Affordable home building has dipped to a 24-year low

The latest data figures from the DCLG on Affordable Housing supply April 2015 to March 2016 published yesterday, show that the number of affordable homes built in England in 2015/16 has fallen to its lowest level for 24 years. In total, just 32,110 new affordable homes were added – a 52% decline on the previous twelve months (66,600).

Affordable housing

Figures for affordable housing are split into three catagories: social rent, affordable rent and affordable home ownership/shared ownership.

The DCLG figures showed the number of new homes for ‘social rent’ fell to just 6,550 – 83% lower than the 39,500 built in 2010/11. The number of homes for private rental at ‘affordable rent’ has now fallen 41% from a peak of 40,730 in 2014/15 to 16,550 in 2015/16. The total constructed for ‘affordable home ownership’ has also dropped 21% from 15,970 to only 3,430 over the same period.Affordable housingLabour housing spokesman John Healey said:

“The figures showed the government was building the lowest number of social rented homes since records began. This all-time low results from Conservative ministers who have washed their hands of any responsibility to build the homes families on ordinary incomes need. We’ve seen six wasted years with the Tories in charge of housing. They have no long-term plan for housing and they’re doing too little to fix the housing crisis for millions of people who are just managing to cover their housing costs.”

Mr Healey also claims the government was trying to hide its “failure” classifying homes as “affordable housing” when they are available at 80% of market rent or can be being sold for as much as £450,000.

“Public concern about housing is at the highest level for 40 years. Millions of families are struggling with high housing costs.”

Affordable housing 2001 to 2016A spokesman for the DCLG explained the drop, saying:

“Delivery is normally lower in the first year of any new housing programme and so these figures are expected as part of a five-year housebuilding cycle. Building more homes is an absolute priority for this government, which is why we have doubled the housing budget to £8bn and we now have the largest affordable housing programme in 40 years. Furthermore, latest figures out this week show overall housebuilding is at its highest level in eight years and we will be publishing our White Paper shortly, setting out our plans to build more homes and more quickly.”

On average house prices have increased by 7% per year since 1980. Unsurprisingly, home ownership is now at its lowest level since 1985 at 63.5%.  So why has the government relaxed and abandoned affordable housing and social housing planning (section 106) requirements?

home ownesrhip rates 2006-2015

Councils spend £3.5bn on temporary accommodation since 2011.

Anne Baxendale, head of policy and public affairs at Shelter told the BBC:

“At a time when this country is crying out for more genuinely affordable homes, these figures are not only shocking but unacceptable. With 120,000 children set to spend Christmas homeless and in temporary accommodation and a whole generation of private renters living from one pay cheque to the next, the new government needs to get a grip on this problem once and for all.”

Meanwhile figures obtained by the BBC through the Freedom of Information Act show councils in Britain have spent more than £3.5bn on temporary accommodation for homeless families in the last five years. During that time the annual cost has risen 43%, with councils spending £851m on temporary housing in 2015 alone, which could have been used to build around 8,500 new council houses on publicly-owned land.

According to data acquired by the BBC, around 61% of the £3.5bn has been spent in London, while 85% of the increase in costs there since 2011/12.

Homeless charity Crisis said the number of people in temporary accommodation was rising at an “alarming rate” and the Local Government Association said the costs were “unsustainable”.

A spokesman for the Department for Communities and Local Government said:

“Time spent in temporary accommodation ensures people have a roof over their head and the number of households in temporary accommodation is well below the 2004 peak. This government has invested £500m to tackle homelessness – including prevention funding and £40m for councils to help rough sleepers. We are also backing Bob Blackman’s [MP] Homelessness Reduction Bill, which will also provide vital support for many more people.”

The Local Government Association said councils must be able to replace sold homes and reinvest in building more of the genuine affordable homes.

University research shows housebuilders are profiting from government policies

Research by Sheffield Hallam University Centre for Regional and Economic Social Research, analysed the UK’s nine largest housebuilders between 2010 and 2015.  It found that housebuilders are growing profits from the housing shortages across the country.

The nine largest housebuilders, responsible for almost half of all new housing starts in the country, increased their housing output by 33% in the period from 2012 to 2015. In the same period their revenues grew 76%, with profit before tax rising by 200%. The research also showed that accounting end of year profits for the five largest housebuilder increased from £372 million in 2010 to over £2 billion by the end of 2015 – an increase of over 480%.

The research report states:

“In 2015, the biggest five housebuilders returned 43 per cent of their annual profits to shareholders, an amount totalling £936m. This raises questions about the potential volume of new supply that could have been provided through reinvestment of at least some of this money.”

On Help to Buy

“Help to Buy has so far generated a 14 per cent increase in supply, which is well short of the fundamental uplift in output that is required. The risk with demand-side initiatives is that they end up simply subsidising households to afford high prices, and for a temporary period.”

“there is scope for the government to do much more to increase investment by local authorities, housing associations and other non-profit bodies for housebuilding. It needs the political will to do it.”

A spokesman for the research team also said:

“Reliance on the private sector alone is not enough: unless there is also a major upscaling in housebuilding by local authorities, housing associations and other non-profit organisations, the crisis in housing supply will continue”

Housing minister Gavin Barwell commented:

“We know there is more to do to ensure the housing market works for everyone and not just the privileged few, and we will be setting out further details in our Housing White Paper shortly.”

A few suggestions for the White Paper:
  • Change government policy from subsidising and promoting home ownership and start building 100,000 council houses a year fro people to rent.
  • Impose a 50% windfall tax on land value planning uplift.
  • Compulsory purchase at pre planning values (less planning costs) any land not started within two years of planning approval.
  • Use this revenue to build new councils houses on confiscated land.
  • Require housebuilders to build 15% affordable housing and 25% social rent out of their total output each year.
  • End Help to Buy and divert the funding to local authorities to build council houses.
  • Cancel the “right to buy” for rented social housing and council houses.
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Leasehold new houses – the next mis-selling scandal?

Caught in a trap – Leasehold new houses

Given the information, no new homebuyer would ever choose to buy a house with a leasehold title. Perhaps this is why some housebuilders hide this extremely important information from new homebuyers. Even if they do think to ask about the property title, it’s no good saying “People are scared of change because it’s something new. But it’s virtually freehold.” As a Persimmon sales advisor told a reporter from The Guardian.

leasehold new houses

Is it Freehold? New homebuyers are getting caught out by newly-built leasehold houses.

Justin Madders MP for Ellesmere Port and Neston, is calling for a ban on leasehold new houses:

“It is clear this system is being abused to drive huge profits at ordinary ­homeowners’ expense. There is no need for there to be leasehold properties, particularly those on an estate where the properties are mainly detached houses.

“They need to be banned – it may be a convenient way for developers to get extra profit from their building work, but once they get in the hands of these private equity companies the profit motive overrides any considerations that there are real people living in their homes, who are being asked to stump up eye-watering sums.”

As Patrick Collinson reported in The Guardian on Saturday 29 October 2016, a new house built by Taylor Wimpey in Ellesmere Port was sold for £155,000 on a 999-year lease in 2009. Seven years later, the owner was quoted £32,000 to buy the freehold from E&J estates who had bought the freeholds from Taylor Wimpey. Another buyer was quoted up to £40,000 by E&J estates for the freehold of their 2011, 4-bedroom £122,000 house and despite a long lease, another new homebuyer in Manchester is was forced to pay £38,000 to buy the freehold on their recently built home.

Escalating ground rent is another issue. Taylor Wimpey set the ground rent at £295 a year on the Ellesmere Port development, with the contract stating that ground rent will double every ten years!

The Guardian reports:

“Like thousands of others in England and Wales, buyers have been trapped by a controversial trend among housebuilders to sell homes as leasehold when they previously would have been freehold. The buyers are given reassuringly long 999-year leases – but later find that buying the freehold is prohibitively expensive.”

Government figures show that around 6,000 new houses were sold as leasehold last year. Previously, houses on new-build developments were sold as freehold, but leasehold new houses are becoming more common with the likes of Persimmon, Taylor Wimpey and Bellway selling houses as leasehold on their developments. Indeed a third of new houses sold by Persimmon are leasehold, around 4,372 in 2015, nearly three-quarters of all new leasehold houses registered in 2015.

