Government announces creation of statutory New Homes Ombudsman
Monday 1 October 2018 was a good day. It has been over 4 years since I began my campaign for Government to set up a statutory, stand-alone new homes ombudsman, providing new homebuyers with a an independent unencumbered means of redress:
FREE * FAIR * FOR EVERYTHING.
It’s been a long, hard, time-consuming and often lonely campaign. I have, as they say, been there, done it, got the T Shirt.
See #NewHomesOmbudsman on Twitter
Over recent years, especially after the APPG EBE Inquiry into ‘Quality of New Homes in England’ published their report on 13 July 2016, the house building industry has had ample time to change its focus and priority towards their customers and improve the overall quality of homes they are building. They have failed to do so, whatever the industry’s in-house surveys “to provide data to rebut negativity” may indicate, as more and more new home buyers are forced out of their homes to enable serious, often structural remedial works to take place.So I was delighted to hear James Brokenshire’s announcement on Monday that a statutory new homes ombudsman is to be created, with legislation requiring all developers and housebuilders to belong to the new homes ombudsman. This follows the government’s consultation earlier this year on consumer redress in the housing market which closed on 16 April – the feedback report still yet to be published.
Secretary of State – James Brokenshire – 1st October 2018
Speaking at the Conservative Party conference, James Brokenshire acknowledged the need to “address quality issues in new homes” saying:
“That’s why I can announce today the creation of a New Homes Ombudsman. This new watchdog will champion homebuyers, protect their interests and hold developers to account. And give confidence that when you get the keys to a new home you get the quality build you expect and the finish you’ve paid for. “
This will help ensure consumers buying new homes will have an independent and legally backed route of redress against developers who do not deliver what they promise.
We want to protect consumers and ensure everyone has a great place to live and raise a family, currently there is no statutory process to bring redress.”
A pre conference press statement said:
“We are creating a New Homes Ombudsman to protect consumers and give them confidence that when things are not right in their new home they have a route of redress. This will also discourage developers from cutting corners and putting unfinished homes on the market.
Our plans will help to ensure that new-home owners have better rights and everyone has a great place to live and raise a family.
According the Home Builder’s Federation [HBF] and the NHBC, 99% of new homebuyers report snags or bigger defects after moving in. Developers have been found to put homes on the market which are incomplete, with issues such as wet paint, poorly fitted doors and other defects.
Whilst most developers do resolve issues there is no standard order of priority, meaning a consumer does not know if it will take one day or three months to resolve a problem, irrespective of how serious it is. Having paid a significant sum of money to buy your home it can be stressful and deeply frustrating to deal with issues which most people would assume have been resolved through the building process.
Our solution: We are creating a new statutory ombudsman specifically for new homes to address these concerns. The role will specifically address problems of build quality in new homes.”
There has been surprising scepticism and negativity from some homebuyers on social media following the announcement. Comments such as:
“What teeth will they actually have to redress any issues at all?” “We need to watch the terms of reference very closely indeed.” “Sadly, it won’t help me in Scotland” “Waste of time. It’ll just be another organisation that receives back-handers from house builders, so they turn a blind eye to any problems.” “It seems will only cater for people in their first 2 years only.” “Great news but devil will be in detail, and that’s not being negative.” “A very short comment with no timescales. The leasehold ban and peppercorn ground rents. Leasehold reform was agreed on last Christmas but here we are with no timescale and no progress!” “It’s certainly a step in the right direction as long as they get on and do it!” “It doesn’t mean Consumers Rights have changed” “Will this cover current new home owners?” “Good news, if the ombudsman has the power to hold developers to account. Big question, will they deal with historic cases & if so, have far back?”
” I’ll be watching with interest. You can perhaps understand some cynicism where government are involved.” “Too little too late.. AGAIN!” “First job, shut down the NHBC”
But make no mistake, this is the most significant positive step change for new homebuyers in the last 53 years. The NHBC was formed in 1936, beginning its life as the Housing Improvement Association, established by a group of builders with the object of giving homeowners a fair deal at a time when “jerry building” was a national concern. Some buyers would argue nothing has changed! Later, in response to the growing concerns of the Building Societies Association, the ten-year structural warranty was introduced in 1965.
The government and the then minister Sajid Javid, had previously indicated a preference for one single ombudsman for the entire housing sector, encompassing new homes, social housing, private sales and lettings. It seems unlikely that the statutory New Homes Ombudsman would have been announced if a single Housing Ombudsman was still part of Government plans.
I would like to thank the many MPs and new homebuyers who have supported my campaign, who, together with the national press, have brought the issue of poor quality new homes and the need for a statutory new homes ombudsman to the forefront. I am however surprised that none of the national press have covered this announcement.
The government confirmed it “will work with consumers and industry to develop our proposals and publish more details in due course.” Why? There is no need, the consultation has been done, the responses are in, there has even been an APPG Inquiry into the “potential and detail” of a new homes ombudsman would work! In the meantime, government expects industry to continue to improve the current redress arrangements and improve the consistency of quality for new build homes.
