OFT to investigate house building

The house building market will be coming under scrutiny from the Office of Fair Trading (OFT), the organisation announced today.

The "groundbreaking" study will examine two key areas - the delivery of housing and the new-build home buying experience.

"Following the recommendations of the Barker Review of Housing Supply 2004, the OFT has been monitoring the house building market and is concerned that it may not be working well for consumers," the organisation stated.

"The OFT will be working with the industry, and the study will complement other reviews across government to minimise the burden on the sector. The study, however, will not look at the overall question of where development should occur or the environmental impact of new homes."

The OFT explained it will analyse "whether land which is suitable for development is being effectively brought through to the planning approval stage and whether land with planning permission is being converted effectively into homes, and customer satisfaction - the homebuyer's satisfaction with the properties available.

"For many people, buying a house is the largest purchase they will ever make and the study will look for ways to improve their experience of buying a new-build home as well as the quality of those homes."

John Fingleton, OFT chief executive, commented: "This is the first in-depth examination of competition and consumer issues in new house building. This is a hugely important market for the economy because of its substantial economic impact and because unresponsive housing supply hinders labour mobility, constrains economic growth, and harms consumers.

"Furthermore, for individual house buyers, even low levels of dissatisfaction can translate into very high detriment. The study will examine how regulation and competition in the market might work better for both the economy and individual house buyers."

A report from the OFT study is expected by summer 2008.