Monthly Archives: May 2014

Why new home buyers need a New Homes Ombudsman.

TW Snag Light SwitchThe quality of new homes is getting worse as housebuilders show contempt for their customers by refusing to tackle the issues in their poor quality, defect-ridden new homes.

This government has bent over backwards to help the house building industry, with taxpayer-funded subsidies such as the controversial Help to Buy equity scheme (£791million loaned for 19,394 new homes to 31 March 2014) and the ongoing relaxation of planning rules. So why are Britain’s housebuilders not doing anything to improve the dire quality of the new homes they are building?

The quality of new homes is getting worse as this recent article in the Daily Mail demonstrates; caused by a combination of a lack of skilled tradesmen, insufficient construction time, poor site management and the builder’s CEOs  only caring about profit and numbers (and their bonuses!) – quality doesn’t come first (if it ever did), in fact it doesn’t even come fourth!  To add insult to injury, housebuilders are even routinely refusing to take any action to fix defects that unlucky buyers discover in their new homes once the initial excitement wears off, coming up with “it’s within tolerance” and other excuses in an attempt to justify not fixing defects in their new homes.

Taylor Wimpey 9 months small size

Extensive remedial works still being done in a Taylor Wimpey new home nine months after moving in.

The sad fact is that the quality of new homes and many housebuilder’s reputations are now so bad, an increasing number of new home buyers are employing professional snagging inspectors to independently check for defects in their new homes before they move in. But yet again, housebuilders often refuse point blank to allow access to the new home for buyer’s inspectors until after legal completion, as a matter of “company policy”. This means that any issues identified cannot be fixed prior to occupation and even if the builder does attend to them later, (a big if!) it causes maximum inconvenience for the consumer taking time off work, moving furniture, mess etc.

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Why the least expensive solicitor is never the best.

A recent report released by the Legal Ombudsman shows  a high rise in the number of complaints against solicitors – in particular against conveyancers.   One of the most serious issues that has grabbed the headlines were reports of solicitors not paying the stamp duty on behalf of their clients.   Whilst rare, this is  fraudulant.  HMRC, often many years later, are coming after homeowners for payment of the original stamp duty due with interest charges added on top.  

Deeds 2Of the 7,500 complaints received by legal ombudsman in the survey, around 18% were concerned with residential conveyancing.  It is thought that this due to a large extent, by the growth in the number of online conveyancers and so-called “tick-box, bucket shop style, call centre conveyancing services” often offering a conveyancing service for as little as £300.  

Buying a home is almost always likely to be the largest purchase most people will ever make. It is a legal transaction and buyers and sellers need professional and qualified legal representation.  Yet despite this, after looking at the other costs involved in moving home, many choose ‘cheap’ rather than ‘best’ when it comes to appointing a solicitor – a decision as the report highlights, many often deeply regret.   

It is always best to have a solicitor who is local to you so that when there are issues they can be discussed face to face.  They could be complex and if there is a problem you need a professional on your side to solve the problems on your behalf, not just part of a box ticking exercise.  You may find there are issues years later when you come to sell the house that were missed by the conveyancer when you bought.  

The advice is always to get a recommendations from people who have just bought or sold. Speak to them.  Then ask yourself: Does the solicitor sound competent? How well do they communicate?  Will they protect your interests? Feel free to negotiate on their fees but don’t skimp.   

Finally, if you are buying a newly built home, never, repeat never use the solicitor “recommended” or “suggested” by the house builder. They may claim it will be “quicker” and “easier” but you can be sure there will be a conflict of interest. In addition, under the Consumer Code for Home Builders, Requirement 2.5 states that house builders cannot restrict your choice of legal representation.

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Estate Agents start charging house buyers fees as well as sellers

Talk about having your cake and eating it, greedy estate agents have started to charge desperate buyers a “finders fee” according to The Mail Online, It says those “desperate” to move to a larger home are being asked to pay fees up to £4,000. “ the same time, the seller must also pay out the usual fee to an estate agent for selling their old home.” 