Most new homebuyers asked me when the new homes ombudsman will be operational. I think the next announcement should include a timescale which I suggest should be “by 2020” at the latest.
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Housebuilders must belong to New Homes Ombudsman to provide better redress for dissatisfied new homebuyers.
In its report, published on 26 June 2018, the All-Party Parliamentary Group for Excellence in the Built Environment called on the government to make it mandatory for all housebuilders to belong to an independent ombudsman scheme.
Close but no cigar, that’s my verdict on the All Party Parliamentary Group EBE report from their secret, behind closed doors, inquiry sessions in “February and March” “looking into the potential and detail for a New Homes Ombudsman.” The good news is the report acknowledges that:
“Buying a defective new home can take a massive toll on people’s wellbeing as they wrestle with an almost Kafkaesque system seemingly designed to be unhelpful. We cannot allow this to continue. Consumers desperately need greater leverage to drive a change in this culture in order to ensure that housebuilders put them at the heart of what they do.”
Kafkaesque: bureaucratic delays, a situation that is confusing and frightening, especially one involving complicated official rules and systems that do not seem to make any sense, a nightmarishly complex, bizarre, or illogical quality.
Much of this latest APPG EBE inquiry report, (published 27 June 2018), repeats previous recommendations of the 13 July 2016 Inquiry report strangely titled “More Homes Fewer Complaints” . Indeed this report could also have been more accurately titled “Better redress for new homebuyers” as it concerns a New Homes Ombudsman. However, the title belies the government’s preferred option of a New Homes Ombudsman within a wider, ‘single portal’, general “Housing Ombudsman” however, “due to the technical nature, suggested new homes disputes would need their own separate and bespoke operation” Even the HBF agree with this, but government should be mindful that HBF’s motivation may be an attempt to retain industry control and influence over any stand-alone new homes ombudsman.
The report states : “We have been heartened to hear of efforts to improve performance from the Home Builders Federation (HBF), senior management at many housebuilders are taking steps to address the multiplicity of issues”according to the HBF. It was a great pity that the person that originally proposed the idea of a dedicated new homes ombudsman at the 2015 APPG EBE inquiry, was not even invited to orally rebut this industry-led smokescreen of lies and untruths. On page 20 Box 3, the HBF director of communications did a sterling job using words such as “put schemes in place” “progressing” “developing” “working with” “prepare” yet not one shred of “we have done” in the two years since the first inquiry report was published. He even claimed that the spectacular fall in satisfaction levels over the last five years (over 8%) in the industry’s own survey, “had been arrested” by a blip upwards of just 2% last year. I believe this is more a result of industry manipulation rather than any perceivable genuine increase in overall satisfaction levels. Recommendation 10 of the previous inquiry report was that the HBF annual customer satisfaction survey be more independent. Has the HBF progressed this? No, there has been not a single change.
Indeed, reading this inquiry report it can be concluded that various interested parties within the industry (HBF, Consumer Code for Home Builders (CCHB), Consumer Code for New Homes, NHBC, LABC, Ombudsman Services, and Housing Ombudsman, all gave oral presentations) have their paw prints all over this report. The report concluding: “We were encouraged by a more positive tone from housebuilders, warranty providers and operators of consumer codes of conduct than we encountered in our first report” Perhaps this only because of the growing likelihood of an independent new homes ombudsman who will making honest rulings on the facts and award justifiable, meaningful compensation. Whilst also making those operating various industry-led consumer codes redundant.
It was however encouraging, that many of the points made in my written submission were included in the inquiry report, including requiring housebuilders to buy-back their most seriously defective new homes.
So what is the good, the bad and the ugly?
Need for a New Homes Ombudsman is recognised
On a positive note the APPG EBE again acknowledges the need for an independent new homes ombudsman, free to consumers and funded by a levy paid for by housebuilders. I suggested £100 per home built. The report suggested £50 per home, raising £8.5m a year (170,000 homes). The HBF accepts their industry should pay. Nevertheless despite to obvious need for a new homes ombudsman, which even the industry itself appears to now accept is inevitably required, the Government has done nothing at all to help new homebuyers, which this report acknowledges are “going through hell”, “fighting redress was taking a toll on their health”. One distraught new homebuyer even told me last week that he was considering killing himself!
Housebuilders forced to buy back defective homes
The report recommends (as I did in my written submission) “that in certain extreme situations, the New Homes Ombudsman should be able to reverse the sale of the property”The re purchase price should be at current market value to include all associated moving costs, stamp duty, legal fees, carpets and curtains etc.
All New Homes Ombudsman rulings to be made public
This is to “flag up trends in housebuilders’ performance and publish annual reports collating awards made throughout the year.” This would enable future potential new homebuyers to see the worst offenders.
“A statutory requirement that any organization building and selling new homes belong to the New Homes Ombudsman to be able to trade.” “If they are struck off, they lose the ability to operate.”
