Reward for failure as ex Bovis CEO David Ritchie stands to receive nearly £2m pay off

Ex Bovis CEO David RitchieRegardless of what fictional character Gordon Gecko once said, “Greed for want of a better word is” most definitely not good!  As details emerged earlier this week of David Ritchie’s pay-off. The former chief executive of Bovis Homes resigned” on 9th January 2017 after a profit warning and ahead of the scandal of buyers being paid up to £3,000 to legally compete on homes that were not finished, and the announcement by Bovis that they had set aside £7 million in February to redress complaints.

A Section 430(2b) statement by Bovis homes, confirmed Ritchie is to be handed a total of £635,430 in salary and bonus and a further £909,250 in shares under the long-term-incentive-plan. He also stands to receive a further tranche of 40,556 shares currently worth £357,805 up to 24 February 2018. A total possible payout of £1,902,485!

He will be paid a lump sum of £242,180 and will receive a total of £338,250 from July until December salary in lieu of notice. His contractual notice period runs until 8 January 2018.

Laughably, Ritchie who formally left Bovis on 28 February, will even receive a £55,000 bonus next month as part of last year’s scheme which “may be subject to clawback for a period of two years”. Ritchie will also have continued use of his company car as well as medical insurance and life cover until 8 January 2018. Unbelievably, if this wasn’t already extremely generous for an individual that presided over a performance that has brought his company to the brink of being taken over by a rival, Bovis are even paying “a contribution in respect of legal costs and a further contribution towards outplacement counselling.”
(which apparently helps displaced employees manage the transition from one job to another!) Not that Ritchie needs to find paid employment anytime soon!

Bovis FlagRitchie, who became Bovis Group chief executive in July 2008, is also in line to reap around £462,850 (52,463 shares) based on Bovis’ current share price (882p) from a long-term incentive plan that vested on 25 February 2016.

Ritchie will also benefit from 50,598 shares worth another £446,400 that became exercisable last month, subject to performance conditions being met. He is also be in line for a further 27,256 shares (£240,466) on 19 August 2017 and a maximum of 13,300 shares worth £117,339 from 24 February 2018, again if certain performance conditions are met.

The details of Ritchie’s payoff being disclosed on Bovis’ corporate website.

It is to be hoped that investors who will be given a vote on Bovis’ remuneration report at its annual meeting in May will voice their displeasure at the payoff although the LTIP was approved by shareholders in 2014.

Critics have accused Bovis of paying a ‘reward for failure’.

Oliver Parry, head of corporate governance policy at bosses’ business group the Institute of Directors, told the Daily Mail:
“This doesn’t look good and it doesn’t do the reputation of British business any good.” He said: “Investors deserve to understand what senior executives are being paid at the point of stepping down.”   A spokesman for Bovis told the Daily Mail that the company had made a “prompt and full disclosure.”

Stefan Stern, director of the High Pay Centre, told the Daily Mail:
“This is a reward for failure. This sort of pay-off reflects the way in which executive pay is trapped in a world of its own. No one else would expect to receive this sort of payment after having underperformed in a job.”

The row over Ritchie’s pay adds to the mounting backlash over excess in the boardroom. Given the circumstances and the amount involved it is to be hoped that Ritchie (47) will do the decent thing and make sizable donations to homeless charities such as Shelter and perhaps donate his time providing accountancy services ‘pro-bono’ for charities.

Meanwhile yesterday, 58% of shareholders of house builder Crest Nicholson voted against the company’s remuneration report at the annual general meeting, revolting over executive pay as the company slashed profit targets that determine performance-based bonuses for its directors.

Shareholders were vented their anger at a pay policy that will enable chief executive Stephen Stone to more easily receive a £811,737 bonus on top of a basic salary of £541,158. A total of £1.35m which  would take a site manager 27 years to earn.  Crest’s chief operating officer Patrick Bergin could be on track to trouser an extra £562,500, adding to his £375,000 salary.

The company’s remuneration report outlined plans to cut the target for pre-tax profit growth for the second year running, down from 16%-20% a year earlier to 5%-8% for the 2017-2019 period, citing challenging trading conditions. It was set at 18%-22% in 2015.

While the vote against the pay proposals was not binding, it indicates growing discontent at executive pay and dissatisfaction among investors.

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Petitions to Government – Are they a waste of time?

The parliamentary petitions system has come under criticism lately when it was revealed that fewer than ten of the thousands of petition appeals launched by the public had led to a change of policy.Petitions debateAs at 3 March 2017, more than 28,400 applications were submitted to the Commons petitions committee in the past 19 months.

The Petitions Committee review all petitions published. The website says they “select petitions of interest to find out more about the issues raised” and “have the power to press for action from government or Parliament.”

At 10,000 signatures requires a response from the government. At 100,000 signatures means the petition will be considered for a debate in Parliament.

Attaining the required number of signatures required for an official response is all but impossible without media coverage and support. Petition for New Homes OmbudsmanMy own petition  calling for a New Homes Ombudsman and other measures that would protect new homebuyers and drive up the quality of new homes has managed a disappointing 793 signatures with just 19 days remaining.  Previous petitions for a New Homes Ombudsman also failed. This change.org petition got just 159 And this you.38 degrees  just 5! This petition for a New Homes Ombudsman  was rejected because it was “unclear.”

So what petitions were important to the British public?

A petition to  “Make the production sale and use of cannabis legal”  had 236,995 signatures, making it the ninth highest of all time. But a petition calling for the “legalisation of Medicinal Cannabis” attracted only 23,414 people signing. Surprisingly a petition calling for “more funding into brain tumours the biggest cancer killer of under 40s” was at number 44 with 120.129 signatures.

Other more popular petitions include “Remove the need to display a front number plate” with 31,122 signatures despite the fact it would bring no benefit. There were two separate petitions calling for a “Ban on driven grouse shooting” with 123,077 and 33,655 signatures. And there is still ten days left to join the 12,769 who have signed a petition “For the Robin to become our official National Bird!

Of the total (mostly pointless) 28,427 petitions, 18,581 were rejected. Under the rules, any that are defamatory, unclear in their aims, party political, about a personal issue, or about honours or appointments can be thrown out. Currently there are 2,772 petitions open and 7,074 that are now closed as petitions are only permitted to stand on the parliamentary website for six months.

Of the petitions permitted to stand on the parliamentary website for six months, 9,846 (35%)  fewer than 433 (4.4%) were backed by more than 10,000 signatures, the barrier for receiving a government response. Of these, just 72 (0.73%) gained 100,000 signatures and yet only 58 were debated in parliament. Only seven resulted in, or coincided with, government action to address the demands made by the petitioner.

Those who favour the system, claim petitions encourage political engagement from voters saying that even if a petition does not lead to a change in the law, it raises awareness among legislators.

Andrew Bridgen, Tory MP for North West Leicestershire told The Times: “If any petition reaches 100,000 signatories, then we should debate it. If just one petition leads to meaningful change, that’s significant.”

Helen Jones, the Labour MP and chairwoman of the petitions committee, also defended the system. “The advice I always give to people is that you have to consider a petition as part of your campaign, and not the end of your campaign”

After over three years campaigning for the government to appoint a New Homes Ombudsman, you are certainly not wrong Helen!

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No Problem With New Home Quality Says HBF Stewart Baseley

Stewart Baseley, Executive Chairman of HBF interview on BBC Radio 4 Today – Saturday 11 February

Stewart Baseley HBFTrue to form the Home Builder’s Federation [HBF] the industry’s PR and lobby group, conducts a perfect whitewash on the facts as their executive chairman Stewart Baseley trots out a well-used, well-rehearsed HBF rhetoric. The two main points the industry is keen to focus on at the moment:
“promoting awareness of increases in output and rebut negative claims on build quality” are well covered. Mission accomplished! Move along there is nothing to see. Money well-spent? The HBF was funded mostly by its house builder members to the tune of £3,037,449 in the year to 31 December 2015.

Questions to Stewart Baseley, Executive Chairman of HBF
Do you accept there is a problem?
“No I don’t accept there is a problem although clearly there are in some cases that you have highlighted some of those on your report and I totally accept that anybody that’s in a situation where they have got a problem, it’s very serious for them.”

“No problem – some cases”
Fact: As Stewart Baseley knows, the NHBC paid out £90million in warranty claims for remedial works to fix serious defects in 11,000 new homes (an average of £8,181 each) in the 12 months to 31 March 2016. That equates nearly 9% of the 124,720 new homes built in the same period. In the previous year, the NHBC spent £86million on remedial works including £23million on foundations and £32million on superstructures to 11,000 new homes.