Justin Madders, MP for Ellesmere Port and Neston, whose constituency covers the Taylor Wimpey development says the situation is: “morally indefensible”. 

“I have had a number of constituents contact me, saying they were aware at the time of purchase that the freehold was extra. However, they didn’t know the original developer sold the leaseholds to private investors who have ruthlessly exploited the law to line their own pockets.

“The prices they have been quoted to buy the freehold have rocketed beyond any reasonable sum people can afford. I have found constituents are unable to afford the fees being quoted and there are extortionate charges associated with obtaining permission to alter the property. Just over £2,500 was quoted for permission just to build an extension.”

The Guardian said it is easy for buyers to miss the fact that the new property is leasehold. For example, at Persimmon’s Agusta Park development in Yeovil, Somerset comprising of 2, 3 and 4-bedroom homes, all are being sold leasehold. Yet The Guardian reported there was no mention that the houses are leasehold on either Persimmon’s website, or in the site brochure.

Asking about the lease, Guardian reporters were told it was 999 years and the ground rent was £150, then £190, and eventually that the ground rent would go up every 10 years using a formula linked to the RPI. The Persimmon sales advisor said:

“It’s a 1,000-year lease. If she lives to 100 there will still be another 900 years to go. It’s virtually freehold. Flats are always sold as leasehold. Lots of [house] developments are going this way now. People are scared of change because it’s something new. But it’s virtually freehold.”

And regarding buying the freehold?

“It’s not available at the outset, but can be bought within two years. I’ve no idea. We don’t quote on the price of the freehold.”

Potential buyers allege they are not told about the leasehold until late in the process.

One Guardian Money reader said: “We were about to purchase a new house when we noticed that part of the communal charge for the upkeep of open spaces was for ground rent.” alleging that at no stage was the word leasehold used by the salespeople, nor was it in any of the documentation they signed. The reader said they pulled out of the purchase of the Persimmon home after seeing stories of housebuilders charging large fees just to give permission to make alterations, such as installing a conservatory and tens of thousands of pounds to purchase the freehold.

Developers were asked why they are selling houses as leasehold?

Persimmon told the Guardian:

“Persimmon sells a mixture of both leasehold and ­freehold properties. As Persimmon has acquired other ­companies over the decades, it has inherited the freehold reversions of leasehold properties sold by those businesses. There are around three million leaseholders in Britain. All Persimmon leasehold houses carry an extremely long ­999-year lease and customers are informed at ­purchase what type of property they are buying.”

Persimmon refused to state the typical ground rents charged, how much the company makes from selling freeholds, or the fees charged to leaseholders for approval for alterations or things like building a conservatory.

Taylor Wimpey ­confirmed it had sold freeholds to E&J Estates, but did not disclose the price, and would not comment on the £32,000 E&J Estates wanted for a freehold. They told the Guardian:

“At Taylor Wimpey the vast majority of our houses are sold on a freehold basis. However, in a small number of developments, ­predominantly in regions of the ­country where it is common practice in the market, we sell houses on a leasehold basis. Throughout any sale process, customers are fully informed of the ownership structure of the home. If a customer is interested in such a property, the sales team advises them whether the property is being sold on a leasehold basis.”

­Issues concerning leasehold properties will be top of the agenda for the all-party parliamentary group on leasehold and commonhold next month. Chaired by Labour MP Jim Fitzpatrick and Tory Sir Peter ­Bottomley, has attracted 43 MPs and lords.

Sebastian O’Kelly of the Leasehold Knowledge Partnership – a support group set up to protect and campaign on behalf of ordinary leaseholders said:

“It is disgraceful that plc ­housebuilders are building leasehold houses that ­ordinarily – and until recently – would have had freehold title. This is an ­erosion of the wealth of ordinary people at the expense of the rich.

Young people, after years of paying rent, finally buy a home and then find they are still, in fact, tenants – which is what a leaseholder is – with all the ­vulnerability that that implies.

The housebuilders are evasive over this issue and it beggars belief that the ­outrageous ground rent multiples come from household-name builders. There is no attempt to justify the adoption of leasehold tenure for these houses, which are not complex communal sites such as blocks of flats.”

 

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Government push to build prefabs to meet its housing target

Prefab Sprout! Flat pack new homes – no Allen keys required! But will  prefabs be the answer to Britain’s housing crisis?

As reported in The Telegraph last Saturday, the government is to embark on a building programme to “embrace the first new generation of pre-packed homes since the reconstruction after the Second World War.” prefab-post-warBy using prefabricated homes that can be delivered to site and built [thrown up] in 48 hours. While the Department for Communities and Local Government [DCLG] is not expected to set a hard target, (one lesson learned at least!) government sources said it was hoped that more than 100,000 prefabs could be built by May 2020 – around 2,500 a month.  Theresa May’s Government is struggling to work out how to meet a commitment to build a million new homes by 2020.

Clearly the large housebuilders, supported in every respect by this and previous government policy, have failed to deliver any meaningful and desired increase in production – even now, they are building fewer new homes than were built in 2007. Profiteering from landbanking? – Channel 4 Dispatches ‘Britain’s Homebuilding Scandal’ due to be aired on Monday 7 November 2016 will no doubt highlight this.

But is there really a housing crisis? Or at least a crisis caused by a shortage of housing? Surely if this were the case migrants, both economic and genuine refugees, would not be allowed to enter the country as presumably, there would be nowhere for them to live. In 2015,  30,000 migrants were given social housing and around  9,000 servicemen currently sleep rough after leaving the military.

The real crisis is working British people cannot afford to buy a home of their own, due to a combination of low wages and house price inflation stoked by government policies such as ultra -low interest rates and Help to Buy. Insufficient homes to rent or so-called affordable homes making an already bad situation worse.oxley-wood-prefabs-2007But is building prefabs a solution? Has the Government forgotten the nightmare suffered by buyers at Taylor Wimpey’s Oxley Woods development in Milton Keynes? These pre-fabricated properties built in 2007 for just £60,000 each, which they claimed could be knocked-up in 24 hours. The site at Oxley Woods was the then Deputy Prime Minister John Prescott’s flagship scheme to develop low-cost, energy-efficient homes. But as reported in the Daily Mail in 2014, a secret leaked report stated that “wooden supporting structures of some of the homes, from scheme developer Taylor Wimpey, are saturated.” It also found examples of ‘poor workmanship and practice’ in laying part of the roof. Seven years later this modern day, pre-fabricated, system-built new housing, has been shown to be as bad if not worse, than the traditional new homes that have been built for many years. Some of these prefabs may even be irreparable requiring demolition.

ronan-pointBefore this was Ronan Point, part of the wave of tower blocks built in the 1960s as cheap, affordable prefabricated housing for inhabitants in West Ham and other areas of London. The tower was built by Taylor Woodrow Anglian, using a technique known as Large Panel System building (LPS), which involves casting large concrete prefabricated sections off-site and bolting them together to construct the building.

Despite this, Britain is to get a new wave of prefabs as the government plans to offer help to build 100,000 factory-made homes. Industry buzzwords like Modern Methods of Construction [MMC] and “modular homes” are being used to describe the new generation of prefabs, aimed at young first-time buyers to “help them on to the housing ladder.”  These prefabs should be allocated to migrants and non-working Britons. It is patently unfair that young working British people are expected to take on a mortgage (if they can get one!) to pay for a sub-standard, prefab kit new “home” while non-workers on housing benefit are able to live in traditionally-built houses. It is easy for ministers to be misguided into thinking, after visiting these new home factories, that modern day prefabs will be of ‘good quality’. They won’t be built to the exacting standards of German made and constructed Huf-Haus new homes that’s for sure!

Even a “Wee House” can take 8 weeks to build!