Review of warranties
“To see if they are fit for purpose for homebuyers and to establish and easier form of redress with warranty providers as part of a New Homes Ombudsman role.”
No separate stand-alone new homes ombudsman (NHO)
It remains to be seen if the NHO staff at any housing ombudsman would be sufficiently skilled, with adequate technical knowledge to fully understand and rule on the technical aspects of building defects, warranty standards and building regulations.
No case fees
Case fees would to penalise the worst offenders but the committee thought “the disadvantages would out way the advantages.” If there are no case fees, there is no financial incentive for housebuilders to attempt a settle a complaint without recourse to the Ombudsman.
New home ombudsman to only cover disputes within first two years
This is a let off for housebuilders. The only reason given was that it “mirrors the duration for the housebuilders’ liability for defects.” However, the 2-year timescale does not bring warranty schemes under the new homes ombudsman jurisdiction, despite the committee acknowledging my observation that the “The Financial Ombudsman Service (FOS) is not the best organisation to preside over technical disputes.” New home warranty providers would not be included in the new homes ombudsman scheme as they are already covered under the FOS.
Awards made by the new homes ombudsman to consumers would limited to £50,000
Whilst this is better than the pitiful £15,000 maximum of the CCHB, it does not go far enough given the cost and inconvenience to owners with serious defects. Going to court is not an option for new homebuyers. Housebuilders have deep pockets would and do, fight every buyer legal action, settling subject to a non-disclosure agreement for fear of setting a precedent. Amazingly, the report concludes that the NHO should operate along the lines of other ombudsman to ensure “the consumer not be out of pocket and that their financial status is restored to what it was before the complaint.” This clearly isn’t going to work for new homebuyers with many having to stay in temporary accommodation whilst their homes serious defects are remediated. Sadly this demonstrates the lack of understanding by the committee of the overall problem faced by new homebuyers, something which I could have helped with had I been invited to give an oral submission.
The report recommended that any new homes ombudsman would not be statutory, despite a number of witnesses recommending this to the inquiry committee.
There is little point of asking for expert opinion if when given, it is then ignored. This is being suggested purely in the interests of simplicity and speed “because it can be set up more easily and quickly. Our overriding concern is to see consumers getting better redress as soon as possible.” It has now been over two years since the first inquiry report “Key” number 1 recommendation being the setting up of a new homes ombudsman. Why has government failed to do anything regarding setting up an ombudsman for new homebuyers’ redress, when it is obviously time critical? Indeed the Government’s own consultation which ended on 16 April 2018, has not even finished “analysing feedback” over 3 months later!
A new “Industry-wide code of practice”
There are apparently seven consumer codes regarding new homes – “all different but sharing a general lack of obligations placed on home builders.”The Property Ombudsman said that the Codes “are written in a way to suggest that they exist to contain complaints” which indeed they do, all being set up following The Consumer Protection for Unfair Trading Regulations 2008.
But the worst part of this report is the proposal for a new “industry-wide code of practice, with government, warranty providers, housebuilders and consumer groups working together, in consultation, to draw up a code that would be used by the new homes ombudsman (NHO) to adjudicate on disputes.”Not only will this give the industry an opportunity to influence what the new homes ombudsman can and cannot rule on, it will also mean the NHO would be shackled by the requirements of a single, industry-approved code of practice, which many housebuilders will be able to circumnavigate as they currently do with their own CCHB. I cannot think of a single ombudsman, in any sector, that can only adjudicate within the confines of a specific industry code. No single code could possibly cover every eventuality for new home consumer redress. It gets even worse with the HBF suggesting that “a detailed set of finishing standards for an ombudsman to apply when assessing the merits of complaints and resolving disputes” no doubt in their mind the housebuilder’s existing NHBC ‘Get out of Jail Free’ card The “Consistent Approach to Finishes” which is used to justify atrocious workmanship standards as permissible, if deemed “within tolerance”
It remains to be seen whether this APPG EBE Inquiry Report is given any consideration by government. Clearly, none of recommendations of the previous inquiry have been implemented. In the meantime, every week many thousands of new homebuyers move into homes that have defects, often serious defects, only to discover housebuilders and warranty providers are failing them. It is time the government stood up to ‘big housebuilding’ and set up an independent New Homes Ombudsman without any further unnecessary bureaucratic delay.
Posted on15/06/2018byNew Home Expert|Comments Off on Housebuilding industry attempts to derail the setting up of an independent new homes ombudsman.
As the Consumer Code for Homes Builders (CCHB) fights against its own imminent extinction, an ever growing recognition that a fully independent New Homes Ombudsman is gaining traction and support in government circles. The CCHB starts to “bend and amend” in an vain attempt to head off fully independent consumer redress, which would make the CCHB redundant and take control of buyers’ complaints away from those paid by the industry, to safeguard housebuilders’ vested interests.