But the main housebuilders, satisfaction ratings have gone down
“They have gone down, well as an industry of course you have to put that into context the fact that first of all we went through the most tremendous recession seven or eight years ago and we lost getting on for half our workforce. As Oliver Colvile quite rightly says, capacity is a challenge and we have increased output over the last three years, by in excess of 50% and we are taking on and training tens of thousands of people to do that; in that context, we actually conduct what I believe is the biggest opinion poll audience research that is undertaken in the UK every year, I am not aware of anything bigger. We sent out 85,000 questionnaires in the last survey year to customers of new homes of all the builders that have been mentioned, we get about a 56% response rate we have about 45,000 returns, which is pretty impressive in terms of the sample size compared to most surveys, and around 85% of the customers of all those homes would recommend their builder to a friend. Clearly there are 15% who wouldn’t and there are a variety of reasons for that and I don’t want to suggest in any way that those reasons are not important and vital to the people that have got those challenges.”

“We have increased output by 50% in the last three years.”
Fact: In the year to 30 Sept 2013, 108,270 new homes were completed. The latest official government figures to 30 September 2016 show 141,690 new homes completed a rise of 31%! Furthermore the number of new homes being built is still 23% lower than the peak in the year to 30 March 2007. Surely Stewart Baseley is aware of the official statistics?

New Home Customer Satisfaction Survey
Yes satisfaction scores, in even this industry’s own manipulated survey (with some buyers being given £250 John Lewis vouchers for favourable responses!) have indeed gone down to 85%. It was good that Stewart Baseley acknowledged this. But of a total of 135,860 homes built in the last HBF survey year, 80,582 surveys were sent out by the NHBC and just 56%, 45,342 were returned representing just 54% of the homes sold privately.  Furthermore, not all survey responses are ‘validated’. Surveys returned late (not within 7 weeks of the date of the letter) are not counted as are those that are “not filled in correctly.” I would suggest if the responses of these surveys were favourable to the industry, they are used in the results!

The HBF state in their Annual Report:
“The Customer Satisfaction Survey and star rating scheme has played a key part in measuring industry performance and providing data to rebut negativity. To ensure the survey is seen to be as robust as possible, HBF and NHBC will be launching a review of the scheme.”
In other words, people like me can see through the hype and are (along with the APPG Inquiry) calling for a survey that is completely independent of the industry.

Well Stewart Baseley has certainly used the “data” to try and “rebut negativity”. By way of comparison, the John Lewis’ customer satisfaction survey score in 2016 was 84.9% and Amazon were top with 86.6%, both are streets ahead of anything the housebuilding industry does!

It is true the industry “lost” a large proportion of the workforce, not forgetting this was something companies within the industry chose to do at the time!

The level of dissatisfaction of those buying new homes is at its highest level since 2009 according to your national new homes survey, are you saying that survey is wrong?
“No I am saying that’s our survey, we are talking about a drop from 90% to 85% all companies and I know the CEOs and I know the managing directors of all the companies that were mentioned in the report, plus many other companies across the country and I am absolutely convinced of one thing and that is they all get up in the morning and go to work and all their people go to work with the intention of delivering a good product to a high service across the country.“ 

”they all get up in the morning and go to work with the intention of delivering a good product to a high service across the country”
Fact:  You only have to look at Taylor Wimpey’s Loddon Park development recent press coverage especially concerning Bovis, to know this just cannot be true, otherwise surely action would have been taken long ago to address the issues. 

“Now clearly things go wrong on building sites, we are working in all weathers with all sorts of raw materials that have to be imported and clearly there are challenges and I think most customers accept that actually is not necessarily possible to always produce a perfect house. The key thing is to make sure we deliver their house on time and where they do have issues and when they do have problems making sure we address.”

“not necessarily possible to always produce a perfect house”
Fact: The housebuilding industry that Stewart Baseley is attempting to defend, cannot even produce a home that is 100% finished by the date builders say it will be. There can be no excuses for handing over a defective, poor quality and often unfinished new home. Whilst it is true a new home is exposed to ‘all weathers’, but so are new hospitals, schools office blocks etc all built to much higher standards handed over 100% compete, on time, with very few (if any) defects. It is not impossible to build a perfect new home. All that is required is care, desire and sufficient time. The industry has lowered expectations, so buyers expect to have defects and faults. You do not expect to have faults in a new car. You don’t drive it for a week and then take it back to the dealer with a list of things that need sorting out!

But that doesn’t always happen people have to go through complaints procedures etc
“Well I accept that and Oliver Colvile talks about an ombudsman and we already have procedures in place. If you have a warranty like the NHBC or Premier or LABC there is a disputes resolution service, we set up a Consumer Code for Home Builder back in 2010 that also has a disputes resolution service for areas that are not covered by the warranty provider, and I’m a great believer in transparency and I’m a great believer in people having access to services that are cheap for them to use to get quick remedies to their problems.”

“We already have procedures in place”
Fact: Dispute resolution by warranty providers, that are funded by housebuilders, to adjudicate on disputes with those very housebuilders about their reluctance to fullfil their obligations under the warranty policy!

“The NHBC Dispute Resolution Service can help with help to settle disputes over defects which relate to the NHBC standards. The NHBC standards require builders to fulfil all of their obligations under the Buildmark policy.”
The fact is house builders don’t and the NHBC has to mediate in disputes, which they find in favour of homebuyers in around 70% of disputes.

The Warranty dispute resolution cannot help with non-warranty matters, such as disputes over boundaries, planning, contractual or financial matters or if arbitration or legal proceedings against the builder have started.

“we set up a Consumer Code for Home Builder back in 2010 that also has a disputes resolution service for areas that are not covered by the warranty provider”
Fact: Unsurprisingly the HBF “sits on the Code advisory forum to ensure house builder’s interests are represented….to ensure that any changes are workable for the industry”  

The new revised Consumer Code for Home Builders comes into effect 1 April 2017. I believe the revisions to the Code are further to the detriment of the homebuyer. They have been made following decisions in cases of claims made by new homebuyers. These include the abolition of the ability to claim £250 for inconvenience, the removal of the requirement to give a copy of the Code to anyone that asks and non-provision the “home builder guidance” – so much for transparency Mr Baseley! Furthermore, in the case summaries since the Code was introduced in April 2010, there have been a total of 193 cases to June 2016. Out of these, 56% that succeeded or succeeded ‘in part’ resulted in total awards of just £221,869, just 19% of the total claimed £1,150,755.

Stewart Baseley says: “I’m a great believer in transparency”
Fact: The Customer Satisfaction Survey and builder star rating for example has no access to NHBC survey portal so buyers can see survey responses and builder scores in real time, [as house builders can] just the industry adjusted results in March. The HBF should publish all builder scores not just the Q1 star rating score. Why do they not publish the NHBC 6-month survey results? The NHBC could publish details on how many claims for each builder and how many disputes for each builder go through the resolution process.

The NHBC should publish details on the number of warranty claims for each builder and how many disputes for each builder go through their resolution process. The Consumer Code for Home Builders should not be confidential. The CCHB should publish the names of housebuilders in case summaries along with what sanctions (if any!) have been made to the housebuilder. 

Fact: The LABC and Premier Guarantee warranties are administered by MD Insurance Services. The Dispute Resolution Service Team is supported by Claim Investigation Surveyors; Premier Guarantee Surveyors is the trading name of MD Warranty Support Services Limited. The NHBC has entered into a joint venture with MD Insurance Services Limited under the name of the Consumer Code for Home Builders Limited (CCHB). The CCHB operates a code providing protection and rights to purchasers of new homes. Ian Davis, Executive Director of NHBC, is a Director of the CCHB. The NHBC paid the Code £235,000 in 2016 and £175,000 in 2015.

The use of ‘Gagging Orders’ isn’t transparency!
Fact: The NHBC and housebuilders use of ‘Non Disclosure Agreements’ also known as “gagging orders” is hardly “transparent” and used for no other reason but to conceal the extent of defects in homes built by housebuilders and the amount of compensation paid. The NHBC also use them when settling warranty claims, especially when further claims might result on particular developments such as weak mix mortar.

“We do not want to increase quantity at the expense of quality”
In order to do this, new homes would need to be being built to a certain higher quality to begin with. Does Stewart Baseley really mean that “we [his house builder members] must be careful not to build homes with even more defects as they slash them up to increase the quantity the government is asking us for?”

It’s time that Stewart Baseley, the industry (NHBC, HBF, house builders) and government came clean, admitted that there is a problem with both the poor quality of new homes being built and the poor service customers receive from indifferent house builders and implement the ten recommendations of the APPG Inquiry Report starting with setting up an independent, government-appointed, New Homes Ombudsman. Anything less is unacceptable.

I am grateful to Mary Glindon MP for asking housing minister Gavin Barwell the question on Monday 27 February 2017:
The current system is clearly inadequate
A Bovis buyer said:

“we took the decision to take Bovis to court last year – but our contract doesn’tt allow it unless NHBC resolution process has been activated and failed – it has been 7 months since we got NHBC involved and they have played us as much as Bovis – the result is always the same nothing happens.”

We are currently waiting for NHBC to start the agreed work – we had to complain to the financial services ombudsman who upheld our complaint to get some action from NHBC, but it is over 18 months since we complained to NHBC and work has still not started. Once the work has completed we will then pursue Bovis for breach of contract and compensation. We have legal expenses cover on our home insurance so can use that if needed”

A Wainhomes buyer told me:

“it is stunning how little comeback you have, the whole system is massively skewed in the developers favour and they know that and completely abuse it. NHBC is just a method by which they give some apparent credibility and peace of mind to their victims, it’s virtually worthless and also crucially means they don’t need to answer to local authority Building Control. It’s akin to fraud/organised crime, yet you have less protection than when you buy a loaf of bread.”

