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More homes but poorer quality?

Wednesday 29 August 2018

There's a great deal of political attention focused on the need to increase the rate of house building at the moment, but alongside this are growing concerns about the quality of the houses under development.

The Government has stressed their commitment to build the homes the country needs in order to counteract the effects of the country's broken housing market, but are these properties meeting the standard we need? And who do homeowners turn to when it all goes wrong?

A recent Commons Briefing Paper looked at existing building control regimes and customers’ means of redress when faced with defects in newly built housing, as a way of reforming the current building system.

It found that MPs are increasingly encountering constituents who have bought new homes, and who are struggling to achieve satisfactory resolution when reporting defects to builders.

The role of building control officers in ensuring compliance with the Building Regulations has been the subject of two Westminster Hall debates in the last few years - one in 2015 and another in 2016. The All-Party Parliamentary Group (APPG) for Excellence in the Built Environment carried out an open inquiry into the quality and workmanship of new housing for sale in England and published its report, More Homes, Fewer Complaints, in July 2016.

The APPG identified a risk around efforts to incentivise house building for homeownership if similar attention is not directed at ensuring consumers are buying “new homes that are fit for purpose, are of enduring quality, perform to the requisite levels of maintenance, cost and energy efficiency and give peace of mind, pride and enjoyment to those who occupy them.”

The report contained a number of recommendations aimed at:

  • improving the systems in place to check quality and workmanship;
  • developing a new quality culture within the construction industry;
  • improving means of redress through the establishment of a New Homes Ombudsman and a review of the warranty system; and
  • improving the information customers receive about their new home, including standardised contracts and a right to inspect before completion.

Taken together, the APPG felt that the recommendations would address the imbalance identified in the bargaining positions of builders and house-buyers.

But this is not the first time that the standard of newly built housing has come under scrutiny. The Callcutt Review of Housebuilding Delivery (2007) noted concerns around caveats included within warranties provided on new homes, as it was felt that they might not offer adequate protection for consumers. The Office of Fair Trading’s 2008 study of the homebuilding market also considered the effectiveness of warranties. One response was to recommend the introduction of a code of conduct to address the consumer protection concerns. The industry responded with a Consumer Code for Homebuilders - now in its fourth edition - however, the APPG concluded that the code “does not appear to give homebuyers the safeguards we think they should expect.”

Former Housing Minister, Alok Sharma, responded to the Westminster Hall debate on 16 October 2017 saying: “It is clear that home builders need to step up and make quality and design a priority. That includes ensuring that, where something goes wrong, house builders and warranty providers fulfil their obligations to put things right.” 

At the time he commented that the Government was “seriously considering” the APPG’s recommendations, that the HBF had set up a working group to take forward action to provide better information to customers, simplify the legal process and create a clearer and simpler process for signing off new homes as complete, and the HBF working group had commissioned an independent report on consumer redress for new homebuyers. On calls for a new housing ombudsman, the Minister said “I am considering that option very seriously indeed.”

Strengthening consumer redress in the housing market: A Consultation ran between 18 February and 16 April 2018, and responses are currently being analysed. The APPG published their report Better redress for home buyers in June 2018 which focuses on how a New Homes Ombudsman could drive up standards and improve consumer redress.

How we're tackling the issue head on

NAEA Propertymark responded  to the Government's consultation on strengthening customer redress back in April, where we pledged support for a single housing ombudsman. Gaps in redress are evident, with consumers unclear who to raise a complaint with and current redress schemes handling complaints inconstantly. Our recommendations included raising awareness among consumers, suggesting all developers should adhere to the Consumer Code for Home Builders and ensuring that all agents have a complaints procedure in place, which is prominently displayed.

To help you out, we've teamed up with NHBC, the UK's leading warranty and insurance provider for new homes, to bring members guidance specifically crafted for estate agents on the NHBC building standard and the Insurance Distribution Directive (IDD). They're only available to pick up from our events so keep an eye out at your next NAEA Propertymark Workshop or Regional Conference, and get yours before they're gone!