The APPG Inquiry in 2015 and the subsequent report published as long ago as July 2016, stated as its number 1 “key recommendation” that a New Homes Ombudsman be set up by government. Indeed it went further saying that the Consumer Code for Home Builders “was limited in its scope” and “did not give a satisfactory form of redress.” The CCHB does not, as it so often claims, “give new homebuyers extra protection”. It is merely the industry’s interpretation of requirements of existing laws such as the Consumer Protection from Unfair Trading Regulations 2008.
1.2 An Ombudsman will not deal with issues of build quality and customer service which have concerned consumers but would simply address the problems that arise. A more fundamental approach to improving the quality of all new homes is therefore essential, and that is what the Consumer Code for Home Builders (“the Code”) is working to achieve.
Not true. A fully independent, government-appointed new homes ombudsman (NHO) would force housebuilders to look at what they do. All complaints to the NHO would be public and through meaningful, justifiable compensation payments housebuilders would be forced to improve the quality of the homes they build. The Consumer Code for Home Builders has been in existence for 8 years and it is a quantifiable fact the overall quality of new homes has fallen over that period. “Working to achieve”? – maybe, but only now a new homes ombudsman is about to make the CCHB redundant.
1.5 We are currently working with the Home Builders Federation, Homes for Scotland and others in the home warranty and home building sector to find an industry-led solution that could more easily be implemented to address concerns in the new home build sector.
“Find an industry-led solution”? The CCHB was industry-led and was found by a government inquiry to “not give a satisfactory form of redress” This profit-driven industry has had the last twenty years to improve quality and customer service when buyers report defects. It has failed all-ends-up to do so. It is not about doing what is “easily implemented” but doing what will be better and most effective for new home buying consumers.
2.5 Whilst we are supportive of the Communities Secretary Sajid Javid’s desire to improve consumer protection within the housing sector, we do not believe that a single Housing Ombudsman will provide the solution given the complexities involved in the construction and sale of new homes and the very different issues within the broader housing sector relating to second-hand homes, the rental market and social housing sectors, by way of example.
On this we can agree. The CIOB also agree that a separate, stand-alone New Home Ombudsman is required their spokesperson told me: “it shouldn’t be about condensing all the work of the various ombudsman but in fact offering something that really meets the needs of the consumer”
2.8 However, on those occasions where there are matters that need to be addressed, an Ombudsman will not be able to deal with any intrinsic systemic and operational issues within a specific home builder company that do concern those consumers, but will simply address the problems that arise. A Consumer Code can work with builders to ensure quality is further raised across the board.
“Can work with builders to ensure quality is further raised” The quality of new homes has got worse, it has never been raised at all. More and more new homebuyers are contacting me in distress, due to their indifferent housebuilders failing, to not only fix defects in their homes, but even to recognise their own responsibility to do so. There are also increasing instances of buyer’s dissatisfaction with the way NHBC deals with buyers’ warranty claims. How could the CCHB possibly ensure quality is raised, when it hasn’t even managed to get plc housebuilders to abide with the basic 19 requirements of the CCHB in 8 years!
3.2 Since its launch, the Code has led to a step-change in how builders deal with customers through the sales process and is now in its fourth edition. It has been reviewed three times with wide consultation across the industry; consumer groups and Government, most recently in 2016 whereby the review was overseen by a former Director General of Fair Trading. Each time, the Code has been updated and improved to provide greater protection for consumers.
4.1 All that said, to further improve consumer protection and address any identified gaps when dealing with new home problems, we are working closely with the HBF, Homes for Scotland and representatives from other warranty providers. To date, those discussions have included:
• Working towards a single common Code;
• Working towards an agreed set of warranty standards which conform to best practice;
• Improving the independence of the existing governance structure;
• Improvement of the existing Independent Dispute Resolution Scheme(s) by way of providing free access to consumers and extending it to cover any gaps identified between the home builder and the home warranty cover in relation to dealing with quality issues;
• Implementation of an Ombudsman redress scheme.
All of which is too little, too late. It is ONLY now being looked at because of the threat of a fully independent, government-appointed, new homes ombudsman. Otherwise why haven’t the CCHB and the industry acted before now? The Barker Review was way back in 2004 and the Office of Fair Trading Market Study of Home Building in the UK published in October 2008, both many years ago!
7.2 However, we believe it [CCHB] can be strengthened further by making it more independent of the Industry. This would not preclude the Industry being represented on the Board; on the contrary we believe that this would be desirable in the interest of reaching effective and practical solutions. However, the Board should be balanced, but with a majority of independents. Plans are already in place to make such changes.
The CCHB will never be independent of the industry. Its tentacles will be all over it, even with “independents” on the board. The NHBC has a council from many disciplines, but it has been controlled and influenced by housebuilder representation. Only a government-appointed new homes ombudsman, accountable and answerable to government, would be truly and demonstrably independent.