BBC Radio 4 Today said they asked the big companies if they wanted to take part in the programme – none of them did. But Bovis wanted to apologise and said:
“in some recent cases we haven’t met our customers’ expectations for which we apologise”

Taylor Wimpey PR statement:

“We sincerely regret that some of their customers have experienced issues with their homes at London Park and they apologised for the disruption this has caused. They say they are working with those affected customers and said they would like to re assure them that they are fully focused on completing their programme of remedial works as soon as possible.”

“We are sorry  ….    we are working with those…” blah blah blah!  In one case they have been “fully-focused” on one particular house at Loddon Park for over two and a half years!  Stewart Baseley and his builder members have their work cut out! The poor build quality of new homes cannot be dismissed like this.

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Fitting carbon monoxide alarms in new homes should be mandatory

Carbon Monoxide Alarms

The fitting of carbon monoxide alarms in new homes should be a mandatory requirement of the Building Regulations in England and Wales.  It may come as a surprise to learn that every year over 4,000 people are admitted to hospital with carbon monoxide poisoning that could lead to brain damage and strokes – with 40 fatalities recorded in England and Wales. One in nine British homes have boilers classified as unsafe.

The new home defect that kills

You can’t see it, you can’t smell it. Carbon Monoxide – the new home defect that kills!

In Scotland and Northern Ireland, the equivalent to the building regulations, requires a BS EN 50291 kite-marked carbon monoxide alarm to be fitted when any new or replacement fuel appliance is installed (except cookers). This covers any fuel burning appliance, including those that burn gas, oil, coal and wood. The alarms must be fitted in any room with the appliance or if it is an enclosed boiler, just outside the enclosure and any room that has a flue running through it. Alarms can be mains or battery powered but if the alarm is battery powered then the battery should last for the life of the alarm.

No requirement in England and Wales:
But the Building Regulations for England and Wales, Approved Document J, only require carbon monoxide alarms to be fitted when any new or replacement solid-fuel appliance is installed. Examples of solid fuel burning appliances being wood burners, open fires etc. There is also additional legislation requiring a carbon monoxide alarms to be fitted in all rented residential accommodation with gas appliances, but not in owner-occupied homes.

Around 84% of UK homes now have smoke detectors but only around 15% have carbon monoxide alarms, putting countless families in danger. Fitting carbon monoxide alarms could save many lives. But currently there are no regulations that require the fitting of carbon monoxide alarms in new homes with gas boilers installed.

Following on from my article Is your new home killing you? about instances of carbon monoxide poisoning in newly built homes leaking from gas boilers, I asked the NHBC – given the industry’s chequered history of carbon monoxide leaking from gas boilers/boiler flues installed in the homes under its warranty – if it thought that a carbon monoxide alarm should be fitted in every new home with a gas appliance? If so, why hasn’t the NHBC included this as a requirement in the latest 2017 Warranty Standards?  I was quite shocked by the reply:

“Thank you for your email to our Chairman; she has asked me to respond. As you may be aware, issues of health and safety are dealt with through statutory Building Regulations, which are set by government. Approved Document J ‘Combustion appliances and fuel storage systems’ does ask for a carbon dioxide alarm to be provided where a solid fuel appliance is located but there is currently no similar requirement in the case of gas appliances.

I would therefore suggest that you may wish address your enquiry to government department responsible for Building Regulations – the Department for Communities and Local Government.

The Head of Technical Policy at the Building Regulation and Standards Division is Richard Harral and his email address is: richard.harral@communities.gsi.gov.uk.”

So I duly contacted Mr Harral at the DCLG on 1st February and received his reply, 12 days later, confirming that he had “passed this on to the policy lead who oversees Building Regulations requirements for Carbon Monoxide alarms. He will provide a response in due course.” Mr Harral also pointed out that “responsibility for Building Regulations in Wales is now the responsibility of the Welsh Government.”

I had previously e mailed communities secretary Sajid Javid and housing minister Gavin Barwell regarding ongoing instances of dangerous gas boilers in new homes. This was the response from the DCLG:

“Thank you for your email of 17 January 2017 to Sajid Javid and Gavin Barwell, raising concerns about the quality of new homes. I have been asked to reply on their behalf.

In relation to the concerns you have raised about dangerous boilers. All heat producing gas appliances and their flues must be installed by installers registered with Gas Safe Register, a statutory registration scheme under the Gas Safety (Installation and Use) Regulations 1998. The enforcing authority for these regulations is the Health and Safety Executive and complaints about installations that are considered unsafe should be made to it.

There is a requirement that the installation of gas appliances be self-certified as compliant. However, these certificates are evidence, but not conclusive evidence, of compliance. This means that building control bodies could take formal enforcement action where work was found not to comply despite a self-certificate having been given. It also means that the building owner would be able to make a claim in the civil courts.”

So basically no requirement is considered necessary by the standards setting authorities or the government. Furthermore, formal enforcement action is not required and would not be taken by anyone, until it became known a boiler was leaking carbon monoxide, by which time it could be fatal and too late. Quiet how the “building owner would be able to make a claim in the civil courts”  I don’t know, they could be dead!

Although not a new-build home, 31 year-old Katie Haines was killed by carbon monoxide in her cottage shortly after returning from her honeymoon in February 2010. The Katie Haines Memorial Trust, set up a petition to lobby the Government to make CO alarms compulsory across the UK, in a similar way to smoke alarms.  It closed on 30 March 2015 and attracted 5,321 signatures, not enough to trigger the government into action.

Her mother said at the time:
“Two young men died in Northern Ireland the same year as Katie and legislation both on council and government level has been pushed through quickly. We feel that we should have the same duty of care in England and Wales.”

Carbon Monoxide AlarmsBut seven years later, there is still no legislation in England and Wales for mandatory fitting of carbon monoxide alarms in new homes where gas appliances are installed, yet there is in Northern Ireland and Scotland!

Despite the lack of any mandatory regulations requiring carbon monoxide alarms to be fitted in all new homes with gas boilers, the three largest housebuilders have all confirmed to me that they now fit carbon monoxide alarms “as standard” in every new home with a gas appliance.

Persimmon homes said:
“It has been Persimmon Homes’ group policy since September 2012 to fit a carbon monoxide detector/alarm to all properties with a gas fired appliance of any type. Current models include the CO-9BT or similar approved models.”Carbon Monoxide AlarmsTaylor Wimpey said

“Thank you for your email, the contents of which are noted and which relates to a matter which we take very seriously.

We are aware of the tragedy that you refer to in your email, which took place at the Barratt Bedfont Lakes development in 2008.

Following a detailed review that we undertook in and around 2011, since 2012 (when we also commenced the phasing out the use of extended gas flues) we have required all of our business units to fit CO monitors in all homes with gas appliances. Our policy is to fit CO monitors in all rooms where a gas appliance is fitted – in some homes, this could involve the fitting of multiple monitors including in rooms with a gas boiler, gas hob or gas fire/s. There is further instruction issued on how that is done, and the positions of the monitors is shown on the house type drawings and customer drawings which the sales executive will run through with our customers.

Please find attached an information leaflet on the Honeywell XC100, which is the monitor that we currently fit. In 2012, we also undertook an exercise of raising the profile of the risks of CO to both customers and homeowners and this included making available free CO monitors retrospectively.”

Barratt confirmed bluntly:
“Yes, we fit CO detectors to all houses and apartments which have a gas boiler.”

But do they? I asked new home buyers in the Unhappy New Home Buyers Facebook Group if they had Carbon Monoxide alarms fitted in homes built by these builders:

Two Barratt new homebuyers responded, one said they had, the other said : “when we moved in in June 2011, we didn’t have one even though it was listed on the specification. It took the Customer Services Manager multiple attempts to deliver one….. we now have a couple of spare central heating control units which he delivered by mistake…”

The few Taylor Wimpey buyers who did respond, all confirmed they had a CO alarms fitted.

Carbon Monoxide The Persimmon homebuyers that responded, overwhelmingly that demonstrated that many Persimmon homes would appear not to have CO alarms fitted, despite the company confirming it was “group policy since September 2012 to fit a carbon monoxide detector/alarm to all properties with a gas fired appliance of any type.”

All twelve Persimmon buyers who responded, confirmed they didn’t have a carbon monoxide alarm fitted: six bought in 2015, two in 2014, two in 2013 and one in 2012. Another buyer said his whole street haven’t a CO alarm fitted!

When I notified Persimmon of this they said:
If you can supply me with the names, addresses and phone numbers of each of the people I’ll gladly get in touch with them.”

It should also be noted that these are battery sealed-for-life CO alarms and need to be replaced every 7 to 10 years.

