Groundbreaking study into UK housebuing market

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Press releases 2007

OFT launches groundbreaking study into UK housebuilding market

90/07 22 June 2007

The OFT has today launched a market study into the £20bn per annum UK housebuilding industry.

The study will allow the OFT to consider the potential competition and consumer concerns within the market and will focus on two principal areas:

- delivery of housing - 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.

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

Download Housebuilding - reasons for market study (pdf 100 kb).

John Fingleton, Chief Executive, said:

'This is the first in-depth examination of competition and consumer issues in new housebuilding. 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.'

The study is expected to report back by summer 2008.

Interviews are available to the media. For further information please contact the press office.

NOTES

1. The construction industry is one of the OFT’s priority areas, and the decision to undertake a market study reflects the importance of housebuilding to the economy.

2. The Barker Review of Housing Supply 2004, which was set up to look at the reasons for the lack of supply and low responsiveness of housing in the UK, called on the industry to increase levels of customer satisfaction and to introduce a code of conduct. It said that if they did not rise substantially in the next three years, the OFT should conduct a wide-ranging review of the market. The OFT believes the industry has not fully complied with this recommendation.

3. Possible outcomes of a market study include:

- giving the market a clean bill of health

- publishing information to help consumers

- encouraging firms to take voluntary action

- encouraging an industry code of practice

- making recommendations to the Government or sector regulators

- investigation and enforcement action against companies suspected of breaching consumer or competition law, or

- a market investigation reference to the Competition Commission.

4. The OFT is confident that this market study complements and is distinct from the Callcutt Review of Housebuilding Delivery and the recently set up National Housing and Planning Advice Unit.

ENDS

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