“There are lies damned lies and statistics”…Mark Twain
A spokesman for the Home Builders Federation (HBF) made some exaggerated, misleading and untrue statements regarding homebuyers’ satisfaction and protection when interviewed for the BBC Radio 4 “You and Yours” programme on new-build homes aired on 2 March 2016. These merit detailed clarification and rebuttle.
The BBC reporter said that “the house building industry says that only around 1% of complaints are around serious issues, structural faults for example and that generally standards are very high.” Even if true, it would still indicate that out of the 143,560 new homes built in 2015, “around” 1,435 will have structural faults that cannot be “guaranteed” not to crack, creak, crumble or fall down, requiring major remedial works. Often this means the new homeowner has to move into temporary accommodation as is the case with Evelyn Lallo who has been in ‘temporary’ accommodation since June last year whilst Taylor Wimpey carry out extensive remedial structural work.
The NHBC told me that “NHBC data shows that 0.7% of Buildmark warranty holders per annum (around 10,500) experience issues that stem from latent defects in the design or construction of the home that constitute a valid claim.” Obviously the figure does not include those warranty holders (new homeowners) with issues that are judged not to constitute a valid claim, or those with claims below the NHBC ‘minimum claim value, currently £1450. The NHBC’s 2014/15 Annual Report indicates that 1,320 valid claims related to foundations (12%) and 4,290 (39%) related to the superstructure of new homes, resulting in a combined cost of £55.3million to rectify. Dream homes that become nightmares are far from uncommon!
Home Builders Federation (HBF) spokesman Mr Steve Turner made these statements on the BBC Radio 4 You and Yours programme:
“We ask the same questions each year to all new homebuyers”
This is not true. The way the questions have been asked and the number of questions asked has changed. In addition, all homebuyers are not sent the survey. Out of a total of 116,580 new homes built in the HBF survey year to 30 September 2014 (2015 survey results), only 67,710 surveys were sent out (58% of homes built in the survey year), with just 38,074 surveys returned (56%).
“The survey does not suggest that a third of people are unhappy”
Again not true as the survey is sent out after just 8 weeks of the buyer moving in and the possibility of a honeymoon effect cannot be overlooked. The APPG Inquiry into the quality of new homes was told a study by the RIBA suggested that a third of buyers were dissatisfied with the quality and design of their new home, two years after moving in.
“Overwhelmingly people are happy with new build homes….”
The “overwhelming” statement is based on only the returned HBF Customer Surveys – representing just a third of the total number of homes built. “Happy” (feeling, showing expressing joy) being quite different from “satisfied” (fulfilled, appeased, gratified, pleased contented – you are pleased because it is what you wanted). More importantly, over 8,974 (23.5%) of the returned surveys were not used in the “sample” of surveys that produced the 86% “Satisfaction” in the question used for builder Star Rating. In addition, the key star rating question is actually asked twice! Once with a Yes/No option and again as “On a scale of 0 to 10 how likely would you be to recommend your builder to a friend?” Clearly, any perceived satisfaction can be (and in my opinion probably is) manipulated, especially as the results of the second version of the question are not made public at all. Until there is clarity and transparency with both the 8-week survey and the survey sent to homebuyers after 9-months – the results of the latter are never published, statements such as this from the industry must be taken with a large pinch of salt!
“that is of course whilst recognising that the industry can always improve and when you are building tens of thousands of anything, especially something as complex as a home that is in effect being built in a field in all weathers by numerous people, that mistakes are going to be made…it’s how we reduce the number of mistakes and number of issues and how we deal with customers who have had issues”
Excluding the latest technological and design advances used in eco-homes, Passivhaus etc. which are rarely built by the volume house builders anyway, building a traditional home is not at all complex, the methods and materials used have remained virtually unchanged for 100 years. Yes it is built outside, but once the roof is constructed, all internal works – carpentry, plumbing, electrical, plastering, kitchen fitting, wall tiling, decoration etc. can be done in exactly the same conditions as in any other manufacturing industry. As for numerous people being involved, there are far fewer people involved in building a new home than build the average family car, yet the car is built to a much higher standard!