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Sajid Javid’s Housing White Paper – Britain’s Broken Housing Market

“We were promised a White Paper, but we have been presented with a white flag – feeble beyond belief”.. said John Healey shadow minister of state for housing. Others commented it was a “predictably damp squib” and a “missed opportunity.” Even Redrow said it was “disappointing” with chief executive John Tutte saying the housing white paper was very light on details and he was surprised it was more of a consultative document.  This is hardly surprising as the stench of the Home Builders Federation (HBF) was all over this housing white paper, an example being the caving into pressure from the likes John Tutte regarding newts “delaying” new home buildingSajid Javid the builders puppetBritain needed ‘Donald Trump’ style action and got a Donald Duck builders’ puppet. “Hard-hitting” proposals were watered down to Westminster’s famous thin gruel, generally becoming ideas for consultation, subjects for further discussion and situations to monitor. This 104 page housing white paper is little more than a plan for more talking and a missed opportunity for decisive, positive action.

On Tuesday DCLG secretary Sajid Javid declared that Britain’s housing market was indeed broken. With the average home costing eight-times average earnings and a total of 2.2 million working households with below-average incomes, spending a third or more of their disposable income on housing, it’s hard to disagree! Mr Javid claimed his housing white paper will provide “radical lasting reform” to fix it.

Build more homes to slow rising costs

Housing White Paper Sajid Javid statementThe whole mistaken premise of this housing white paper is to “build more homes to slow the rise in housing costs. We need to build many more houses, of the type people want to live in, in the places they want to live.”  How many times did we hear that one?  Yet it is that very demand, fuelled by ultra-low interest rates and government subsidy, that further stimulated demand, exceeding supply with the resultant increase in prices. This is what markets do. Rising housing costs are systematic of years of political economic interference and meddling. If prices are unaffordable, measures put in place that subsidise housing will only serve to enable price increases to continue. Think housing benefit, low interest rates, help to buy, quantitative easing. All of these contributed significantly to Mr Javid’s “broken housing market” and his housing white paper won’t be fixing it anytime soon.

History shows private housebuilders will never build enough new homes

What was needed was an honest admission from Mr Javid that the private market alone will not build the 250,000 new homes each year needed to meet the government’s target of one million new homes by 2020. Loosening the planning system even further and helping smaller builders will not alter the fact that out of the 270,000 homes that are approved through the planning process each year, less than half are actually built. In fact I would go further and suggest even if planning was no longer required at all, Britain would still have a housing crisis! Since the 1970’s, Britain has added on average just 160,000 new homes a year, well below the 250,000 “target”.

Thirteen years ago Dame Kate Barker, now an independent non-executive director at Taylor Wimpey, warned of the crisis to come with the first large-scale report into the shortfall of housing provision. At the time she said 245,000 homes a year would be required to keep house price inflation at 1.1%, but average house prices have risen 50% since then. The Lyons review in 2014 revealed a shortfall of 1 million homes.

Landbanking is a reality, not a myth!

Measures to ban letting fees, longer term tenancies and the ‘use it or lose it’ landbank compulsory purchase are not new ideas, they all came from Ed Miliband in 2013!  From the housing white paper:

“there is also concern that it may be in the interest of speculators and developers to snap up land for housing and then sit back for a while as prices continue to rise. We propose to encourage more active use of compulsory purchase powers to promote development on stalled sites for housing.” But it’s “under review” and “representations are welcomed.”

No wonder shares in Britain’s listed housebuilders rallied as few believe this housing white paper will make any big difference.

Housing white paper makes no mention of the quality of new homes

Most disappointingly of all, was the total absence of any measures to tackle the dire quality of the new homes that are actually being built. It is pointless having a plan to build even more new homes if new homes are soon demolished because quality standards were so poor.See no evil - hear no evil - speak no evil

MPs push for report recommendations to be implementedThe word “quality” was mentioned 42 times in the housing white paper, but only once regarding actual build-quality. This government seems content to ignore growing calls to appoint a New Homes Ombudsman  which would have powers to hold housebuilders to account and award justifiable compensation to beleaguered new homebuyers. Whilst the housing white paper did acknowledge the existence of the APPG for Excellence in the Built Environment (2016) More Homes, fewer complaints – report from the Commission of Inquiry into the quality and workmanship of new housing in England, it only said it would:

“keep requirements under review, to ensure that they remain fit for purpose and meet future needs. This includes looking at further opportunities for simplification and rationalisation while maintaining standards.”

In December last year, the housing minister Gavin Barwell said:
“The Government will be considering the recommendations in the report in developing future policy on new homes”

“More Homes, Fewer Complaints.” Retrospectively, a better, more accurate title could have been “Fewer Homes, More Complaints!

There will be more on the main points of the housing white paper such as it is, to follow. Watch this space!

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NHBC hand millions in cash-backs to housebuilders

The NHBC has come into justifiable criticism in the national press recently. The NHBC provides warranties for around 80% of new homes built in any given year. Last year its accounts show it spent £90 million fixing 11,000 defective new homes. What is not listed is the total number of claims the NHBC rejected because the estimated cost of remedial work was judged (by the NHBC) to be less than their ‘minimum claim value’, currently £1,550. So unless buyer’s homes need costly repairs, their warranty claims are often rejected.

The NHBC state on their website:

“Our purpose is to work with the house-building industry to raise the standards of new homes and to provide protection for homebuyers in the form of Buildmark warranty and insurance. We are an independent, non-profit distributing company limited by guarantee – neither part of government, nor a charity. Our business is run by the Board of Directors with surpluses being re-invested in the improvement and development of our products and services.”

The standard of UK new homes is at its lowest since 2009 according to the results of the NHBC’s own Customer Satisfaction Survey!  So it might come as surprise to learn that in yesterday’s Guardian, Graham Ruddick reported that the NHBC has been paying around £10m-£15m every year to housebuilders in what he describes “is effectively a profit-share agreement.”

It certainly does raise more questions about the NHBC’s independence and credibility. Many new homebuyers have been openly questioning the independence of the NHBC for years.

The NHBC’s rebate scheme hands more money back to the larger housebuilders, with payments of up to £2million a year, for those registering the most homes with the NHBC. This tie-in and lack of independent transparency cannot be helpful to either the industry, or those buying new homes. It is yet another example of a wave of scandals currently being exposed in this broken industry.

The Guardian reported that:

“A senior industry source said the annual payment to the housebuilders was a way to keep them “sweet” and ensure they remained NHBC customers. The source also said that the system is open to abuse, and there were at least two occasions since 2010 when a major housebuilder asked for an extra or increased payment which was approved by NHBC.”

There have been a raft of complaints in the national press against several housebuilders, most notably Bovis, who were exposed last month as having tried to ‘bribe’ their buyers to legally complete on unfinished homes.  This exposes a general lack of protection and an absence of any mechanism where buyers can be properly compensated, other than taking civil action in the courts.

NHBCThe NHBC new home warranty is a form of insurance policy that is supposed to cover the cost of fixing faults in new homes due to non-adherence of warranty standards or building regulations within the first 10 years. The NHBC inspect homes at key stages, last year reported that around 98.5% of key stage warranty inspections were carried out, a total of 798,000 inspections, finding 357,000 items that required builder rectification.

Concerns emerge over the independence of the biggest warranty provider

This is the first time it has been revealed that the NHBC has and is paying millions to plc house builders in what it refers to as “premium refund” payments in its financial accounts. However, it is only mentioned in the notes to the accounts (page 103) and the amount paid out has not been disclosed.

A letter seen by The Guardian from the NHBC to a housebuilder states part of the premium paid 15 years ago is eligible for a refund. It explains how the payment is calculated, being based on the number of homes registered by the housebuilder 15 years ago, the cost of claims paid on those homes and any investment return earned by the NHBC on the premiums paid. Fifteen years, allowed time for the homes to be built and for the ten-year warranty liability to expire. In addition, the NHBC also decides the size of the total pot of money that it shares with housebuilders.

The letter also says:  “The NHBC remains committed to providing as much support to the industry as we can, such as pricing new business at breakeven, whilst using the strength of our balance sheet to continue to return past profits to house builders with good claims records”

However, former NHBC chief executive Imtiaz Farookhi said in the NHBC  Annual Review 2003:  “Our operating result for the year shows a pre-tax surplus of £6.2 million, an increase of £1.0 million on last year’s £5.2 million surplus. As NHBC is a non-profit distributing company, all post-tax surplus is re-invested to further raise standards in the new house-building industry and to continue to provide consumer protection for new homebuyers. But the ‘premium refund’ system was established in the 1990s!

The Guardian said that the NHBC defended the payments but refused to confirm how much it had paid out to housebuilders or comment on the extra payments to the two housebuilders.

The NHBC responded:

“NHBC provides a market-leading warranty, which currently protects 1.6 million UK consumers. Last year we paid £90m in respect of claims in addition to providing assistance to homeowners through our resolution service, which mediates between homeowners and their builder and last year found in favour of homeowners in 70% of cases.”

