future policies in these areas.

Industry Consultation

As well as interviews with homeowners, the OFT will be making contact with industry, consumer bodies, businesses, government departments and independent experts to seek their views and gather evidence relevant to the key areas outlined above. The OFT intends to work with the homebuilding industry to ensure the study complements other reviews into the industry and thus minimises any burden on the sector.

Possible Outcomes

The OFT predicts that there are a number possible outcomes of the study as a whole, including:

  • the new home building market will be given a clean bill of health;
  • the publication of information to help consumers make more informed decisions;
  • firms may be encouraged to take voluntary action to improve performance and consumer satisfaction;
  • the introduction of an industry code of practice;
  • recommendation to the Government or the sector regulators;
  • investigation and enforcement action against any company found to be in breach of consumer or competition law; and/or
  • a market investigation reference to the Competition Commission.

The Home Builders

Despite the high profile and the emphasis on consumer protection and satisfaction, homebuilders remain positive about the outcome of the study:

"I am confident that, on the issues of effective use of land and customer satisfaction, the home building industry will be given a clean bill of health." (Stewart Baseley, executive chairman of the Home Builders Federation).

The Home Builders Federation believes the real problem with new homes is the shortage of land with planning permission and it is optimistic that the home building study will serve to highlight this.

What Next?

The deadline for written submissions on the study was August 2007 and although no definitive date has been released, the OFT intends to publish the findings of the homebuilders study in summer 2008.