The Office of Fair Trading (OFT) said its market study into housebuilders had found that while the sector was "broadly competitive", many homebuyers experienced faults with their new property or delays moving in.

It said that while many of these faults were quickly fixed, some homeowners did suffer "significant detriment, distress and inconvenience" if there were major faults or many problems with their new home, particularly if these related to the plumbing or heating.

It also found that the sales process for new homes was "not without problems", saying it was particularly concerned about reservation fees and the clarity of information provided to homebuyers, while it thought some of the terms and conditions in contracts were potentially unfair.

As a result of the findings, representatives from across the sector, including the Home Builders Federation, National House Building Council and the Council of Mortgage Lenders, have agreed to create a code of conduct and redress scheme for consumers, which should be up and running by March 2010.

The new code will offer clear guidelines to ensure that consumers can get problems fixed quickly and with minimum disruption.

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, that would be funded through a levy on the industry.

John Fingleton, chief executive of the OFT, said: "We have found the home-building market to be generally competitive, with no evidence that individual homebuilders have the ability to restrict supply in order to inflate prices or to hoard land for anti-competitive reasons.

"However, we have concluded that homebuyers 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 that will improve consumer protection."