“As is standard practice, we do not discuss our commercial transactions or our underwriting terms. It is common practice in the insurance industry to recognise good claims history in a number of ways such as noclaim bonuses, and this is what our premium refund system, established in the 1990s and disclosed in our accounts, is designed to achieve. The system is consistently applied and is based on clear rules and processes. As this refund recognises long-term good claims history, the rules state that builders do not need to be current NHBC customers to receive it.”

“The sum paid in refunds is a very small proportion of NHBC’s annual turnover.”

The NHBC told The Times it paid ‘only’ £4.5million in ‘premium refunds’ last year, compared to the £90 million cost of claims to rectify defective new homes under its warranty.

The non-profit NHBC could put this spare surplus money to better use

NHBCInstead of handing a “premium refund” of £4,500,000 to 13 plc housebuilders already making average pre tax profits of 20%, which totalled £3,992,000,000 last year, surely the NHBC should be using these cash surpluses which they claim are “re-invested in the improvement and development of our products and services.” and “raise the standards of new homes”?

Here are a few suggestions of how this money could have been better used:

  1. Give a £10,000 prize (tax free) to each of the 417 site managers winning a NHBC Pride in the Job Quality Award. This might encourage the other 14,600 site managers to be more quality focused!
  2. Increase the number of NHBC inspectors. At £35,000 a year the £4.5m would pay for another 129 inspectors, meaning they could make 257,240 additional inspections or spend 35% more time on sites, inspecting and more importantly, re-inspecting!
  3. Increase the salary paid to its 400 inspectors by £10,000, to attract the best professionals from within the industry, rather than the cheapest.
  4. Fund 450 trade apprentices, paying each £10,000 a year NHBC ‘scholarships’, to help address the “skills shortage”.
  5. Pay (at least) 3,000 homebuyers’ warranty claims that are rejected because the estimated cost works required is below the minimum claim value of £1,500 (in 2016). To “provide protection for MORE homebuyers”

NHBC board directors have close links to housebuilders

Two of the thirteen directors that make up the NHBC governing board have close ties to the housebuilding industry. Stewart Baseley is executive chairman of the Home Builders Federation (HBF), the industry’s trade body which says it is: “the voice of the home building industry in England and Wales. Representing member interests on a national and regional level.”  The other is Stephen Stone, chief executive of listed housebuilder Crest Nicholson. Stone replaced Greg Fitzgerald who stepped down from the NHBC board last year, and is CEO of Galliford Try trading as housebuilder Linden Homes.

The lack of independence and clear conflict of interest of these two NHBC non-executive board directors raises further concerns about the governance of NHBC and its impartiality. The HBF also has six of its representatives on the NHBC Council.

In response to another story in the Guardian an NHBC spokesperson said:

“NHBC adopts the highest principles of UK governance and all our board members are chosen for the contribution and value they can add to NHBC’s purpose. There are clear procedures in place to record declarations of interest and manage potential conflicts. NHBC’s board comprises 13 members drawn from a diverse range of sectors including the financial services sector, public service and in some cases from the housing sector.

“Those directors from the homebuilding industry are in the minority. Their presence is extremely valuable to the board as a whole as they bring current knowledge of the industry and of the issues it faces, which can help to shape and determine our business strategy. Because of that their insight and input is critical to our decision-making.

“All board appointments are notified to our regulators and some appointments require prior before the individual can take up their position.”

MPs call for the government to introduce a fully independent new homes ombudsman to adjudicate fairly on all complaints about new homes.

The Conservative MP for Plymouth Oliver Colvile, who chairs the All-Party Parliamentary Group on excellence in the Built Environment, said he had great concern about the independence of NHBC. He is calling for a fully independent new homes ombudsman to be set up by government and for homebuyers to have a mandatory right to inspect their new home before they legally complete the purchase.

Mr Colville told the Guardian: “I think what needs to happen is that the government needs to look at this seriously. This is a consumer rights issue,” he said. “Let’s put the consumer on top of the list. I want to see action on this issue.”

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Carbon Monoxide Poisoning Risk In New Homes

Is your new home killing you?

Killer new homes - carbon monoxide poisoningThe shocking truth is, any new home built since 2000 that has a gas central heating boiler could be lethal. There is now widespread recognition that systems with concealed twin extended boiler flues, pose a significant risk of carbon monoxide poisoning. I am calling for a mandatory requirement that all new homes must be fitted with carbon monoxide alarms.  In addition, every new home must be independently inspected, not merely ‘signed off’ and certificated  by the installer.

Carbon monoxide poisoning kills

14 November 2007
Maria Ighodalo (28) dies from carbon monoxide poisoning
London and Quadrant housing association tenant, Maria Ighodalo, died in a block of flats, known as ‘Beulah Hill’, in Upper Norwood from carbon monoxide poisoning. The flat had a gas safety certificate and a concealed flue heating system.

27 February 2008
Elouise Littlewood (26) dies from carbon monoxide poisoning
You would think that following the tragic death of 26 year-old dance teacher Elouise Littlewood on 27 February 2008, who died from carbon monoxide poisoning from a faulty boiler installation in her flat on the Barratt development at ‘Bedfont Lakes’ in Notting Hill West London, that all house builders would be double checking every boiler in every new home they build, to ensure they are 100% safe and installed to manufacturer’s and GasSafe instructions.  Elouise bought the two-bedroom property through a shared ownership scheme with Notting Hill Housing confirming: “Barratt had installed the gas system and produced a gas safety certificate with a one-year guarantee.”

Prosecutions over inadequately installed concealed boiler flues
After separate investigations by the Met Police and the Health and Safety Executive, the gas fitter accused of her manslaughter, Paul Williamson (53) from Sutton, was cleared of manslaughter by gross negligence by an Old Bailey jury in June 2012. His employer, Malden Plumbing and Heating Limited, was also cleared of failing in its duty to protect non-employees from risk.carbon monoxide alarm Following the Bedfont Lakes tragedy, which also left Her lodger, Simon Kilby, with permanent brain damage, the Health and Safety Executive warned that 1,200 homes with concealed flue boiler systems could be ‘immediately dangerous’ with a further 4,800 a potentially ‘at risk’. The figures were based on exploratory work carried out by Barratt and other developers. Carbon Monoxide [CO] is a colourless, odourless, tasteless, poisonous gas produced by incomplete combustion of carbon-based fuels. It stops the blood from bringing oxygen to cells, tissues, and organs and can kill quickly, without warning.

28 May 2008
No Commissioning certificate for boiler in Persimmon new home
A few days after Lisa Peplow and her family moved into their brand new home she discovered the boiler installed by Persimmon Homes, could have leaked potentially fatal carbon monoxide fumes after calling an emergency plumber when the boiler stopped working and produced a “funny smell.”

The plumber told her that the boiler at her house in Shackleton Close, Bowerhill, near Melksham, did not even have a commissioning certificate – a legal requirement. She told This is Wiltshire:
“He came out, disconnected it and condemned the installation saying it was illegal. I had three things wrong with the boiler last year and he said if I hadn’t had them repaired there would have been a carbon monoxide leak. I was horrified; I was really shaken because I’ve got two girls here. Especially by the fact that carbon monoxide could have leaked out because of the installation.”

The plumber found part of her boiler had melted, giving rise to the strange smell.

25 September 2008
Gas safety checks at 319 new Barratt homes
The gas central heating systems in 269 homes in Colchester built by Barratt Developments underwent safety checks after concern was raised about the standard of their installation, with condensation stains spotted on a ceiling indicating evidence that a twin-pipe flue was leaking. The UK’s largest housebuilder said occupants could be at risk of carbon monoxide poisoning because of problems with flue installations. Another 50 apartments on a Barratt development in Leeds were notified of similar problems. Residents were told to contact British Gas to safety-check their systems; with others having the gas supply to their homes switched off to ensure their safety. The Barratt spokesman saying at the time:
“After detailed discussions with the Health and Safety Executive, as a precautionary measure we have engaged British Gas to conduct quality assurance checks at a limited number of housing developments where a central heating system may have been installed.

31 January 2009
Gas supplies turned off in 340 Taylor Wimpey new homes
A Taylor Wimpey development of 340 homes at ‘Harbour Reach’ in Poole had their gas supplies turned off after a leak of a potentially fatal carbon monoxide was discovered, detected by a carbon monoxide detector, fitted in all homes owned by Raglan and Swaythling Housing Associations. One resident Chris Walsh, who had moved in over a year earlier, said at the time:
“We’ve been told there are serious problems with the boiler flues and levels of carbon monoxide, it’s a silent killer. When you buy a new property you get a [gas] certificate that the property has been tested and complies. How can that be allowed to have happened?”  

2 December 2010
HSE issued a safety bulletin which was updated on 20 May 2013
It is a requirement under The Gas Safety (Installation and Use) Regulations 1998 for a service engineer working on a boiler, to check the flue for correct operation. This cannot be done where the flue has been installed within the fabric of the building with no access. The most commonly installed boilers that could have been fitted with extended concealed flues are: Range Powermax, Potterton Powermax, Gledhill Gulfstream, Ideal iStor.

