Scotland's plea for housing help

• Increase image
• View all images

House builders in Scotland need more support from the UK Government to raise consumer confidence, according to Scottish communities minister Stewart Maxwell.

The house building sector in Scotland has been hit hard by the economic downturn. Figures issued by sector body Homes for Scotland reveal the number of houses being built could drop from an average of about 25,000 a year to 12,000 this year.

The figures were released as the Office of Fair Trading called for an industry code of conduct to be established by 2010.

But Mr Maxwell believes action must be taken before then. He said: "The UK Government holds the major levers that can address the lack of consumer confidence and mortgage finance at the root of the current downturn in house building."

The OFT found that although the industry was "broadly competitive", many home buyers experienced faults with their new property or delays moving in.

But the OFT warned that if the industry failed to make adequate progress or deliver an effective solution, it would recommend further intervention through a statutory redress mechanism – funded through a levy on the industry.

While companies including Persimmon and Barratt were reluctant to comment, the Home Builders Federation described the report as "a real boost for the industry".

HBF executive chairman Stewart Baseley said: "It is a credit to home builders that following an in-depth examination they have received such a clean bill of health."

The OFT said there was no evidence that individual house builders had the market power to restrict supply in order to -inflate prices or that they hoarded land.

Pascal Levine, a senior associate at property consultancy King Sturge, said: "Land banking is a house builder's base asset. Most house builders aren't holding land for planning permission for any length of time – it is actually down to slow planning.

Small firms will find new regs tough

The OFT has admitted that faults in homes built by smaller house builders will increase as these firms struggle to adapt new standards.

In order to minimise potential problems the regulator has called on the Government and Welsh Assembly to help small house builders and self builders meet zero carbon targets.

Head of sustainability at window manufacturer Velux, Kevin Brennan, said: "Simple eco technologies are both cost effective and available but we need Government support to raise awareness and increase their accessibility."

• Increase image
• View all images

ANALYSIS: OFT will act if house builders don't

Though the OFT found no evidence that practices such as landbanking were anti-competitive or harmed the consumer, house builders cannot rest on their laurels.

They need to address the problems which the OFT did identify – educating consumers about their rights, tracking complaints and providing speedy low-cost dispute resolution procedures where issues are not covered by the National House Building Council or other warranty schemes.

Over the next three years they must successfully deliver on their promised code of conduct. If they do not deliver they risk having new regulation and statutory remedies to protect consumers imposed on them.

Alex O'Connor is a partner at law firm McGrigors