Whilst the issue regarding the dire quality of new homes that are currently being built, along with the implementation of additional measures to protect new homebuyers is ignored, such as the DCLG setting up a New Homes Ombudsman, this headline-grabbing Government plans to publish a white paper next month, that will include measures to encourage banks to lend to small firms that build houses off-site, which are then delivered to a final destination. Ministers have apparently, taken a “huge interest” in 21st-century prefabs after being impressed that some were erected on site in just 48 hours. However, these homes were not fully 100% complete. Ministers would do well to recognise, there is no shortcut to quality housing!

The Telegraph reported that Accord Group, a housing association in the West Midlands, can produce a three-bedroom house from scratch in a day in its factory and has been visited by government figures. But claims by Accord Group of two homes “put up in one day” are misleading. The film below shows the assembly of little more than a timber frame kit, of the type that large housebuilders have been using for over 30 years, yet still appear incapable of constructing them to the required standards. Furthermore, foundations, substructure, drainage and ground floor and scaffolding were all completed before the “one day” started. In addition safety on site appears to be being compromised in the ‘rush to complete’ as there is no fall arrest system in place when the first floor ‘cassettes’ were lifted into position. Of course the likes of Gavin Barwell and Sajid Javid will not know any of this, anymore than they realise that there will be more delays connecting gas, water and electrical services and the time it takes to construct road infrastructure on developments.

Gavin Barwell, the housing minister, said that the Government sees a “huge opportunity” in manufacturers building houses off-site as it tries to find new ways of “achieving” its home building targets. Barwell said: “Offsite construction could provide a huge opportunity to increase housing supply and we want to see more innovation like this emulated across the housebuilding sector.”

If Barwell is serious, he would do well to fund the building of council houses for working families at affordable rents. To be built by local building contractors on fixed-price, fixed-term contracts, rather than yet more subsidised headline grabbing policies, which will have little impact on this failing industry.

Last week, Ed Lister, chairman of the Homes and Communities Agency said the government should encourage a wider range of firms to build homes, including those with no prior experience! Lister, a former deputy mayor of London told Building Magazine: “Why can’t any company come along and set up a development company using MMC (modern methods of construction) and build homes?”

The government has also indicated it wants a wider range of firms building homes. Gavin Barwell told Building last week that Theresa May is “very keen” to see a wider range of organisations building new homes in the UK. So not only will we have 100,000 prefabs but they could be thrown up by organisations, that have little or no building experience too!

 

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Make Sure Your New House Is Not Leasehold

Buyer beware: The great leasehold new house scam

When will the incessant greed of housebuilders reach its zenith? Not content with charging premium house prices, large plc housebuilders keep coming up with new ways to squeeze every last drop of additional profit from unsuspecting new homebuyers. It started with overpriced optional extras and upgrades. Then shared driveways and non-existent front gardens enabled housebuilders to cram in even more homes on their developments. Persimmon road not finished 30 months after last home sold.Next came the Freehold house with Leasehold type management charges – inescapable “annual rentcharges for maintenance of communal amenities on the development”, commonly around £200 a year for each home, normally for ‘maintaining’ landscaped areas.

Also becoming increasingly common, are charges for private roads, footpaths and street lighting on developments. These charges are even more galling when builders fail to fully-complete these areas for months, sometimes years after the last house was built and sold.

The website Home Owners Rights Network has been set up to fight the unfairness of these charges and campaign for a change in the law. The Leasehold Knowledge Partnership was set up to protect ordinary leaseholders.

Now some housebuilders have taken fleecing buyers to a whole new level. Selling Leasehold new houses, but at Freehold prices. There can be no other reason for this other than to increase their bottom line. As the Daily Mail reported in May 2015, two new housing estates were being built in on either side of London Road in Peterborough. At the time, Persimmon were building 50 new homes at “The Edge” on the east side, selling three bedroom homes for £158,995 – £180,000. On the other side of the road at “The Sycamores” Barratt were building 80 new homes, almost identical in appearance, with a three-bedroom property costing from £163,995.

persimmon-leasehold-housesWhilst almost identical in every way, there is one significant key difference. The Barratt houses are Freehold but the Persimmon houses were sold Leasehold, meaning that instead of owning their homes outright, these Persimmon new homebuyers have to pay an annual £150 fee in ground rent for the land the property stands on. Even worse if they decide they wanted to add a conservatory or undertake any major renovations, they will have to ask the freeholder for permission.

As the government push for more homes to be built, thousands are being sold as leasehold by housebuilders, many of these inevitably targeted at naïve first-time buyers, unaware of the additional cost and the huge disadvantages that come with owning a leasehold property. It would appear that investment companies are fuelling the rise in leasehold new houses, many seeing it as a way to profit from the annual fees new homebuyers are forced to pay.

The story in the Daily Mail stated: “there are 670,000 leasehold houses in Britain, according to the figures of the Department for Communities and Local Government. In 2013 — the most recent year for which figures are available — the number of owners with leasehold houses had increased by 63,000 in the previous five years.”

Figures from the Land Registry reports show that leasehold properties accounted for 43% of all new home registrations in 2015, nearly double the 22% recorded in 1996.

Traditionally, most leasehold properties have been flats in blocks, where there are communal areas. The service charges cover things like:
  •     Car park enforcement
  •     Communal car park (gates, lighting cameras etc)
  •     Entry phone system
  •     Fire alarm and fire equipment
  •     Landlord electricity and water utility bills
  •     Lift maintenance and safety inspections
  •     TV aerials and satellite system
  •     Buildings insurance
  •     Management administration fees
  •     Accountancy fees
  •     Future maintenance fund for major repairs
  •     Cleaning of communal areas including roads and pathways
  •     Landscape garden maintenance and grass cutting
  •     Membership and upkeep of communal facilities such as swimming pool
  •     Caretakers and porters

Buyers pay an annual fee to the freehold owner — usually the property developer or services firm for the management and upkeep of these shared spaces and services. However, another sting in the tail is, with every year that passes, the property will erode in value as the length of the lease reduces.

So why have housebuilders and developers started to sell individual family houses on a leasehold tenure?

The CBRE says that: “house-builders have become more aware of the benefits of structuring leases in an attractive manner to increase the value of their property holdings seeking to maximise sale receipts on disposal.”

These leasehold arrangements appear to be principally designed as a means of extracting further and ongoing payments out of their unsuspecting customers.  Whether they serve any legitimate purposes is anyone’s guess but I believe it is unlikely they do, or that those purposes could not be met in some other way that does not fix customers with ongoing charges. I am of the opinion that large housebuilders see leasehold tenure as an opportunity to profit twice from the land; once from new homebuyers, who pay freehold prices for leasehold houses and again from either the ongoing charges and ground rent, or from the freehold investment or insurance company, if and when they decide to sell the freehold.

I can see no justification for selling a leasehold brand new house. Some unsuspecting new homebuyers will probably not even realise, until they get a bill from a management company, exactly what tenure they have bought. This is even more likely if the buyer use the housebuilders ‘suggested’ or ‘preferred’ solicitor, something new homebuyers should never do as it raises the question of their impartiality and is a conflict of interest.

With leasehold, in most cases the freeholder appoints a service company to collect ground rents, service charges and manage the land on which the houses are built. Whilst some of these companies are reputable, others might use residents as a cash machine, with ever increasing charges for insurance and maintenance.

The freeholds of large flat developments are commonly sold to one of a very small number of very large companies that buy up tens or hundreds of thousands of these freeholds. Some are unscrupulous service companies who have a track record of making it difficult for leaseholders to their pay ground rents, by not cashing cheques etc. and then claim very large fees and expenses for taking contrived enforcement action against leaseholders for non-payment.

A legal expert recently told me:

“There have been examples where ground rents of £150 per year are due, cheques go un-cashed, and then enforcement fees and expenses of many hundreds, sometimes thousands, of pounds are levied against the leaseholder.  Legal action often follows because the leaseholder duly finds it incredibly difficult to get a response to any correspondence or queries from the companies in question, which then launch legal action on the premise that the debt remains outstanding.  Naturally, further fees and costs are claimed through the court proceedings.  Aggressive lawyers then pursue settlement of the contrived debts and many leaseholders feel compelled to pay large sums to settle those debts to avoid the time and hassle of going to court for what, by then, would be a hollow victory for them given the wasted time and stress they would suffer and the costs they might incur instructing lawyers to represent them.