Even if there has not been a carbon monoxide leak in a home, engineers might discover that the flue pipes were not connected as securely as they should have been presenting an ongoing risk to the occupants if left unresolved. All homeowners especially those that have bought a new home are advised to fit a carbon monoxide detector. These can be bought for as little as £7 to £25 and could save you and your children’s lives!

9 July 2012
Couple poisoned by carbon monoxide for five years in Taylor Wimpey home
Doreen and Gerald Lee were exposed to carbon monoxide for five years because of a faulty boiler flue. They claimed housebuilder Taylor Wimpey had put their lives at risk after discovering that levels of deadly carbon monoxide in their ‘Winthorpe Gardens’ home in Borehamwood were “through the roof.” Their home had been built by Taylor Wimpey five years earlier, but a “wrongly installed” boiler flue only came to light when the property was checked five years later. Flats in another Taylor Wimpey development, ‘Keble Court’, next to Winthorpe Gardens, were evacuated on 14 July 2012 after more concerns about carbon monoxide leaks.

Six months earlier, Taylor Wimpey were forced to take action on another of their developments, the 791 home Grand Union Village, in Ealing and Hillingdon after elevated levels of carbon monoxide were discovered at an apartment in December 2011.

Taylor Wimpey inspect 9,000 homes in 4 years
Taylor WimpeyIn total, Taylor Wimpey had conducted inspections on more than 9,000 of its new homes in the four years to October 2012. It has even inspected homes that did not have extended concealed flues. Taylor Wimpey told Inside Housing:
“We have also identified that only a very small proportion of homeowners are having their gas boilers inspected and serviced regularly. In light of the concern that many customers are not having gas appliances inspected or serviced regularly, we have now amended our standard specification to include the installation of an audible carbon monoxide alarm in any room which contains a gas appliance.”

Taylor Wimpey wrote to all of its customers who bought homes completed from 2000 – when concealed extended flues were commonly used, highlighting the risks of carbon monoxide poisoning, emphasizing the importance of regular boiler servicing and offered to supply free carbon monoxide alarms. As of October 2012, Taylor Wimpey had written to a staggering 150,000 customers about the issue and says it has installed or supplied more than 30,000 audible carbon monoxide alarms since 2009 following the HSE safety bulletin in December 2010.

Persimmon, Britain’s second largest housebuilder by volume, whilst refusing to comment on whether it had found problems in any of its homes and whether it had taken steps to protect residents in homes with concealed flues, it did tell Inside Housing in October 2009 that it had found 384 properties that “did not have access panels in accordance with the safety requirements”. It had undertaken to complete work on these by December 2009.

March 2014
At risk notice on Barratt boiler after Ideal sent engineer to fix it
As John Gosling writes in his excellent blog ‘A Barratt Home From Hell’ that the Ideal engineer pointed to the air inlet on the outside wall explaining that because of the way it had been fitted, the boiler was receiving insufficient air and would not be running efficiently. After John called the HSE Barratt quickly fixed the problem.

23 November 2015
Home built in 2006 had unsealed flue
An inspector found a fault with the boiler of a home built by Roland Bardsley Homes in 2006. The company being acquired by David Wilson Homes in 2006. Louise Dunn, from Shaw near Oldham, suffered symptoms of carbon monoxide poisoning in November 2015.  It was discovered that the flue, designed to take carbon monoxide away from the home, was left unsealed, meaning the toxic gas could leak back into the house.

December 2016
Taylor Wimpey still apparently have issues on their developments around the UK with boilers.

A Taylor Wimpey homebuyer recently posted on the forum :

“We have an ongoing issue with Taylor Wimpey. An insurance-appointed engineer shit down out boiler because it was “dangerously unsafe” He found that the flue to our boiler was incorrectly fitted at installation because flue lengths were cut too short, damaged elbow and missing seals. A second engineer second engineer of my choice, attended [on 11 January 2016] and pretty much reached the same conclusions Taylor Wimpey have sent their own independent engineer but they are refusing to share their findings (which I’m not surprised at). Carbon monoxide has been leaking into our home, which explains why I get headaches and nauseous when working at home. Fortunately, we have a three-storey townhouse and neither of us spend that much time on the top floor. We’ve been without running hot water and heating since 30th December 2016 because the engineer shut down our boiler on the grounds that it was dangerously unsafe.

 “I’ve since learned that Taylor Wimpey have had issues on other developments around the UK with boilers and subsequent carbon monoxide emissions. Indeed, on our development a string of boiler failures prompted Taylor Wimpey to install carbon monoxide alarm monitors on every home on site (almost 300). About four years ago, a row of houses on our development had some pretty serious boiler issues. After the remedial works were completed, Taylor Wimpey then sent ‘engineers’ to every home and installed CO [Carbon Monoxide] monitors outside every boiler cupboard and allegedly checked every flue. They fitted three brackets to ours, one in the boiler cupboard and two on the main body of the flue in the loft.”

I can’t begin to list the number of issues other new homebuyers have told me about. Most concern boilers found to be “wired incorrectly” after the first annual service was carried out. This forum post concerning Charles Church homes  being typical.

Independent inspections of Gas and Electrical installations

At the APPG Inquiry Into the Quality of New Homes in November 2015 I made a submission/presentation and said that there should be:
“Independent Electrical and Gas installation inspections. Electrical and gas safety inspections must be carried out by an outside inspector rather than the current self-certification by the individual or installing contractor.”

I have asked government for this measure to be considered for inclusion in the Housing White Paper (along with the New Homes Ombudsman) as people’s lives are being put at risk and certain house builders retrospectively fitting carbon monoxide alarms is not a solution to the leaking, potentially lethal, boiler flues and incorrectly installed gas boilers.

As a minimum, it is essential to make fitting carbon monoxide detectors in all new homes a mandatory Building Regulations requirement and NHBC warranty standard. As it stands, there is no legal requirement for builder, landlords or gas companies in England and Wales to install alarms where there are only gas appliances. There is a duty under the Building Regulations Part J from 1 October 2010, when a solid fuel or bio fuel heating system is installed, such as a wood burning stove.

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Housebuilders’ Recommend A Friend Schemes

We all know about the oft-quoted HBF survey question: “Would you recommend your builder to a friend?” In the 2016 survey results an somewhat unbelievable 85% said they would, but did they? Most of the large house builders have recommend a friend schemes also known as “send a friend.” Normally a leaflet outlining the scheme is dropped in the Welcome Pack buyers are given when they move in to their new home. They offer a cash payment to buyers who recommend a friend or someone who goes on to buy a home from the house builder. These payments vary considerably from a paltry £300 (Keepmoat) up to £4,000, although it appears £500 is the most common.

For most, the extra money will come in handy at a time of need, especially with all the costs associated with moving home. But beware there is a procedure and significant hoops to jump through before you can get your referral cash,  even then it can take several weeks. The referral payment is only made following the friend’s legal completion.

Firstly, you should also consider whether your house builder is worthy of recommendation. Would your friend thank you if their new home turned out to be an unmitigated disaster from hell as they often do?

Check recommend a friend expiry dates or time limits

A Ben Bailey (part of Avant group) new homebuyer told me that:
“despite having proof of her recommendation under the recommend a friend scheme and their friends also having made it clear from the outset that they had been recommended on their first visit when they reserved their property and on subsequent visits to pick flooring, tiles etc. – the sales advisor kept saying she would look into it but just before completion told them they don’t qualify for the referral fee without any explanation why!”
It transpired that the reservation was made three days beyond the expiry date of the recommend a friend offer.
 Another buyer says:
“Having done this, we tried but failed to jump through all the hoops. Amongst other things, we were told we submitted the form too late. Notwithstanding we had never been given one. My impression of the scheme is that it appears to be a con. When I questioned the issues I was almost made out to be lying about the facts and this from a company who pride themselves upon customer care.”

Buyers have to chase their house builder for their referral payments
“We received the cash (well, cheque) but did have to chase for it. Numerous phone calls to the head office over the course of 5 or 6 weeks for each promotion claim.” 

Most house builders stipulate the form has to be submitted on the first visit to the sales office at the time the friend buys the property.

Be especially wary of schemes that say “up to £2,000” for example.
Bovis Recommend a FriendAll house builder’s sales advisors are given what are known as negotiables. They are an amount of discount they can offer, which can be a reduction in price, and/or “free” optional extras such as turf rear gardens and carpets for example, without having to ask their manager. So when a buyer negotiates a £5,000 discount they won’t get the “free” turf or carpets that their neighbour got for “free” included in the full price they paid. It would be foolish to believe that the recommend a friend referral payment isn’t coming out of their negotiables budget and so the recommended friend will be actually paying the buyer’s referring them!

Read the small print!
Persimmon Homes Recommend a FriendWatch out for time restrictions and requirements such as presenting the recommend a friend voucher before any price negotiations take place.

Persimmons voucher states that: “For a limited period only”- “This voucher is to be given to the Sales Advisor before any purchase negotiations have begun.” Now you know why!

Redrow states the voucher: “must be completed and handed to the sales advisor at the time of reservation.”