8.1 We are currently looking at ways we can improve the existing Independent Dispute Resolution Scheme by way of providing free access to consumers and extending it to cover any gaps identified between the home builder and the home warranty cover in relation to dealing with quality issues.
The CCHB should have included defects, poor quality and warranty issues but these were and still are, specifically excluded to protect housebuilders and warranty providers, not new homebuyers.
8.2 You have asked within your consultation whether purchasers of new build homes should have access to an Ombudsman scheme; we consider that the importance is not necessarily whether it is an Ombudsman scheme, but more that there should be access to an Independent Dispute Resolution Scheme that can determine on issues that arise.
Unsurprisingly, as a proper new homes ombudsman would make the CCHB redundant. IDRS has not served new home buyers within the “limited scope” of the existing CCHB. Far too often, even when buyers succeed, payments are a small fraction of what was justifiable.
8.3 Whilst we understand that the Property Ombudsman and Ombudsman Services (Property) have proved to be effective in addressing issues with estate agents in the second-hand homes market, our Code along with others in the sector already use CEDR Ltd: They are the leading independent commercial Alternative Dispute Resolution (ADR) provider in Europe and one of the largest and leading ADR organisations internationally, dealing with over 300,000 people in commercial disputes and resolving over 100,000 consumer disputes across 30 differing sectors.
CEDR Ltd are indeed a commercial ADR, As such they have commercial interests to protect. An independent new homes ombudsman would be non commercial: FREE – FAIR – FOR EVERYTHING
8.4 CEDR Ltd are accredited with the Chartered Trading Standards Institute under the ADR Directive and are an associate member of the Ombudsman Association and we are already in discussion with them as to how they may alter their services to meet Government’s expectations.
CEDR may well be accredited with the Chartered Trading Standards Institute (CTSI) but the CCHB is not approved by the CTSI.
8.6 We do not believe an Ombudsman scheme in isolation would, or could, offer the same levels of protection to consumers as home buyers currently have under the Code as it would not, by definition, embody a compliance regime as referenced above. A voluntary Ombudsman scheme inevitably would not engage all home builders as happens with the current warranty-led scheme where involvement in the Code is made mandatory by way of the warranty bodies’ Rules of Registration.
As previously mentioned, the CCHB does not offer any “protection” to buyers whatsoever! A New Homes Ombudsman scheme would not be voluntary at all. Every housebuilder would be legally required to be bound by its decisions and scrutiny, paying a levy based on the number of homes each build.
8.14 Many of the issues being raised recently in the media are deemed to be “snagging” issues. This is a broad term and further clarity on what this means would help – some may be quality issues, others maintenance issues that appear over time as the property “settles in” and dries out, and others might relate to work that needs to be completed. An agreed timeframe for resolution of defects may reduce the volume of complaints and it is then possible to consider that those that are not dealt with in that time could then be escalated either through the home warranty provider or failing that, the Independent Dispute Resolution Scheme.
This is typical of this industry, to attempt to minimise often serious defects in new homes as minor, snagging, or maintenance issues after “settling in”. In reality, thousands of new homebuyers have recently found a voice and engaged with the media to make very public the extent and often serious defects in their new homes, such as missing insulation, weak mortar, defective render and issues with timber floors.
Increasingly, buyers are required to move out of their dream homes whilst their homes are torn apart and (hopefully) defects are rectified. It is neither fair nor just that in these instances, many of which cause ill health due to the stress and anxiety caused by housebuilders’ persistent denial of obvious issues, that there is currently no independent mechanism for justifiable compensation to be paid. An independent new homes ombudsman would address this gap.
8.16 Given all of these issues, we would suggest that a time-limited and independent study is carried out to review the way in which quality issues are dealt with, and to identify the gaps which an independent dispute resolution service would be best to address. Such a study would ensure consumers are fully covered for all matters of complaint in the future.
The last thing beleaguered new homebuyers need is yet more delay. There is no need for a study, this industry knows full well the serious nature of defects, poor quality and how it acts towards its own customers. It chooses to do nothing. Further consultations, calls for information or green and white papers will only give more delay. What is needed is action, the setting up of a new homes ombudsman as soon as possible.
9.1 In respect of your consultation question around what kind of sanctions should a redress scheme have access to, we do not believe the purpose of a redress scheme is to act as a regulator but rather the purpose of the scheme should be to put the individual back in the position they would have been in had the service failure not occurred.
A redress scheme that does not actively punish or sanction miscreants or act to prevent reoccurrence of similar complaints will be ineffective and not give consumers the redress they deserve or seek. To “put the individual back in the position they would have been in had the service failure not occurred.” With new homes would mostly mean remedial works to bring the new home up to the required standard. It would not address the issue of compensation for inconvenience and stress caused both before and during the required works.
Publication of decisions
10.2 A large business may receive more complaints just by the nature of the volume of homes sold but that may not mean that it is worse than perhaps a small business that might receive one or two cases, which could, therefore, indicate a more severe problem. Consumers often only look at the volume of complaints and perception is often the more complaints the worse the company.