Whether the situations of leasehold houses would or could give rise to more of this kind of scam will remain to be seen, but given that the same big housebuilders who have been doing this on leasehold for years are now imposing comparable arrangements on freeholders, I think it is a fairly safe assumption that this will happen, blighting many more unsuspecting homeowners’ lives.”

In a worst case scenario, freeholders have the power to force forfeiture of a lease where the entire asset is seized and the leaseholder evicted from their home for failure to pay sums owed to the freeholder. This case, which was ruled the leaseholder’s favour eventually, concerned non payment of the Freeholder’s £76,086.20,  legal costs. with the leaseholder having  paid off the original disputed £7,548 service charges years ago.

According to Savills, investors have poured around £1.2 billion into residential properties with ground rents. At a time of ultra-low interest rates, ground rents are viewed as a steady stream of income. The investment company can also choose to resell the freehold to another buyer.

Under the Leasehold Reform Act, leaseholders have a right to buy the freehold at a later date. How much it will cost depends on the value of the home, the ground rent and the years remaining on the lease. It can cost several thousands of pounds. In the meantime, if a leaseholder wanted to make changes to their house such as adding a conservatory — they must seek permission from the freehold owner of the land.

As the remaining lease reduces each year, the property loses value. But extending a lease is not cheap either! For example, it could cost around £4,167 to buy the freehold of a £250,000 house, with a ground rent of £250 a year and 995 years left on the lease, according to figures from Freeholdcalculator.com Legal fees could add another £3,000.

It gets even more expensive as the lease reaches 80 years. For a £300,000 property, it could cost £10,000-£12,000 to extend a lease with 80 years left compared to around £5,000-£8,000 with 89 years unexpired. As reported in another story Daily Mail reporter Ruth Lythe, told how families in Cramlington, Northumberland, cannot now sell their houses as their leases are about to fall below 80 years. When owners asking to extend their leases they are being quoted £8,000 to £14,000 by management companies.

Persimmon told the Daily Mail:

“only around a third of the houses it built over the past three years are leasehold, with ground rent reviewed every year.”  Only? Out of a total of 39,609 new homes built by Persimmon in 2013-2015, (assuming 10% were flats, as in 2015) this equates to 11,883 new houses sold by Persimmon as leasehold since 2012 – 3,960 a year.

Miller homes are apparently, also selling leasehold houses. A Miller Homes prospective buyer telling me that when they found out the houses were leasehold and, as they were walking out the door the sales agent said, “oh but for £4,500 you can buy the lease.”

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Annual Report 2015/16 – Consumer Code for Home Builders

The first  Annual Report by the Consumer Code for Home Builders since April 2014, was finally published this month.

In May 2014, I asked the question, Is the Consumer Code for Home Builders (CCHB) fit for purpose? In March this year I wrote that the Consumer Code for Home Builders is failing new homebuyers. This voluntary code was launched in April 2010 and has been inadequate and failing new homebuyers ever since.

In July, a report published by the APPG Inquiry Into Quality of New Homes found that:

  • “The Code [Consumer Code for Home Builders] does not appear to give homebuyers the safeguards we think they should expect.
  • It does not appear to us objectively to offer consumers a wholly satisfactory form of redress.
  • The Consumer Code for Homebuilders is limited in its scope.”
APPG Inquiry Report Publication 13 July 2016

APPG Inquiry recognises a government-appointed New Homes Ombudsman should be set up.

The APPG Inquiry “Key recommendation” is the setting up of a government-appointed New Homes Ombudsman.  It said that the Ombudsman:  would need to be completely independent and replace the dispute resolution service offered as part of the Consumer Code for Home Builders.”                                        

Annual Report Consumer CodeThe information contained in the Code’s belated, recently published “Annual Report 2015” covering the years 2014/15 and 2015/16, fails to justify the continued existence of this industry- led voluntary Code, in my opinion.

The Code’s latest Annual Report claims: “the industry has made great strides in producing and updated Consumer Code which is fit for purpose in today’s world.” So by implication, the previous three editions of the Code were not fit for purpose!  It remains to be seen if the latest revision, due to be implemented in April 2017, will be any better especially given the housebuilders’ continued indifference towards promoting the Code’s very existence to their customers and adhering to its Requirements. The main drivers behind this latest review would appear to be the desire for the Code to meet the Chartered Training Standards Institute’s (CTSI) Consumer Codes Approved Scheme (CCAS) accreditation requirements.

This Annual Report states that:

“In 2014, the Code’s management board took the decision to gain approval through the Chartered Trading Standards Institute (CTSI) Consumer Codes Approval Scheme (CCAS). It was important to show how the Code helps strengthen consumer protection and improve customer service standards by approval of the CTSI under their CCAS. This facilitated self-regulation.” 

It will take more than the approval of the CTSI to do that! So how is this going nearly three years later?

Carol Brady, Secretariat for Consumer Code for Home Builders tells me:

“As to our application to the Chartered Trading Standards institute (CTSI) under their Consumer Codes Approval Scheme I should advise that it is not being made in order to comply with the EU Directive as you have stated, given that such a Directive does not apply to the sale of new homes. It is being made however, as cited in the report, to show how the Code helps strengthen consumer protection through that approval process.  The Code is at stage 2 of the CTSI process (the period in which it demonstrates it is working well in use) and we envisage this continuing into 2017. Furthermore, it is perhaps worth noting that CEDR Ltd, who operate our Independent Dispute Resolution Scheme, are a certified ADR provider with CTSI and while we have no obligation to follow the requirements under the Directive, we may choose to do so in order to demonstrate good practice.”

However, in a letter I received on 10 March 2015, from the then Minister for Communities Stephen Williams MP,  he said:

“Under the EU Directive we will need to ensure that ADR [Alternative Dispute Resolution] provided by a certified ADR body is available for any dispute concerning contractual obligations between a consumer and a business. For the Consumer Code [CCHB] to be a certified body it will need to be registered and approved with the CTSI and show that it meets the principles set out in the Directive and associated Regulations.”

It would appear the CCHB is concerned that “some warranty providers are seeking the approval of similar Codes by the CTSI. [sic]” It says these Codes may offer similar protection to consumers but “has the potential of creating some confusion for consumers.” 

The Annual Report also states that the Code’s credibility was “recognised by the Help to Buy scheme, with the requirement that the terms of the Code should be observed by Home Builders promoting Help to Buy.” Given that housebuilders regularly fail to comply with even the most basic requirements, to display the Code (only around 30% comply) and give a copy of the Code to buyers (only 55% compliance), you have to ask why these housebuilders are still able to offer the Help to Buy scheme to their customers? Maybe perhaps, the confidentiality of the CCHB-AS is enabling miscreant housebuilders to get away with their non-compliance with impunity?  

So what are the proposed amendments to the Code?
  • “Improving consumer awareness of the Code by encouraging its greater prominence in sales offices. By making it a mandatory requirement that there is a visible display of the Code in Site Sales and Estate Agents offices at the point of sale.
  • Supporting online training for front-line sales staff to improve overall compliance with the Code at the point of sale;
  • Improving the pre-purchase information Home Buyers receive when making purchasing decisions such as information on event fees.”
Protecting the vulnerable

The CTSI’s CCAS requires (C5) the Code to address how Home Buyers will be treated when in their own homes require housebuilders to take into account the homebuyer’s vulnerability when dealing with them in their home, for example if the homebuyer is elderly, has a disability or English is not their first language, suggesting further assistance might be required.

“In future Code editions of the guidance provided to Home Builders, they will be reminded that their customers should not be subjected to high pressure selling techniques and the needs of vulnerable customers should be considered.”

Such high pressure selling techniques may include: encouraging a reservation by implying there are other interested parties or that there is an imminent price increase due where there is neither, offering a financial incentive for an instant decision or encouraging a reservation by refusing the opportunity to personalise the new home where the stage of construction would still allow it. So only “guidance” – should this not be mandatory?