A Bovis buyer posted online:
“My friend got £500 for recommending Bovis to us. The Sales team weren’t happy that we didn’t mention it straight away as they said that would have affected the deal that they were able to give us. It definitely goes against the buyer to say you were recommended by someone”

Bovis Homes optimistically included four recommend a friend referral postcards in their Welcome Packs, working out at four recommendations of £500 for each one.

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Bovis give buyers £3,000 cash incentives to move into unfinished new homes.

Bovis Homes

Just when I think there isn’t anything else this industry can shock me with – coverage in the national press has revealed that Bovis Homes offered “bribes” of up to £3,000 to their buyers if they legally completed or moved into unfinished new homes on or before 23rd December 2016. This was done in a vain attempt to meet the City forecasted target of 4,170 completions for their financial year-end.

The “incentives” were offered to buyers just days before Bovis issued a profit warning, stating that 180 homes were “being deferred into early 2017” resulting in profits lower than previously expected. Equity analyst Anthony Codling at investment bank Jefferies, told The Times: “This will be where they are trying to make their targets. They would have been trying their hardest to complete those homes to get people moved in before Christmas. There is pressure from an investor perspective to meet the volume target and they will do what they can to meet those targets.”

Other analysts said that the cash incentives from Bovis were part of a failed attempt by the FTSE 250 company to meet City targets saying Bovis’ share price had “substantially underperformed the sector over the last seven years.”

Have Bovis Group attempted to deceive investors and the City as to the true year-end results of the Company, by pushing through legal completions (sales) on new homes that were not 100% finished at year-end? I am no expert on financial reporting regulations but more is here.  Perhaps this is something that the Financial Conduct Authority [FCA] should be investigating.

Outraged buyers have taken to social media complaining about Bovis asking them to legally complete on unfinished homes with no driveways, windows, paths, gardens, unpainted walls and even the wrong kitchen units being installed. The Facebook Group “Bovis Homes Victims” now has over 1,000 members, as media reporters and others join to find out what buyers are saying about the company on the Closed group.

Rob Elmes, 32, told The Times he refused to accept an initial offer of £2,000 to complete on a three-bedroom £320,000 home in Worcestershire and was offered £3,000 four days later to legally complete on 23rd December. Mr Elmes refused, saying that his home was not yet finished with workmen still in the house and his drive unfinished. To compound matters, Bovis have even managed to fit the wrong kitchen!

Bovis have admitted that customers had been offered an incentive to complete before the year’s end, but claimed that no one was forced to move in before Christmas.

A spokesman from Bovis said: “Customers were clearly free to decide their preferred course of action. The Group often offers a range of incentives at sale and completion in line with industry practice.”

The firm said that all homes “were habitable”, with the required industry certification as per the Council of Mortgage Lenders’ Handbook Rules. A Bovis spokesman said: “A limited number of customers were offered an incentive to complete before the year end and all homes were habitable with the requisite CML industry certification, with a timetable for outstanding finishing works to be carried out in the New Year”

However the reality would appear to be different and members of the Bovis Victims Facebook Group were quick to add their experiences. One member who has asked not to be named, said she was initially told she was due to move to her new Bovis home in October.” She posted: “We were offered £2,000 by Bovis to complete early on 23 December and told we’d be able to move in to our home over a month later on January 27th. We decided not to take the offer due to the shaky legality and were assured this wouldn’t affect the build. We’ve just been informed our anticipated completion has now moved to 31 March”

How could these homes be regarded as “habitable”? It can hardly be substantially complete if it will take up to three further months to complete the “outstanding finishing works.”

On 23rd December, posts on the group included: “Bovis want us to complete today and move in and [sic] the end of January.” Another Bovis buyer claimed that even if they had accepted Bovis’ cash offer they were unable to legally complete because Bovis had “not completed the correct Help to Buy document.” In addition, forcing or coercing buyers to legally complete on unfinished houses is not new. One posted that they were put in a hotel for 10 days as Bovis would not wait till after Christmas back in 2013. They wanted to complete asap. Been a fight ever since”

Bovis told The Guardian: “We recognise that our customer service has to improve and the leadership of the organisation is absolutely committed to getting this right.” This came just two days after Bovis CEO David Ritchie “resigned” who admitted a “limited number” of customers were offered an incentive to complete before the end of the year, but no one was forced to move in.

Bovis Apologises

On another Bovis development, the company has finally bowed to pressure and has apologised to buyers for problems at two sites in Norfolk. A Bovis’ spokesman said:

“We are working with our customers at Costessey and Cringleford to resolve their issues and we take their complaints very seriously. We recognise that in some cases at these locations we have not provided the standard of home that we pride ourselves on, for which we apologise. We also recognise that our customer service has to improve and we are absolutely committed to getting this right and are taking actions to put in place robust procedures and practices to rectify issues such as these and prevent them from occurring again.”

My award for ‘best headline’ currently goes to The Sun with “Bovis and Butthead”

Council of Mortgage Lenders (CML) Rules

The CML website states:
“Under rules introduced in April 2003, to help eliminate the practice of builders allowing occupation before the home is completely finished, the Council for Mortgage Lenders’ (CML) initiative requires builders to obtain a completion certificate. This is issued by an independent Building Inspector, normally the NHBC, following a satisfactory final inspection of the property. The lender requires this completion certificate, along with confirmation that the new home warranty is in place, before they release the mortgage funds.  

It is common for the Final Inspection to be made 14 days before the completion date. This will give the solicitors and mortgage provider time to arrange for the funds and provide you with an opportunity to inspect your finished home.”

Could those Bovis buyers, in accepting the “incentive” payments and legally completing on an unfinished and uninhabitable new home, be innocently complicit with Bovis Homes, the solicitors and the warranty inspector in potential mortgage fraud? The homes would not have been in the condition on completion and therefore the full value, that the lenders believed. Even more, those bought using Help To Buy may have, proportionally, also defrauded the taxpayer!

The Council of Mortgage Lenders told me:
“We can’t comment specifically on these cases in relation to mortgage fraud, as I am sure you’ll understand. I think our members will be concerned about the emergence of this practice, [payments to buyers to legally complete on unfinished new homes] however – as you rightly point out, this practice shouldn’t be able to happen as the properties must be inspected and signed off as complete for habitation; the use of a cash incentive will also potentially distort the true value of the property if the valuer is unaware of it.

For clarity, the CML does not have its own ‘certification’ process in relation to new homes completion. We think this reference is probably to the CML Lenders’ Handbook, which is a set of instructions to conveyancers. In that, it stipulates that lenders require a form of new home warranty (such as an NHBC warranty) to be in place prior to completion, which the conveyancer checks as part of the conveyancing process. This requirement was introduced some years ago to prevent this very issue. It may be useful to contact warranty providers, to establish how they think this might be happening.”

Indeed it might; so I did. I asked the NHBC how it was possible for a CML final inspection certificate to be ‘signed off’ by the NHBC inspector? Especially when some of these houses were clearly far from finished requiring in one case, three months work! Another had not been decorated.

The NHBC said:
“All homes registered with NHBC are inspected at key stages of construction. This includes a pre-handover inspection, which is designed to ensure that the property is fit for occupation and that our 10-year warranty cover can be provided. Where people do experience issues with their new homes we offer protection under our warranty for 10 years, including a free Resolution service in the first two years. We would encourage homeowner (or constituents) with concerns about their new home to get in touch with us so that we can offer them our help.” 

Not exactly enlightening is it? Again, how is it that any of these homes are judged finished and “fit for occupation”? On 6th January, NHBC Chief Executive Mike Quinton quit after four years – three days ahead of David Ritchie’s “resignation” as Bovis’ CEO.

NHBC Guide to CML InitiativeUnder the CML rules introduced in April 2003, a lender will not release the mortgage funds for a new property until the buyer’s conveyancer has received confirmation, in the form of a cover note, that the property has received a satisfactory final inspection and that a full new home warranty will be in place on or before legal completion. In an excellent article (March 2010) Building.co.uk highlighted that the “A Guide to the CML Certificate” ended with a warning stating that: “If [the consultant] signs the certificate and defects are subsequently found to affect the property, it is highly likely that they will face a claim on their professional indemnity insurance some way down the line.”

You also have to question quite what, (if anything) the buyer’s solicitor entered into the CML “Disclosure of Incentives form” (Section 10) for those that chose to take the Bovis’ incentive!

HBF Buyers’ customer survey ratings

This letter breaches HBF rules 23,24 & 25.It would appear that Bovis are also manipulating the HBF Customer Satisfaction Survey. Bovis Homes, rated just three stars by its customers for the last two years, has allegedly offered John Lewis vouchers to buyers in return “for giving good feedback on the NHBC survey” Whilst not uncommon within the industry, this is clearly against the HBF Star Rating rules 21,22,24 and 25.

Barratt, Persimmon and Taylor Wimpey distance themselves from this latest scandal

Last Thursday Tom Knowles reported in The Times that the country’s biggest housebuilders were distancing themselves from the scandal, in particular Bovis’ claims that cash payments to buyers to legally complete on unfinished homes was “in line with industry practice.