The more complaints the worse the company is a fairly logical conclusion. Barratt (17,395 homes) have fewer complaints than Taylor Wimpey (14,842 homes) and both have fewer complaints than Persimmon (16,042 homes) – based on HBF survey star rating and social media. With a housebuilder league table, new homebuyers would be able to avoid the worse of the plc housebuilders, or at least know what they were letting themselves in for!
10.3 Trends data and context is key here and while we would not oppose the publishing of such information, it nonetheless should be in a considered and balanced way given that consumers will often buy a new home due to the location and affordability as opposed to the identity of the developer building it.
“A considered and balanced way”? In other words, in a way that the industry approves of.
11.1 The consultation asks if there should be a statutory body and our concern is that this will require parliamentary time to establish, which could take several years through the legislative framework. 90% of the home building industry is already supported by, and complies with, our Code and we believe that by finding an industry-led solution, we can increase the cover.
Time is of the essence. The only delay being government lack of urgency. Any legislation could be sorted out in a week if there was a will to do so. Implying a new homes ombudsman would take several years as a justification to trust the existing and failing CCHB to “find an industry-led solution” is ridiculous. That time has long since passed as Tony Lloyd MP for Rochdale said: “We must have not a nice, cosy, industry-led ombudsman, but an ombudsman process that has real teeth and the capacity to make a material difference” During a debate in the House of Commons the then APPG EBE chair Jo Churchill said: “I applaud the Department for Communities and Local Government for getting the Home Builders Federation to look into the voluntary ombudsman scheme, but perhaps the time for any such voluntary scheme has passed.”
11.2 By expanding its remit to cover the issues currently being faced by home buyers in relation to redress, and by working with others within the home warranty and home building sector, supporting HBF, we believe we can provide an industry-led solution that could more easily be implemented with support of both the industry and key stakeholders.
The CCHB had an opportunity to “expand the remit” during the fourth revision to the CCHB. Yet the latest incarnate of the Code made it even more difficult and placed new obstacles for new homebuyers seeking redress.
11.3 If agreed, we will continue to work with HBF, Homes for Scotland and other colleagues to address the issues raised within the consultation setting out a framework and agreed timetable for implementation.
In other words work with the wider industry to protect its interests and ensure that any new homes ombudsman redress scheme is managed and set up by the industry, no doubt as the CCHB was and will be “limited in its scope” and “not appear to us objectively to offer consumers a wholly satisfactory form of redress”
The British new homebuyer deserves better from government! The CIOB hold the view that only a fully independent New Homes Ombudsman, by its very existence, would drive housebuilders to reflect on the work they carry out and drive them to aspire to ‘do better’ in the knowledge that their customers can complain to an independent ombudsman.
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Home Builders Federation (HBF) 8-week “Satisfaction” Survey 2018
So six months after the industry’s in-house “customer satisfaction ” survey year-end on 30 September 2017, the HBF have finally released the results. So what do they say to the new home buying British consumer?
The HBF claim “Homeowner satisfaction with new homes remains high”
Despite the HBF survey responses being repositioned this year, (with the key question “Would you recommend your builder to a friend?” buried in the third row!) the ongoing failure of this industry to its customers cannot be hidden.
FACT: Whilst the “Would you recommend your builder to a friend?” key star rating question score this year was 86% – up 2% on last year’s nine-year low of 84%, it is still at the same level it was in 2011 so no improvement.
“As output has risen, so quality has fallen – The evidence points to an industry…..which will at times ride rough-shod over dissatisfied buyers”+++ This demonstrated by the fact that 4% fewer would recommend their builder, would buy another new home from any housebuilder.
Credit is due for the slight increase the number of surveys issued and the percentage returned. Out of 156,120 new homes built by housebuilders in the survey year, 93,444 (73%) surveys were sent out to the 127,800 private new homebuyers with 57,972 (62%) returned. Avant, rated 2 stars in 2016 are now 4 star rated in just two years, with a 193% increase in their “sample size” over that period.
The HBF say their Star Rating scheme: “awards participating members a star rating based on the survey results is now an established barometer of performance and a widely used industry marketing tool. The survey also helps participating members identify areas they can improve and is used by HBF to rebuff unwarranted criticism of our industry.”
“Identify areas they can improve”
Taylor Wimpey have been rated 4 stars for the last 4 years, one of the few housebuilders to publish their actual percentage for the key star rating question – 87% (2014); 86% (2015); 85% (2016) and 88% in 2017. Just a 1% improvement over three years! Persimmon have been 3 star rated every year over the same period.
Survey results “used by HBF to rebuff unwarranted criticism of our industry.”
Well they try to. The fact is, 99% of homebuyers reported defects in their new homes to the housebuilder within a few weeks of moving in. For the second year, 41% reported more than 10 defects. Imagine if virtually all new cars had defects? If housebuilders built cars, many would be on our roads with defective brakes and wheels falling off!