The CTSI’s Consumer Codes Approval Scheme (CCAS) aims to promote consumer interests by setting out the principles of effective customer service and protection. It goes above and beyond obligations required by consumer law, setting higher standards and giving consumers confidence that Code members can be trusted from their right to display the CTSI “Approved Code” logo. 

This Annual Code Report re affirms “the aim of the Code (new words shown in bold) to ensure that all new homebuyers:

  • Are treated fairly at all times;
  • Are given reliable information about their purchase and consumer rights before and after they move in to their new home;
  • Know what level of service to expect;
  • Know how to access an independent, speedy, low-cost dispute resolution scheme to deal with any complaints.”

Mystery shopping results indicate this is not happening

The Code uses mystery shopping to “ensure that the effectiveness of the Code is being properly tested.”

The report published results showing that:
  • A third of homebuyers (33% – 32% in 2013/14) unaware of the Code, would know more after visiting a housebuilder’s site.
  • Site Sales awareness of the Code was 80% (78.5% in 2013/14)
  • The number of housebuilders displaying the Code is 30% (27.5% in 2013/14)
  • The number of mystery shoppers given a copy of the Code on request was 21.5%, with a further 17.5% being directed to the builders’ or Code’s website. (15% and 20% respectively in 2013/14)

Consumer Code For Home BuildersHowever buyer’s responses to Question 19 of the HBF 8-week survey: “Were you given a copy of the Consumer Code for Home Builders?”  show that despite a 19% increase in the number of completed surveys returned, there was a reduction in the number of homebuyers that received a copy down from 57% to 55%.  

So it is even more astounding that in the CCHB Chairman’s introductory statement he says that: “the industry has wholeheartedly embraced the Code when the findings in his Annual Report and adjudication case summaries clearly show clear evidence the opposite is true. 

The Code has been in existence for seven years, yet housebuilders are still failing to display the Code and promote it in their site sales offices. Nearly half of all new homebuyers are not given a copy of the Code – a clear breach of Code Requirement 1.2. Perhaps the Consumer Code for Home Builders should actually print 200,000 bound copies a year and distribute them to every housebuilder’s sales office rather than rely on often busy, site sales advisors printing a copy via a computer or photocopying when someone asks for a copy.

In the real world, housebuilders do not want to advertise and promote the Code’s existence as it would result in a dramatic increase the number of complaints for adjudication. Since April 2010, a total of just 193 cases have been brought by new homebuyers (to June 2016), 111 succeeding in full or in part. In 2015, the average sum awarded was £2,031. The Annual report confirms a downward trend of average awards over the last three years, £2,219 in 2014 and £2,651 in 2013. Adjudication decisions are final and not open to either review or appeal.

The most frequent breaches to Code Requirements by housebuilders are:
  • Failure to have a system in place for handling and resolving complaints (Requirement 5.1) (in 54% of all successful cases in 2015)
  • Failure to provide adequate pre purchase information or misleading prices (Requirements 1.5, 2.1 – in 37% of all successful cases in 2015)
  • Failure to provide reliable and realistic home completion date information (Requirement 3.2 – in 35% of all successful cases in 2015)
  • Pressure from house builder for buyers to agree to contractual changes (Requirement 3.1)
  • Unfair and/or unclear terms in sales contracts.                                  (Requirement 3.1 – in 24% of all successful cases in 2015)
  • Misrepresentation of property description (Requirement 1.5)
  • Breaching Reservation Agreements and non-repayment of reservation fees (Requirement 2.6) 

So why are these housebuilders still able to offer Help to buy?

Why are these housebuilders still registered with a warranty provider?

Why are the non-compliant housebuilders not named?

It is clear to me that the language used in the latest Code Annual Report that the CCHB is running scared of a completely independent, government-appointed, and free to use New Homes Ombudsman Service that would adjudicate on everything regarding new homes, including poor quality and warranty issues. The Code has consistently failed in its attempts to raise its profile, whilst housebuilders continue to appear to breach Code Requirements with apparent impunity.

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Sign The Petition For Better Quality New Homes

With  greater protection for those that buy them!

The only way the housebuilding industry will change for the better, is if enough people sign this petition. This Government is pre occupied with its blinkered approach to increasing quantity of new homes being built, throwing billions of taxpayer’s money at housebuilders in the process. Just last week another £5bn was earmarked for an industry that cares so little for its own customers and the quality of the product they sell.

APPG Inquiry ReportAn all party group of MPs had an Inquiry last year Into the Quality of New Homes. The Inquiry Report made ten recommendations, including the number one “key recommendation” the setting up of a New Homes Ombudsman. All of the recommendation have the potential to not only force housebuilders to improve the quality of the homes they build, but also give those that buy new homes better protection via access to a New Homes Ombudsman.petitionWe have been here before with the Barker Review of 2004, Office of Fair Trading Market Study of Home Building in the UK October 2008, and now more recently the APPG Inquiry 2016. Yet surprisingly, there has not been any legislation to force this failing industry to improve.

But the Department of Communities and Local Government (DCLG) is not listening.

Despite the over-whelming evidence, thus far, the Government is ignoring the problem of poor quality new homes. Is the Government worried that imposing new regulations on the large housebuilders could result in a backlash and a slowing down of the already inadequate levels of production, reducing the number of homes built? Perhaps.

But a large and increasing number MPs are well aware of the problems their new home buying constituents are experiencing on developments such as Taylor Wimpey’s Loddon Park, poor quality, basic preventable defects and a total indifference to sorting them out. But an individual MP is all but powerless to do anything to force through new legislation. They can only enter the lucky-dip “ballot” for Private Members Bills. Even if they are successful in getting one of around 20 slots, they could be pressured by Government whips to use their slot for shoe-horning in a bill for government ministers.

bill-proposal-for-a-new-law

So all we can do as voters, is force the Government to respond (if 10,000 sign) and hopefully debate (100,000 to sign) the implementation of the ten APPG Inquiry Report recommendations. But only if enough people sign this petition! It is that simple.

The response to the petition thus far is as disappointing as it is surprising. For example despite all the issues buyers have with their new homes and Taylor Wimpey at Loddon Park, just 8 out of 200 buyers have signed thus far. After three weeks (23 left to go) only 280 have signed.

Calling all new home ‘moaners’, why haven’t you signed this petition?

Most new homebuyers choose not to go public with their experiences for various reasons. But by choosing to ignore this petition, it could send the wrong message to those that can re balance the new home landscape giving buyers better protection and higher quality new homes for generations to come.

Please sign the petition (it will only take a minute) here is all that is involved:
  • Click on the link
  • Tick the Box “I am a British citizen or UK resident”
  • Add your name
  • Add your e mail address   (this is used for verification purposes only)
  • Add your Postcode            (this is used for the constituency map only)
  • Click “Continue”
  • Click “Yes this is my e mail address”
  • Then check your email and click the link in the e mail that Petitions: UK Government and Parliament send you to sign this petition. Please note: You have not signed until you click the link in the email.

Finally, please e mail the Petition link it to everyone in your address book and share with your Facebook friends and Twitter followers.  https://petition.parliament.uk/petitions/167660

Change will only occur if enough people stand up and demand it. Today’s badly-built new home is tomorrow’s old home. The issue of poor quality, sub-standard defective new homes will affect everyone sooner or later.

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Proposed Statutory Levy On Housebuilders That Fail To Train

farmer reviewIn February 2016, the government asked the Construction Leadership Council (CLC) to look at the labour model within the construction industry and the pressures on skills and other constraints that limit housebuilding and infrastructure development in the UK. The CLC commissioned Mark Farmer to undertake a review and his report, The Farmer Review of the UK Construction Labour Model was published on 17 October 2016.

The independent Farmer Review, commissioned by two Government departments, highlights construction’s dysfunctional training model, its lack of innovation and collaboration as well as its non-existent research and development (R&D) culture. Farmer says the construction sector must “modernise or die” and faces “inexorable decline” unless radical steps are taken to address its longstanding problems.

Mark Farmer, an independent construction labour consultant, found that the building industry was failing to invest in either training or research and development, resulting in a steadily shrinking workforce that was and is, failing to increase productivity.

