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OFT welcomes report designed to get a better deal for buyers of new homes

17 March 2004

The OFT welcomes the publication of the Barker Review's final report (see note 1) and its recommendations designed to get a better deal for purchasers of new houses.

The purchase of new houses is an area of considerable consumer dissatisfaction. The OFT particularly welcomes the challenge to the industry by 2007 to have:

• increased the proportion of house buyers who would recommend their house builder from 46 per cent to at least 75 per cent
• improved customer service satisfaction levels from 65 per cent to 85 per cent
• established an OFT-approved consumer code. The OFT looks forward to the industry coming forward with proposals for such a code.

The OFT will, as the report recommends, keep open the option of a wide-ranging market study in this important market.

Meanwhile the OFT will press ahead with enforcement of the Unfair Terms in Consumer Contracts Regulations, especially in the light of the  recent Court of Appeal judgment which made absolutely clear that they apply to purchase of new homes and other business to consumer contracts relating to land (see OFT press release 29/04).

NOTES

1. The Chancellor of the Exchequer and the Deputy Prime Minister set up the review in April 2003 (led by Kate Barker) to consider housing supply in the UK and if appropriate to identify options for Government action.

2. The Enterprise Act requires the OFT to set criteria for approving consumer codes of practice and permits it to use an official symbol to signify which codes have OFT approval. A body that administers a voluntary consumer code and can influence and raise standards within its sector, such as a trade association, may apply for approval of its code. Such a body is known as a 'code sponsor'.

The OFT published core criteria for codes in July 2001, following consultation (see press release 31/01). The criteria cover the organisation of the code sponsor, the preparation and content of the code, complaints handling procedures, independent redress, monitoring, compliance and publicity.

The Consumer Codes Approval Scheme comprises two stages: Stage One - the OFT must be satisfied that code meets the OFT's core criteria in principle. The code sponsor must make sure its code contains measures designed to remove or ease consumer concerns and undesirable trading practices in its sector. Stage Two - the code sponsor must prove its code lives up to the initial promise. The burden of proof lies with the sponsor. The sponsor must show that the code is being effectively implemented by its members and that consumer disputes are properly resolved.

3. The Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) superseded the UTCCRs 1994, and apply to standard contract terms used with consumers. The UTCCRs protect consumers against unfair standard terms in contracts they make with traders. The OFT, together with certain other bodies, can take legal action to prevent the use of potentially unfair terms. A term is likely to be considered unfair if it causes a significant imbalance in the parties' rights and obligations under the contract, to the detriment of consumers. The UTCCRs say that a consumer is not bound by a standard term in a contract with a trader if that term is unfair.  Ultimately, only a court can decide whether a term is unfair.

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