Why does the HBF not publish individual builder results for every question?
John Stewart HBF Director of Economic Affairs told me back in 2011: “From a personal perspective, I think publishing more detailed company results would not have had any more impact on raising customer satisfaction among new home buyers. But it would most certainly have provided food for those who are prejudiced against the industry and simply seek to criticise. I see no value in this.”
Yet according to HBF chief Stewart Baseley who is by his own admission says he is “a great believer in transparency” – “achieving such high levels of customer satisfaction, whilst delivering the steepest increase in the rate of house building we have seen for 40 years, is a considerable achievement.”
Considerable achievement? Well Bovis are still rated just two stars. This despite building 332 FEWER new homes last year – a drop of over 8% on the previous 12 months, according to the company, to “focus us once again on delivering high quality product and service to our customers.” Bovis have became the only plc housebuilder to be rated 2 stars in consecutive years, with less than half of Bovis’ buyers completing the survey.
Quality and satisfaction are not the same
To many, being “fairly satisfied” does not indicate full satisfaction, yet the structure of the HBF survey adds the “fairly” score to the “very” to get the overall “satisfaction” score the HBF publish. In addition, a heavy emphasis is placed on the Yes/No responses to “would you recommend your builder to a friend?” It could be argued that many would, give a ‘Yes’ purely on the basis their experience was “not that bad” rather than “terrible” which would be a ‘No’. This is borne out by the result from the second question: “how likely would you recommend your builder to a friend?” with just half indicating a positive response. In addition: “NHBC 9-month customer satisfaction survey scores generally 5-10% LOWER than the HBF 8-week survey”+++ These 9-month survey responses have never been made public!
The HBF claim these latest results: “once again prove the industry’s commitment to achieving the highest levels of customer service and satisfaction. The results have been achieved over period that saw the steepest increase in house building activity we have seen for 40 years.”
Well not exactly. The number of total new homes built in 2017 was 162,490 still below the peak of 168,640 to 30 March 2007. As for the “prove industry’s commitment to achieving the highest levels of customer service” this is a disgraceful statement considering the nightmare that thousands of new homebuyers are suffering across the country, due to the ineptitude of indifferent housebuilders. Tell that to the 11,000* buyers – equating to 8.4% of all new homes completed in 2017 – that make an NHBC warranty claim every year, 30% ** of which are within the initial two-year period when housebuilders are responsible!
“In addition to the high level of Customer Satisfaction revealed by the survey, the industry also has its own self-imposed Consumer Code, ensuring customer concerns are heard and that disputes can be resolved through an independent adjudication system.”
Self imposed? The requirements are derived from theConsumer Protection from Unfair Trading Regulations 2008. Customer concerns regarding poor quality, defects and warranty issues are not covered by this Code which “does not appear to objectively to offer consumers a wholly satisfactory form of redress and is limited in its scope”+++
“The survey results and the Code, in addition to a ten-year warranty on all new homes, combine to give new build home purchasers genuine confidence in the product they are buying.”
A survey with results used by this industry to “rebuff unwarranted criticism” and for marketing, an ineffective Code “limited in its scope” and warranties that seeks to bat away claims.
Let’s face it; this in-house industry survey is easily manipulated. All housebuilders can see their customer’s responses in real time on the NHBC portal, enabling them to incentive buyers of their homes to answer positively to the crucial star rating question: “Would you recommend your housebuilder to a friend?” Furthermore 11,803 survey responses were not used for the sample size of the key question. I asked the HBF why and they said: “The Star Rating part of it is just for HBF members. Hence adding up the sample sizes for the Star Rated builders will not get you to the total 57,972 responses as other non HBF members are sampled as we want to get as full a picture as possible. However, every single valid Barratt response counts towards Barratt’s rating; every single valid Bovis response counts towards their score etc. Valid simply means completed by an owner occupier within the 20 week response window. Not one single valid survey was ‘not used’”
The APPG EBE in the report “More Homes – Fewer Complaints” agreed with me that the survey should be conducted completely independently of the industry. “Recommendation 10: Housebuilders should make the annual customer satisfaction survey more independent to boost customer confidence. We believe it would boost consumer confidence if the Customer Satisfaction Survey is seen to be more independent of the NHBC and the HBF – bringing in a high profile third party to conduct and take ownership of the research….”
The HBF reaction? To attempt to reaffirm via a IPOs MORI review of the survey that said it is “fit for purpose” nevertheless “changes are being implemented in the next survey year.”
It may well be fit for the industry’s purposes, but is not in my opinion, fit to demonstrate rising customer service, satisfaction or that higher quality new homes are being built. In fact it is and always has been, woefully inadequate. Nevertheless, such as it is, it does paint a grim picture of an uncaring industry, hell bent on ever increasing their profits, whatever the consequences for naïve, trusting new homebuyers that believe their spin and hype.