He said:

“The construction industry is in dire need of change. What is clear to me following the nine months spent conducting this review is that carrying on as we are is simply not an option. The construction industry doesn’t have the impetus needed for this change. It requires external action.”

The Farmer Review  recommends that clients of construction companies – which include developers and housebuilders – that buy construction work in a way that doesn’t support industry innovation or skills development, should face a statutory levy tax charge of 0.5% of the cost of each project. They would therefore have the ability to avoid paying this tax completely, by commissioning construction in a more responsible way.P1000442Housebuilders already pay a levy to the Construction Industry Training Board (CITB), which funds the sector’s training board and they will also be required to pay the new Apprenticeship Levy if their employee salaries total more than £3m a year. However, the Farmer Review found that large housebuilders reclaimed 74% of the levy they paid in grants to the CITB. Perhaps this is why he is recommending a wholesale reform of the current Construction Industry Training Board (CITB), its related levy system and a “reform programme instituted including a new mandate to properly fund and drive forward both appropriate skills development and innovation to suit a modern progressive industry”

For many years housebuilders have reclaimed large amounts from the CITB, much of it for mandatory health and safety training such as: First Aid, CICS cards, site inductions, tool box talks and the CITB’s own Site Management Safety Training Scheme (SMSTS) courses. None of which is training related to or creating trade based skills. The large plc housebuilders currently pay 0.5% of their PAYE and 1.25% of their net (after tax deducted) CIS sub-contractor payments; reduced from the previous 1.5% of payments made to labour-only sub contractors. Many of the larger housebuilders forcing their labour-only subcontractors to supply minimal materials such as screws or nails to avoid the levy all together. At least housebuilders find it harder to cheat the current levy, even though they are skilled at reclaiming most of their levy contributions from the CITB as “training” grants.p1000463

Mark Farmer said existing levels of industry investment in training are:

“extremely low when viewed against other UK industry benchmarks. £180m of CITB levy (with only £140m issued back in grants) in a £100bn industry with 2.3m employees does not bode well in terms of ability to have any scalable impact.”

According to the Commission for Employment and Skills, only 57% of employers in the construction sector offered any training in 2015. The Review found that the increasing reliance on private-sector housebuilders has made the industry more cyclical, working against a long-term investment in training, as have low margins among construction companies.

Farmer said:

“If you buy a new car, you expect it to have been built in a factory to exacting standards, to be delivered on time, to an agreed price and to a predetermined quality. This needs to happen more in construction, so that the investors, developers or building owners hiring construction firms increasingly dictate the use of modern methods of delivery and invest appropriately in the skills agenda to grow this part of the industry. There are more similarities between manufacturing and construction than many people are led to believe and this perception needs to change, starting in the housing market”

“The industry’s [housebuilding] low level of self-esteem and poor image is further reinforced by the generally poor relations it has with its own clients. It is in many quarters not valued by commissioning clients [new home buyers] who accept and often even plan for poor performance.”

A YouGov poll earlier this year found that two-thirds of Britons wouldn’t consider a career in construction.

Farmer said he also wants ministers to directly intervene in certain areas to ensure many of the issues identified are rectified. Good luck with that! The ten recommendations of the APPG Inquiry Into the Quality of New Homes has thus far fallen on ‘deaf ears’ within the DCLG. It is no good commissioning reviews, reports, studies and having inquiries, if the resultant recommendations are never considered or implemented. Perhaps Government should start withdrawing state funding such as Help to Buy from housebuilders that refuse to take their training responsibilities seriously, or windfall tax the increasing profits these schemes are generating to fund construction training.

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The Redfern Review – How Is CEO Peter Redfern Doing At Taylor Wimpey?

peter-redfernIt has been over seven months since Taylor Wimpey released its results for the full year to 31 December 2015 (1 March 2016). This included a statement from Chief Executive Peter Redfern, which recognised improvement was needed with regard to his company’s poor customer satisfaction levels. Perhaps it is time to take stock and conduct our own ‘Redfern Review’.

Peter Redfern said:

“During 2015, we achieved a customer satisfaction score of 86% (2014: 87%). We are disappointed that this has slipped. Whilst we operate in a cyclical market, we strongly believe that a customer centric approach is needed throughout the cycle. During 2015 we completed an in-depth review of every aspect and stage of our Customer Journey, to identify areas of improvement and to deliver a better homebuying experience for our customers. Throughout the review, our focus has been on understanding our customers’ priorities to enable us to deliver at and ahead of expectations. We have also commenced the process of rolling out our new customer approach across the business with a focus on three main areas: our culture, management structure and process. This is to ensure that going forward we deliver the right product, supported by excellent customer service to all our customers at every stage of their journey with Taylor Wimpey.

As part of this new approach, we have developed a customer mindset focused on delivering proactive, positive and professional service, which we want to ingrain in our behaviour with customers. We have also developed and will be embedding four customer commitments in the business, focused on getting it right first time, communicating well, keeping promises and finding solutions.

In addition, during 2015, we have enhanced the capability and size of our customer service teams across the regional businesses, with the introduction of a number of key new roles. In 2015 we developed and started to implement a training programme to equip those employees interacting with our customers with the right skills to deliver a consistently great service.

We are pleased to see a positive trend in customer satisfaction in the monthly survey scores in the second half of 2015. Customer service will remain a key priority for Taylor Wimpey in 2016 and on an ongoing basis.”

So how is this new dawn of customer service going at Taylor Wimpey?

In this Redfern review, you only have to read the tweets on #thinkwimpeythinktwice and the Taylor Wimpey – Unhappy Customers Facebook Group to see it’s business as usual. Same indifference to both the quality of its new homes and customer service. But I believe something has changed – it has probably got even worse!

Taylor Wimpey’s development at Loddon Park near Reading is a prime example. One of the longest suffering buyers is Luke Mahon, who even after nearly two years of extensive remedial works, installing missing insulation and other defects, still has issues outstanding. On 26 September 2016 Luke @MyHouseSucks tweeted: 2 years ago today we moved into our new @TaylorWimpey house. Today we move back in for the 3rd time. Worst of all, it’s still not finished!” and on 1st October 2016 he tweeted: Two years this has been going on now and guess what? Our @TaylorWimpey house still doesn’t meet building regs! How do they get away it?”

Peter Redfern visits Loddon Park

A question for Peter Redfern during his visit to Loddon Park

In fact this particular development is so bad Taylor Wimpey CEO Peter Redfern even visited the site recently, presumably to see it for himself and speak with the customers his company had let down perhaps? Not a bit of it! Quite a few of the buyers at Loddon Park have confirmed Redfern didn’t speak with any of them during his visit on 13 September 2016, despite some actually requesting he did!

Peter Redfern

Buyers plead for CEO Peter Redfern to discusss their new homes.

Some took to Twitter to confirm: Luke Mahon @MyHouseSucks saying “he came to the site, but he didn’t visit my home” @myshoddyhouse said “he came, he saw (with rose tinted glasses), he avoided all residents!” He was late arriving at Loddon Park because he was apparently met by an angry buyer’s picket line at another site! Even the MP for Reading East Rob Wilson has got involved. He first met with residents on this site 14 months ago to discuss their “exhaustive and frankly unacceptable list of defects in their newly-built Taylor Wimpey properties.” He says: My constituents deserve much better and I will see to it that Taylor Wimpey delivers on its commitments.”  In his update on 17 September he adds: “Taylor Wimpey has continually assured me that it is committed to rectifying all defects without delay and that remedial works are ongoing. I remain committed to making sure Taylor Wimpey delivers on its commitments to residents and draws this sorry saga to an expeditious – albeit, long overdue – conclusion”

Peter Redfern

Peter Redfern replies to MPs but not to his customers.

On 28 July 2016 at another Taylor Wimpey development,  ten year-old Gemma Fever was injured when a radiator in the family’s new home fell on her.  Her mother Kate e mailed Peter Redfern regarding her daughter’s injuries and has confirmed to me that she has not had a reply from Redfern. Again the local MP Neil Parish, has got involved with his office speaking to a representative from Taylor Wimpey regarding the incident and the action they are taking.