The scandal has led to Oliver Colvile MP, chairman of the All Party Parliamentary Group For Excellence in the Built Environment, to call for a debate into the standard of new homes, he said: “We will try to have a debate in the House of Commons about the quality of new-build housing. We need to press the government to do more.” In July last year, Mr Colvile and a group of MPs published their Inquiry Report detailing ten recommendations, which included my suggestion that buyers or their surveyors, have a mandatory right to inspect their properties before they complete their purchase. Many Bovis new home buyers have complained they were not allowed to enter their homes until the day of completion and on doing so, discovered workmen attempting to complete the works in time.

In a statement Bovis suggested offering cash to customers to complete by a certain date was “in line with industry practice”, but the three biggest housebuilders, Barratt, Persimmon and Taylor Wimpey, said that they never make this offer. Ryan Mangold, chief financial officer of Taylor Wimpey, said: “We have never given cash incentives to get buyers to move in by a certain date.” Peter Truscott, chief executive of Galliford Try, said that while developers occasionally offered investors buying several homes, cash incentives to complete by a set date, this was not the case for individual customers. The Home Builders Federation said: “It is not common industry practice to offer cash to new home buyers to complete early.”

However, a Persimmon homebuyer posted on ‘Unhappy New Home Buyers’ Facebook Group:
I read that about this morning in The Mail. Persimmon tried this on lots of our purchasers including us in 2010, but for some reason we had put our money in a 6 month Bond and told them where to go…..needless to say we won….but our neighbours moved in with Windows missing!, Trouble is it did not do us any good because we had so many problems, and still have some, we pay out for some things ourselves, but some [sic] we live with!”

A spokesman for Bovis told The Times:
Each individual customer was approached on a case-by-case basis and, where appropriate, they were offered the opportunity to move into their homes in time for Christmas with an agreed timetable for outstanding finishing works to be carried out in the New Year. Customers were offered help in the form of payments for a range of reasons in light of the extra costs they would incur by doing so . . . Similarly, some customers were offered compensation payments as a gesture of goodwill in light of the added disruption over the festive period.”

The scandal is so serious that several MPs have said they could raise the issue in Parliament. Among them are Labour MP Melanie Onn, former Tory housing minister Mark Prisk and as mentioned earlier, APPG EBE Chairman Oliver Colville MP. However the fact of the matter is that issues such as these are not new. The APPG EBE ‘Inquiry Into the Quality of New Homes In England’ found that “as the number of homes being built increased, the quality of new homes has declined.” The Inquiry Report painted a damning picture of a broken industry, bereft of any moral compass. It said:

“The evidence points to an industry…which will at times ride rough-shod over dissatisfied buyers… House builders should be upping their game and putting consumers at the heart of the business model…For some, purchasing their dream home turns into a nightmare…Evidence suggested there is a continuing issue with poor standards of workmanship in new homes…At financial half-year and year-ends, the quality is reduced as they rush to meet targets…Housebuilder’s own quality control systems are not fit for purpose…The government must take a lead role to make sure house builders deliver a quality product and service and not just focus on numbers being built.”

Debate or no debate, it is to be hoped that the forthcoming Housing White Paper due later this month, does indeed take note of the ten recommendations of the APPG Inquiry Report and includes measures to address the ongoing quality and service shortfalls of the major housebuilders, especially by undertaking to set up an independent New Homes Ombudsman before the end of this year.

It is my opinion that the buyers’ quotations in this article, reproduced entirely as they were originally written on posts freely available on Facebook,  would be considered by a reasonable person, to be true and the opinions or experiences of these private individuals. This article is my honest opinion of the buyers’ own claims and statements that any reasonable person might also conclude. I believe this is a matter of public interest.

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Bovis Homes CEO David Ritchie “Resigns”

Bovis CEO David Ritchie Officially at least, David Ritchie, CEO of Bovis Group, Britain’s 6th largest house builder by volume ‘stepped-down’ yesterday with immediate effect after eight years in charge. It took Bovis less than a day to remove Ritchie’s profile from its corporate website. The Evening Standard reported that “doubts over Ritchie’s position are understood to have come to a head in recent days culminating in a board meeting at which he offered his resignation to chairman Ian Tyler, who accepted.”

The announcement coming just three days after the resignation of NHBC chief executive Mike Quinton and 13 days after Bovis issued a profit warning  (on 28 December 2016) saying that pre tax profits would be lower than predicted:

“we have experienced slower-than-expected build production across the group’s sites during December, resulting in approximately 180 largely built and sold private homes that were expected to complete in 2016 being deferred into early 2017”

The company issued a similar profit warning in November 2015, at the time blaming planning delays and rising costs caused by labour shortages.

Following this, in February 2016 Bovis’ announced that poor productivity and poor quality of work was forcing it to review and replace a substantial number of sub contractors across its sites.

But are housebuilders are placing too much importance on their year-end figures and rushing completions?  Bovis Homes have regularly over-stated and under-achieved their beleaguered buyers. Now it would appear they have been doing this to investors.

Bovis homebuyers are not ignorant of the issues regarding the rush for year-end completions with one tweeting:  “sales equals targets equals bonuses! Buyers are conned into moving into incomplete homes #yearend”

Tweeting about the Bovis year-end legal completions on one development: “completions on 23 December 2016 were especially bad. Owners residing in homes with no driveways, windows, gardens. Yet it’s happening! Cash incentives for buyers to complete is common practice!”

Bovis buyer's warning!But just how unfinished were the homes that were put back to “early 2017”? It is also questionable why the warranty inspector ‘signed-off’ the CML final inspection certificate if these homes were so unfinished that buyers were allegedly “bribed” to legally complete regardless. This should not have been possible without a final inspection and a signed-off CML completion certificate. KentOnline said: “it has emerged many families due to move into its Orchard Fields development in Maidstone were told their properties were not ready – some with less than 24 hours notice.”

Ritchie, who was paid £1.54 million in 2015 including his £550,000 salary, is understood to have received a payoff, reportedly a year’s salary (to be announced in April) and has no other job to go to. Ritchie remains as non-executive director of Irn Bru soft drink maker AG Barr, following his appointment in April 2015.

Ritchie a chartered accountant joined Bovis in June 2002 as Group Financial Director and became Group Managing Director in January 2007. He took the helm as CEO in July 2008.

Bovis statement on Monday said:

“The Board of Bovis Homes Group PLC announces today that David Ritchie, Chief Executive, has notified the Group of his intention to leave the Company..

David will step down as Chief Executive of the Group and as a Board Director with immediate effect but will remain with the Group until 28 February 2017 to assist with the process of transition. The Board has appointed Earl Sibley, the Group’s Finance Director, as Interim Chief Executive with immediate effect and will immediately initiate a process to appoint a permanent successor which is expected to take several months.”

Shares in the house builder rose 2% – up 15p to 831p on the news.  Earl Sibley (44)  joined Bovis Group in April 2015.

David Ritchie said:

“It has been a privilege to serve Bovis Homes as its Chief Executive over the last eight years as the Group has doubled in size and delivered record profits. I believe now is the right time for someone new to lead the Group into its next phase of development. I have spent over 18 years working for this great company and I wish Bovis Homes every success in the future.”

So what did David Ritchie achieve?

When David Ritchie took charge in July 2008, the 2007 year-end annual report stated: turnover of £555m, profit was £123.6m (22.4%) with 2,930 new homes built in the 12 months. For 2016 turnover is forecast at £1,012.6m, profit is likely to be £165m with the number of homes built around 3,975. It can be seen that whilst turnover has indeed “doubled in size” due almost entirely to rising house prices with Bovis’ average selling price increasing from £83,400 in 2007 to £254,760  last year. However profit has increased just 33.5% and the number of new homes completed is up just 35.6% during Ritchie’s 8-year reign.Bovis salesIt is therefore hardly surprising that Bovis shares have gained just 128% since 2009. This is put into perspective when compared to the 600% rise Bloomberg UK Housebuilders’ Index. An analyst at Canaccord Genuity said Bovis share price has “substantially underperformed the wider sector over the last seven years. Production delivery issues have held the shares back over the last few years and the group’s returns are significantly below the sector average.”

Another analyst, Robin Hardy from Shore Capital, told the Evening Standard:

“We have long been concerned that there was something structurally wrong at Bovis and that — for reasons which were not wholly clear from the outside — Bovis was struggling to keep hold of key resources necessary to execute its growth plans. It has long been suspected there were cultural issues that ran right to the top of the organisation and that the business was less able to function freely and take best advantage of market conditions because of too much control.”

When Ritchie became CEO in July 2008, Bovis were rated just three stars by their customers in the HBF 8-week customer satisfaction survey, with just four other housebuilders rated higher. In 2015 and 2016 Bovis were again rated 3 stars by their customers. Only Persimmon and Avant being rated ‘as bad’ as Bovis Homes.

Bovis’ site managers have never excelled in the NHBC Pride in the Job competition either. With an average of just 4 NHBC Quality Awards each year since Ritchie took control and Bovis are the only major volume house builder that has failed to win a single NHBC Quality Award as they did in 2015!

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