UNITED Kingdom home builders have agreed to implement a new voluntary code of conduct to protect consumers after the government's consumer watchdog found evidence of buyers experiencing faults, delays and "unfair" contracts.

Trade representatives will form a body to oversee the new regime, which would include a means of resolving disputes, the Office of Fair Trading said yesterday.

If the industry failed to do this, it would be necessary to apply a levy on builders to fund a system of obligatory remedies, the OFT said.

The findings of the probe come as the UK's 45-billion-pound (US$83.4 billion) home building industry struggles with declining prices and narrowing margins after values tripled in the decade through August last year, driven by a shortage of homes, Bloomberg News reported.

The investigation was set up after claims were made that quality levels were falling short and builders weren't increasing output to meet demand, exacerbating spiraling prices. "Home buyers need more protection when buying a new home and we have worked hard with the industry to help it develop a new approach to self-regulation," OFT Chief Executive Officer John Fingleton said.

The new system would "provide better levels of consumer satisfaction, with long term benefits to the industry and consumer alike," he said.

Some buyers had experienced "issues around the sales process including reservation fees, the clarity of information provided to home buyers and potentially unfair terms and conditions in contracts," the regulator said.

However, there was "little evidence of competition problems with the delivery of new homes in the UK" and no evidence that house builders had abused market share to restrict supply in order to inflate prices, the OFT said.

The code of conduct would begin by March 2010, the watchdog said.