Radiator falls on 10 year old girl 2

Ten year-old Gemma – Injured by a defective Taylor Wimpey new home.

So since those sterling words in the firm’s Annual Report and Accounts, how is the main man doing? Is he leading by example? Has he “developed a customer mindset focused on delivering proactive, positive and professional service”? A good start would have been making a point of visiting his customers in their defective homes, listening to their problems and doing something about it.

As for “getting it right first time, communicating well, keeping promises and finding solutions”? Nothing will change all the time the Company is run by an accountant who appears to me to be either petrified or indifferent of his company’s customers.

Has customer service been a “key priority for Taylor Wimpey in 2016”? Not on this evidence. I believe Taylor Wimpey has, and continues to fail on every account in particular, “understanding our customers’ priorities to enable us to deliver at and ahead of expectations.”

Considering the poor quality of new homes this industry produces, you may wonder why the Taylor Wimpey boss is being singled out. Well he recognised his firm has problems and made a public statement implying something was being done about it. In short there would an improvement.

So here is the Redfern Review. Must try harder?  Certainly. ‘D’ for Effort –  ‘E’ for Progress?  In my opinion, accountants are not best placed to oversee housebuilders. They know the price of everything and the value of nothing. Good with figures perhaps, but not so good at everything else.  It may surprise some that Taylor Wimpey are not Britain’s worst house builders, such is the problem within this industry.  It is now time for those in government to do something to end the misery of those who buy new homes incentivised by government policy.
A good starting point  would be to end the Help to Buy subsidy for any housebuilder failing their customers by not delivering on their aspirational marketing commitments!

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Yet more taxpayers cash for housebuilders

Yet more funding for housebuilders! Whatever became of austerity, “there’s no money left” and “balancing the budget by 2020”? So is the country now awash with spare cash? Of course not. According to the national debt clock,  the UK is borrowing another £5,170 per SECOND or £1.86m an hour! The National debt is currently £1,762,340,000,000 (1.76trn), this equates to £28,291 for every person living in the UK or £48,600 for each UK taxpayer! So I find it totally incomprehensible that another £5bn is being added, to further and unnecessarily subsidise private housebuilding under the guise of increasing the number of new homes built.cropped-cropped-P1000481.jpgWe have already had the ‘The Osborne Stupidity’ – ‘Help to Buy’ fuelling house prices and housebuilders’ record profits. Now we have the ‘The May Lunacy’ ‘Help to Build’, yet more funding for housebuilders. Last week the Theresa May’s government announced two major housing initiatives; a £3bn Home Building Fund – £2bn long term funding for infrastructure and £1bn short term loan funding aimed towards enabling smaller developers enter the market. As is often the case with government announcements of supposedly “new funds” £1.2bn of the £3bn was previously announced as the Large Sites Infrastructure Fund in 2015. In addition, a new £2bn “Accelerated Construction Programme” aiming at getting new homes built more quickly on public land.

The new £2bn fund is designed to provide 15,000 new homes on public land by 2020, supposedly by boosting housebuilding. How can this £2bn provide 15,000 extra new homes when the UK average house price is £216,750 (July 2016)? The £2bn fund will buy just 9,227 new homes in total, just over 3,000 a year to 2020! The eight largest housebuilders could easily build these with a modest increase in their output of around 4.3%, with Barratt adding just 745 more homes a year and Taylor Wimpey a mere 568. Surely it would be better, quicker and cheaper to force housebuilders to up their production, perhaps by taxing homes not started in their planning-approved landbanks?

The £2bn Accelerated Construction Fund, could be used to underwrite new developments on public land and could mean the government offer guarantees to developers that it will step in to buy properties housebuilders are unable to sell, according to Sir Edward Lister, the chairman of the Homes and Communities Agency (HCA), which will oversee it.

Lister told Property Week: “The way I see that going is guarantee money rather than anything else. So it’s about us going to a housebuilder and instead of expecting the normal build-out rate of 50 units a year we’ll say, ‘We want you to build all 500 in one go and what we’ll do is guarantee to take them off you if you can’t find a buyer”.

Property Week reported that the HCA would sell the homes on the open market or to private or social landlords with at agreed prices set before the government select which development schemes to back. How is a £2bn fund going to be able to step in and buy up to 450 extra homes on each site as Lister implies? Surely this latest scheme is being aimed at small house builders, probably following many weeks of lobbying by the Home Builders Federation (HBF) who were at last week’s Conservative Party Conference. So why isn’t this latest round of Government funding for housebuilders limited to those that currently build less than 30 new homes a year?

The Government will identify sites within its own property portfolio which can be built on by 2020 and will deliver outline planning permission and undertake the costs of some remediation work to reduce commercial viability risks on these sites. Hardly aimed at small housebuilders!

Unsurprisingly, the Home Builders Federation  has been quick to back the new funding for housebuilders, suggesting it will help small firms come back into speculative housebuilding, even so it claims “more is needed particularly to help smaller builders play a part” HBF spokesperson Steve Turner said he expected small firms and new entrants to the market to be the biggest beneficiaries of the fund, which is also expected to offer land on a “buy now, pay later” basis and with planning permission already granted. Never mind “anyway you can de-risk that process will help” –  it will be completely risk free! Talk about cake – both having it and eating it!

Taxpayers should be grateful that the fund is limited to ‘just’ £2bn. Free public land (no upfront cost) with planning permission and a guaranteed buyer at the outset, what’s not to like? Now anyone with a truck can make a 25% profit building homes for an outlay of just the building costs, around 40% of the value and they can get access to £1bn of short term loan funding for that too! All with the potential to leave the British taxpayer with impossible to sell, badly-built new homes.

The Government should be funding the building of council houses if it is serious about increasing Britain’s housing stock for everyone, not just aspiring home owners. The move towards a “dystopian meritocracy” with housing policies designed to grab the headlines is aimed purely at increasing the level of home ownership through government schemes, subsidising private companies within the industry and their customers, is as misguided as it is unfair. There is nothing wrong with renting a home. Britain should be building decent council homes, built by local building contractors, not subsidising an entire industry and its customers, with a policy which has so far failed in its attempt to achieve any meaningful increase in housing output and will in all probability, continue to do so, because plc housebuilders will never build the number of new homes needed.

It is time the government switch focus away from funding for housebuilders pursuing quantity and look to improve the  quality of new homes. Housebuilders can well afford to build better quality new homes and give those that buy them better service when they find problems. All the measures recommended in the APPG Inquiry Report would also cost UK taxpayers absolutely nothing at.

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Why do so few new homebuyers complain and go public?

This was a question I was asked at the APPG last November. Surely, if there was a real problem with the quality of new homes, why is it that so few actually complain and go public with their experiences? It is a question I often ask myself, knowing as I do that 93% of new homebuyers will report problems to their housebuilder very soon after being handed the keys.  Imagine the public outcry if 93% of new cars went back to the dealer for faults to be fixed after a few days or weeks! Indeed, if new homes were cars they wouldn’t be fit to go on the roads! So why is it that out of a potential 129,300 people that bought a new home in the year to 30 June 2016 and reported problems to the housebuilder, most chose to stay silent? Even more astounding are 86% that the HBF claim “would recommend their housebuilder to a friend” – although the HBF 8-week customer survey results appear to be being manipulated by the big housebuilders.

Adversely  affect the future value – more difficult to sell

Lord Richard Best said: “I think another factor could be that people don’t want to moan about their new home having invested such a large amount of money, and knowing that one day they’re going to sell it to. It’s counterintuitive to rubbish something that you’re going to sell later, which you’ve invested so heavily in.”

His Lordship is not wrong there. It has even been known that some large plc housebuilders try to silence unhappy buyers by implying that going public on social media, could blight the development and owners could suffer negative equity saying, “do you really want to be the cause of lower house prices where you live? What do you think your neighbours would say?”

