Myths exploded on ‘land banking’ and ‘competition’ An exhaustive investigation by the OFT into house building in the UK has given the industry a huge boost at what is a most challenging time. It will also give potential buyers of new homes confidence in both the quality of their new home and their builder. After over 12 months of probing, the investigative body has revealed that; Accusations of land banking are a total myth and that builders need a stock of land as a direct result of the convoluted planning process. ‘The time lag and uncertainty involved in obtaining planning consent and building are such that a land bank will naturally span over a number of years’, says the report. It goes on to say that builders are actually ‘constrained by the availability of suitable land,’ and recognises that the biggest ‘landbank’ is held by the public sector which could be released to ease the constraint that is halting the delivery of the homes this country needs. It could find no evidence of anti competitive practices that were detrimental to the consumer, one of the main reasons the review was originally set up. ‘We found no evidence that individual homebuilders have persistent or widespread market power or that they are able to restrict supply or inflate prices.’ Overwhelmingly, home builders delivered excellent service to their customers, with 86% of people satisfied with the service they received and 90% saying the construction quality of their home was good or very good. Government regulation currently being discussed could act as a constraint on much needed new housing and some companies may ‘struggle to meet the requirements and to implement new technological solutions’. It suggests that Government needs to assist the industry develop technologies needed to meet proposed legislative requirements. Responding to the results today, Stewart Baseley, executive chairman of the Home Builders Federation said “After months of probing, the OFT’s report is a real boost for the industry. It is a credit to home builders that following such an in-depth examination they have received such a clean bill of health. In such challenging times for the whole industry, the findings are very welcome. The report should also give potential buyers of new homes real confidence in the product they are purchasing.” The OFT found that where there were faults on new build homes they were usually minor, and were in the vast majority of cases sorted out by the builder very quickly, and gave no cause for concern to the home owner. The report did identify a small number of cases where more significant problems were encountered. To help address these instances, the industry had already initiated moves to establish a code of conduct that will ensure even better levels of customer service. The OFT has been in discussions with the cross industry steering group driving the code and is happy with progress being made, recognising it to be the most ‘speedy and cost effective solution’. Mr Baseley added, “Whilst the report is extremely positive, house builders are always striving to find ways of improving the service they provide still further. Establishing a self regulated code of conduct will help us do that, and it is credit to the industry that the OFT agreed this is the best way forward.” Notes to Editors: The Home Builders Federation (HBF) is the principal representative body for private sector home builders and voice of the home building industry in England and Wales. The HBF’s 300 member firms account for some 80% of all new homes built in England and Wales in any one year, and include companies of all sizes, ranging from the multi-national, household names through regionally based businesses to small local companies: www.hbf.co.uk The OFT announced it was undertaking its market study in June 2007 ‘ in response to the suggestion that competition problems might lie behind the sluggish response to rising prices, and partly in response to the 2004 Barker review.’ Negotiations are currently ongoing with regard to proposed future industry regulation including; Community Infrastructure Levy; Zero Carbon Homes; Lifetime Homes; and levels of affordable housing which builder can be expected to supply. Government targets for new homes are: 2 million additional homes between 2006 and 2016; 3 million additional homes between 2006 and 2020; 240,000 net additions per year by 2016. (target refers to net additions to the housing stock in England, which takes account of additions to the stock through new build completions and conversions, less losses through demolition. The most recent net additions figure for England was 199,000 in 2006/07. New build has represented approximately 90% of annual net stock additions in the last few years. In calendar year 2007, there were 175,363 total new housing completions in England, and 209,606 new housing completions in GB Reasons to buy a new home include; Its chain free New homes are 6 times more energy efficient so meaning huge saving on power and heating bills New homes are built to much higher specification than older properties Everything is new and untouched- its a blank canvas! For media enquiries, or to arrange an interview, please contact Steve Turner 020 7960 1606 07919 307 760 steve.turner@hbf.co.uk