For sale board 2These new fees are yet another cost for cash-strapped buyers who are already paying ever increasing costs to move home, including 3%  Stamp Duty as well as their own estate agent’s fee to sell their property – at least 1% of the sale price. 

It is questionable if there are any advantages for buyers and estate agents are getting a great deal of bad publicity and negative attention about this practice, termed a “sales technique” in Estate Agent Today.

Buyers are being forced to pay these fees due to a shortage of properties that come onto the market. Such is the stampede for the best homes; you have to question why sellers even need an agent in the current bubble market. 

An NAEA spokesman defended the increasing use of finders’ fees, claiming it a symptom of the pressures on supply in the current market:                        “Common practice for estate agency fees is for the fee to fall to the seller in return for the agent’s role in marketing the property, securing the sale and negotiating the transition with the buyer and others who may be part of the chain. However, given the current pressures on supply in the market, some agents may well consider changing their fee structures to encourage more sellers to the market by reducing fees for those selling a property and instead introducing a finder’s fee to help buyers find the right property. In whatever instance a fee is levied, however, our code of conduct is clear that all agents must be upfront and transparent about the fee being charged” 

A probe has been launched into the borderline legality of the increasingly widespread practice of charging both sellers and buyers fees. It started as a charge to buyers when they succeeded in a “sealed bid” tender process, levying a typical fee of 2.5% of the successful bid price. However now finders’ fees to buyers are also becoming commonplace. 

Property Ombudsman Christopher Hamer said:     “the agents’ clear legal obligations are to the seller and entering into a contract with prospective buyers may well compromise that and be seen as a conflict of interest.” 

The only people this will help will be the estate agents, who will end up getting double their usual fees. It would appear they are trying to get back their crown from bankers, as the most greedy and despised profession.

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Is the Consumer Code for Home Builders fit for purpose?

After close examination of the recent Adjudication Scheme case histories, we ask……..Is the Consumer Code for Home Builders worth the paper it is written on?    The clue is in the name “For Home Builders” not for homebuyers.  At best, house builders tend to view the Code as voluntary or optional despite many of the Code requirements actually being required by consumer legislation.   At worst, as is shown by the published case summaries, house builders knowingly continue to disregard the Code requirements in the full and certain knowledge that the worst that could happen would be slap on the wrists and a small award against them.  Now in it’s fifth year, the Code is frequently referred to by the industry being used as an opportunity to promote new homes.

Consumer Code coverThe Consumer Code for Home Builders was launched in April 2010 apparently as a response to the Barker Review in 2004 and Office of Fair Trading – Market Study of Home Building in the UK published in October 2008. The Consumer Code is allegedly the house building industry’s response to the issues raised in those reports relating to customer service and satisfaction. It was created by a “group of stakeholders within the industry” who “joined forces to consider the issues raised” to “produce a Code of Conduct for home builders.” It was first launched in April 2010 – over FIVE YEARS after the deadline in Barker’s report!

CodeThe Code claims to:  “provide protection and rights to purchasers of new homes, ensuring that all new home buyers are treated fairly and are fully informed.”  But the protection already exists with The Consumer Protection from Unfair Trading Regulations 2008, making it a legal requirement to treat consumers fairly and The Business Protection from Misleading Marketing Regulations 2008 reinforces the legal requirement not to make misleading or false statements. The Consumer Code for Home Builders if strictly followed, should result in compliance with the legislation, probably the main reason it was created by the house building industry.

The Code applies to all house builders registered with the new home warranty providers such as the NHBC, LABC Warranty and Premier Guarantee.  It consists of 19 requirements and principles that house builders must adhere to in marketing, selling homes and their after-sales customer service.  Failure by a house builder to adhere to the code requirements can result in exclusion from all registers run by the warranty bodies that participate in the scheme. Has this ever happened?  Very unlikely!

But is the Consumer Code effective?  –  Do house builders strictly follow it?  –  Are punitive penalties being imposed on builders who are found to have deliberately breached the Code?   Going by the latest published Adjudication Case Summaries for 2013 it would appear not.

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