Seven in 10 new houses 'faulty'

The OFT's final market study report will be published in September

Seven in 10 buyers of newly-built homes found faults with the property, according to a study by the Office of Fair Trading (OFT).

But most of the problems were only minor issues with decorating, glazing, plasterwork or appliances and did not cost the buyer anything to fix.

Those whose moving-in date was delayed faced heavy costs, the study into the state of the homebuilding market said.

The report also looked at allegations of firms hoarding land to boost profit.

There was a scarcity of sites, and holding land could increase profits, the early findings concluded.

But ultimately "landbanking" reflected a need to have a pipeline of land at different stages of the development process - rather than a desire to be anti-competitive, the report said.

Consumer satisfaction

The OFT launched the investigation into the multi-billion pound housebuilding industry in the UK in July last year.

It wanted to look at the customer satisfaction and the success, or otherwise, of regulation and competition in the industry.

The probe was announced when the housing market was continuing a boom, although there was a shortage of newly-built homes.

Housebuilders have found the going tough as the availability of mortgages fell owing to the credit crunch and house prices have dropped.

Old versus new

The OFT commissioned a survey or 1,000 people in Britain who had bought a newly-built home in the last two years.

New homes in numbers 70% found problems or faults when they moved in 40% were motivated by knowing nobody else had lived there 48% were "very likely" to consider buying a newly-built home again 2% faced costs of more than £10,000 owing to delays

More than half (56%) said the desire for a newly-built home was primarily due to not having to do any work when they moved in.

Other reasons also included there being no previous occupants, no chain, being able to choose fixtures and fittings, and cost. But nearly one in 10 said they had encountered a pushy salesman.

Some 32% of buyers said that they could not move in on the date they were originally told.

The OFT said it was highly unlikely that the homebuilder provided any compensation for the delay, with only one in 10 getting money back.

But 37% said they incurred costs, nearly half of whom paid more than £1,000 as a result of the delay, and 2% paid more than £10,000.

Some 70% of people - including 83% in Scotland - had found faults when moving in.

Yet, nearly half (48%) of all buyers surveyed said they were "very likely" to consider buying a newly-built home again in the future.

Landbanking

When it came to landbanking, the report said that homebuilders wanted to start work on sites as soon as possible owing to the holding costs of land.

It is a credit to homebuilders that following such an in-depth examination of the services they provide, they have received such a clean bill of health Steve Turner Home Builders Federation

Over the next three months, the OFT will discuss its initial findings with the industry and consumer groups before the final market study is published in September.

"These two reports form an important part of the picture on the market for new homes in the UK," said Heather Clayton, of the OFT.

It ruled out researching the planning process as part of the investigation as this was being covered by a separate National Audit Office inquiry.

Steve Turner, of the Home Builders Federation, said: "The survey show that, overwhelmingly, homebuilders delivered excellent service to their customers, with 86% of people satisfied with the service they received and 90% saying the quality of construction was good or very good."

He added that many problems were sorted out very quickly by builders and gave no cause for concern.

"It is a credit to homebuilders that following such an in-depth examination of the services they provide, they have received such a clean bill of health," he said.