Regarding the need to “reduce the number of mistakes and issues” In the 2014/15 financial year, the NHBC spent £87million rectifying “mistakes” on 11,000 claims under its Buildmark warranty. Around 51% for these were claims for major “mistakes” made to foundations or superstructure totalling over £55million – 63% of the total cost! As for “dealing with customers who have had issues”, many are faced with indifferent, incompetent, or downright petulant staff in the house builder’s so called “customer care” departments, who appear to do anything and everything to avoid carrying out their responsibilities under the first two years of the 10-year new home warranty. Perhaps this is why the NHBC had to step in and take over builder’s responsibilities in the first two years of the warranty, to the tune of a staggering £26.2million last year – 30% of the total cost of warranty claims.
The reporter said “the industry will carefully consider any recommendation for a new homes ombudsman but said buyers already have several levels of protection.” This is the industry already pushing against the introduction of a New Homes Ombudsman:
“The mortgage company require a warranty and require the home to be built to a certain standard which is monitored by a warranty provider”
It is true, you cannot buy a new home with a mortgage unless it has a ten-year warranty. The fact is a great many homes are not built to the required standards, indeed some are not properly inspected and some vital inspections are not even carried out.
“you have a two year guarantee from the builder whereby anything the homebuyer picks up that doesn’t meet expectations or standards or build standards, the builder has to repair”
This is incorrect. It is not a “guarantee from the housebuilder” – it is a requirement of the new home warranty which states: “The builder is responsible for putting right any damage caused by their failure to build to the NHBC Standards.” This is quite different from: “anything the homebuyer picks up that does not meet expectations” and most builder’s clearly highlight all the exclusions they can get away with such as: “Wear and tear, neglect and failure to do the appropriate maintenance, damp, condensation and shrinkage not resulting from the builder’s failure to comply with the NHBC Standards, storms and severe weather conditions, flooding and changes in the water-table level, fire and smoke.” Even so as previously noted, the NHBC spent £26.2 million last year on claims in the first two years of the Buildmark warranty.
“you have the warranty providers that provide a resolution service for disputes in that area”
The NHBC Dispute Resolution Service can be used when house builders fail to carry out their responsibilities in the first two years regarding defects notified under the new home warranty. Around 33% of disputes are found in favour of the house builder! It is not for matters, such as disputes over boundaries, planning, contractual or financial matters.
“you’ve then got an 8-year warranty after the two year cover expires for any serious structural or serious issues with the home.”
Last year the NHBC which provides warranties for 80% of all new homes built each year, paid out £60.3million for claims made in years 3 to 10 – 11,000 claims. This is hardly indicative of quality, care or building to standards and regulations! More importantly, the warranty does not pay new homebuyer’s any compensation for disruption, inconvenience and loss caused during works to remedy serious latent defects to the structure of the home Mr Turner!
“You’ve also got recourse to the Consumer Code which gives a further independent adjudication over issues that may arise”
Again not true. The Consumer Code for Home Builders Adjudication Scheme only provides recourse for non-compliance of Code requirements. The Code is merely the industry’s interpretation of the requirements of existing statutory regulations that house builders who are registered with warranty providers agree to comply with; such as the Unfair Terms in Consumer Contracts Regulations 1999 and the Consumer Protection From Unfair Trading Regulations 2008.
In the 47 case summaries published in 2015, the following were deemed to be “outside the scope of the Code” – any warranty matters or disputes, snagging, defects, poor quality and workmanship issues, unfair fees for extra works, loss of property value, safety, electrical safety, water ingress, even an allegation of threatening behaviour and slander by a builder! Of these cases 41 were successful, although 38 were only judged successful “in part.” The total awarded to claimants being just £85,155, representing just 22.7% of the total amount claimed (£374,103). It should also be noted that over 110 violations in 17 different requirements of the Code were made by house builders in the 41 successful cases. This does not include the 16,802 occasions builders breached Code requirement 1.2 by not even giving their buyers a copy of the Code at Reservation – and that figure is from the respondents of Q19 of the HBF 8-week survey! If the same percentage were applied to every new home built in the survey year, it would indicate that around 50,129 new home buyers were never given a copy of the house builders own Code! No wonder, even with its limitations, the Consumer Code for Home Builders Adjudication Scheme (CCHBAS) is rarely used by consumers!
Finally the warranty providers do not pay compensation at all. The Consumer Code for Home Builders maximum payment under the CCHBAS is just £250. The CCHBAS will only reimburse a buyer‘s actual monetary loss and expense, with the burden of proof on buyers to prove breaches of Code requirements and provide invoices and receipts to substantiate their claims.