Embarrassment

It could also be that many new homebuyers are embarrassed, facing the sudden realisation that, having paid large sums of money for their homes, they could have and perhaps should have, taken more time and done at least some research, on both the development and the housebuilder before signing on the dotted line. Perhaps some may have avoided buying from a housebuilder rated just three stars by their own customers, or one that employs very few site managers capable of winning an NHBC Quality Award. Yet in 2015,  18,350 buyers still bought either a Persimmon or Bovis new home.

Ignorant of defects

Most new homebuyers are young naïve first-time buyers attracted by the prospect of home ownership by Help to Buy and other government schemes. Most of the others are naïve first-time new-build buyers. Inexperienced, they do not know what standards to expect and what is acceptable and what is most definitely not. Most new homebuyers are not building experts, yet surprisingly very few pay for their home to be professionally inspected and snagged before they move in. Many even use the solicitor the builder suggests and do not seek or take note of the good advice available online. These are the builder’s favourite buyers; trusting, easy to please and easily fobbed off!

What happens on site stays on site

On most new developments, site managers and sales advisors work together to prevent complaints and defects getting back to their regional offices. All too often, buyers give the sales staff a hand-written list of things they want sorting out on a scrap of paper. Whether these items get fixed properly or not, no one has any record, not the new homebuyer, or more importantly, the housebuilder’s regional office.

Intimidated or scared of the housebuilder

Quite a few new homeowners are so intimidated and concerned about possible ramifications that they choose to either say nothing, or accept whatever excuse or explanation their housebuilder tells them when they report something wrong with their home. “its within tolerance” and “you’re being picky”  for example.

Do not want the disruption of repairs

It cannot be under-estimated the amount of disruption that new homebuyers suffer when trades return to fix their sub-standard workmanship and defects, all of which the housebuilder failed to check or get right before the buyer first moved in. Add in taking time off work and potential damage to carpets and possessions, it is not surprising many choose to accept the defect in the certain knowledge that to sort it out would mean extensive works, dust, dirt and in some cases actually moving out. Some new home buyers may  decide to undertake the work themselves “if you want a job doing right…etc” rather than have the prospect of the same unsupervised bodgers returning for a second attempt!
Taylor Wimpey remedial work after 9 months

Evelyn Lallo's Taylor Wimpey New Home On BBC South Today

Gagging Order/Confidentiality AgreementGagging Orders

Or to use the legal term non-disclosure or confidentiality clauses. These are added to agreements which buyers sign before they receive compensation from housebuilders. More often than not they also have a requirement for the new homeowner to delete any social media messages and take down their blogs or websites critical of the housebuilder and their home. The Internet is a powerful resource and is forever, the housebuilders know this.

 

The British disease

It is a well known fact that the British don’t like to complain. Far better to suffer in silence. “Is everything alright Sir? Madam?” Yes they say! Of course it is – the meal may have been horrible, the hotel room noisy or dirty or staff rude and indifferent. It’s all too easy to say nothing likely to cause conflict and just vow never to go there again. But by doing so, nothing is ever going to change. Even so most people choose to say nothing, leaving it to someone else. It’s exactly the same with new homes.

The young are less likely to complain

This is not just a question of older people being more grumpy. These people have the wisdom and life experiences and have learned over many years that you don’t get what you want, what is morally right, unless you are prepared to do actually something about it. They know what is acceptable and certainly what is unacceptable. This baby-boomer generation will have had a better education and therefore are better equipped to write a structured letter stating what is wrong and what outcome they are looking for. This is something that younger people can struggle with.

Haven’t got the time

Oh if only I had a pound every time I heard that one! They find time to go shopping, to get tattoos. They find the time to text all day. They have time to watch rubbish reality TV. They are permanently on Facebook – a website wasting the time of a billion lives globally. Yet these same people are “too busy” to sign a petition that might just force the government to do more for new homebuyers than throwing ever-increasing amounts of taxpayer’s money at plc housebuilders. They are “too busy” to write to their MPs to inform them of their defective new homes and indifferent housebuilders. Some do find time to make timid posts in closed, single-builder Facebook Groups rather than join forces and stand up and be counted as the first generation that together, says we have had enough, we will get this changed.

In the meantime, no doubt a trickle of suffering new homebuyers will be brave enough to face the TV cameras from time to time on programmes such as BBC Watchdog, with their sorry tales of woe. Programmes that allow the housebuilders to respond: “we are sorry that on this occasion, we have not met our own high standards. We are working with the buyers concerned to resolve their issues as quickly as possible.”

And so it goes on. The silent majority of new homebuyers through their own inaction are in their own way, as bad as the housebuilders that built their defect-ridden new homes. New homes are poor quality, of this there is no doubt. Large plc housebuilders prioritise profit over people – fact. So why are people not protecting themselves and doing at least some research before buying a new-build home? It could be argued that consumers spend more time deciding which  new pair of shoes to buy than they do buying a new home.

Never before has so much, been owed to so few, by so many

A very few new homebuyers do get active. They set up residents groups, Facebook groups, post on Forums, some even writing of their experiences on their own website or blog.

A brave few are even prepared to be interviewed on national television or in the national press. People like Sue Oliver, who highlighted on Channel 4 Dispatches last November how Bovis had tried to prevent her seeing (and wanted to doctor) a report on her home. (below)Bovis Doctor report e mail DispatchesPeople like Luke Mahon and his fellow Loddon Park residents, so angry about the defects in their Taylor Wimpey new homes they have shouted loudly; although after two weeks only six have signed this Petition! Carolina and Roberto Revilla also long-suffering Taylor Wimpey new homebuyers also appeared on Dispatches. In national press James Hayward tells the Daily Mail he was so angry he set up a website mydavidwilsonhome.co.uk and there is Andy Bell who bought a Persimmon new home.

Kirsty Burton was one of several feisty new homebuyers determined to force housebuilders, [Persimmon, Taylor Wimpey and Barratt] not only to fix their homes but pay meaningful compensation, which Persimmon have agreed to do at their Hunters Gate development in  Grantham. In an interview for the Daily Mail Mrs Burton said at the time: “We have suffered unimaginable stress and Persimmon have fought us every step of the way.” But how did they get on? Were the problems with their homes sorted out? How long did it take? Where are the warnings to others? To be sure, even the most angry new homebuyers go quiet in the end. Why are they not telling others of their experiences or how they got compensation and how much? Why are they are not now campaigning for better quality and better customer service? petitionEven more inexplicable is that at the time of writing, most unhappy new homebuyers have not even bothered to sign this Petition  to force Government to implement the  ten APPG Inquiry recommendations, especially, the setting up of a New Homes Ombudsman. A simple task that takes around a minute to do!

luke-mahon-lodden-park

Insulation being fitted in Luke Mahon’s Taylor Wimpey built new home at Loddon Park

New homebuyers often feel isolated when they try to make a complaint. The first thing housebuilders say is “this is an isolated incident, don’t speak to your neighbours about it,” and it’s incredible that most appear to have a system in place to bully their customers into that. Divide and conquer. Loddon Park new homebuyer Luke Mahon was told by Taylor Wimpey not to talk to his neighbours.  He says the way that Taylor Wimpey act towards their customers is “quite intimidating. First of all they try and isolate you and try and make out it’s just you and no one else is affected. And then they kind of try and make it feel like your making a lot of fuss, things like oh well you’re being very picky”  You can hear his experience of Taylor Wimpey  here

A single twig can be easily snapped, but not when it is part of a bundle tied together! So it is very strange that so few homebuyers appear willing to get organised and join forces against their housebuilder. That is apart from making a few comments in these Facebook groups for a short while.

Unhappy New Home Buyers604 members (Public)

Taylor Wimpey Unhappy Customers – 275 members (Public)

Persimmon Homes and Customer Services  – 83 members (Public)

Persimmon – Unhappy Customers  – 304 members (Public)

Barratt Homes = The new faulty towers  – 200 members (Public)

Bovis Homes Victims Group  – 380 members (Closed)

Homeowners Rights Network  – 289 members (Closed)

I have been campaigning for more than seven years for a better deal for those that buy new homes and I don’t even own a new home! I won’t be giving up until, at the very least, buyers can take disputes to a government-appointed New Homes Ombudsman! 

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