* NHBC annual report to 31 March 2016
** Figures supplied by NHBC
+++ APPG Inquiry Report “More Homes Fewer Complaints” July 2016
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Government Consultation: New homebuyers – why you should be bothered!
So after four years of campaigning for the government to set up an independent New Homes Ombudsman, new homebuyers finally have a golden opportunity to tell government to set one up. Given the 100,000 or more that buy a defective new-build home each year, (98% reported issues to their housebuilder within a few weeks of moving in, 41% reporting 11 or more “problems”) you would think new homebuyers would be ‘chomping at the bit’ to complete the government consultation!
But here’s the rub; the government are not publicising this consultation at all. National newspapers have given it scant coverage of the consultation since the 18th February 2018 press release. Last Sunday, The Observer provided the only coverage of this important government consultation in a national newspaper since the press release. Even so, it only briefly touched on it saying “The government is consulting on proposals that include a single housing ombudsman to handle complaints” but didn’t say the views of new homebuyers are being asked for. On 10 March, I contacted 35 journalists from national newspapers, just four replied! One had already written the story above, another has plans to cover the topic, PA to the Editor of the Mail on Sunday said she would “forward it to the news desk” and another forwarded my email to her editor as she will be abroad until April.
The Consultation “Strengthening consumer redress in the housing market” was “announced” on a Sunday, 18 February 2018, in a ‘blaze’ of publicity that was little more than a regurgitation of the MHLG press release which soon fizzled out faster than a budget supermarket firework on a wet night. Has lazy journalism replaced investigative journalism? Has anyone actually read the Consultation documentation?
But even if this government consultation was well publicised and made clear that the public should take part, it looks to me that the vast majority of new homebuyers wouldn’t be prepared to spend a few minutes to complete it. There are times, when I feel I am the only person trying to do something about defective new homes and errant housebuilders. Those that buy new homes, apart from a very few, in the main seem happy to do nothing themselves apart from seek help and moan about their new homes on social media. Ignorance and apathy? I don’t know and I don’t care!
I emailed around 400 new homebuyers (those that had previously contacted me for help and advice) asking them to complete this consultation, one replied saying: “Why would I help you out? I’m sorted now.” Point to note you are not “helping me out” you are helping yourself and all future new homebuyers! On a personal level, I will never have a need to use a New Homes Ombudsman, as I would never buy a new home!
Posts on housebuilder Facebook “new homebuyer action” groups usually start:
“has anyone…” “Can anyone….” “Does anyone….” “Question about….”
“I was wondering if anyone could help me…..” But very rarely: “This might be useful/help others”Ask not what other new homebuyers can do for you, but what you can do for other new homebuyers! But how many members of these various Groups will actually complete this consultation? I would be astounded if it was even as high as 1 in 20!
The previous government consultation “tackling unfair practices in the leasehold market” stated: “The response to those plans, published here was overwhelming. We received a staggering response with 6,075 replies” [5,336 private individuals of these 4,489 being leaseholders], demonstrating the strength of interest in this issue.” This due to a large degree by very active Facebook Campaign Group with over 10,000 members and the support and backing of a registered charity with full-time employees, The Leasehold Knowledge Partnership vigorously promoting that Consultation in the press.
So government considers a response of a little over 6,000 is “overwhelming”. Imagine what the response would be if 15,000 (around just 10% of those that buy a new-build home every year) completed the current government consultation and demanded an independent, stand-alone, new homes ombudsman be set up by government.
Just when I think it couldn’t get any worse – two ‘copy cat’ consultations are been launched:
The Chartered Institute of Building (CIOB) consultation is asking members and other industry professionals for views on some of the exact same questions of current government consultation on strengthening consumer redress in the housing market. A spokesman from the CIOB told me:
“we are in support of a New Homes Ombudsman as we highlighted in our response to the APPG for Excellence in the Built Environment Inquiry. What we are trying to do by asking members a select number of questions in the survey is to get some data together to put forward in our response. We are not duplicating the work just that in our experience, members maybe too busy to respond or simply not know the process. Therefore, many CIOB members often share their views with us so we can formulate a response. Of course, what our members say isn’t gospel and we act entirely in the public interest.”
Hot on the CIOB heals comes yet another Consultation, this from Ombudsman Services that only last month declared said it would no longer offer “a broken solution to a broken market“. But it would seem is now touting to be the single “Housing Ombudsman” that is Sajid Javid’s preferred option. Ombudsman Services new survey, “Building Balance”, has been launched, asking for views on a topics such as whether there should be a single ombudsman, and whether the current system is muddling for users. Well the number of simultaneous consultations certainly is!
These are in addition to another consultation on commonhold – a result of the consultation on leasehold reform last year, which is also ends on 16th April 2018.
The RIBA has a “Building on Quality” consultation. Point to note: to build on something it has to exist in the first place!
At least this one from What Mortgage comes with a chance to win £500 (now there’s an idea Mr Javid!) but this looks to me to be little more than an exercise to harvest consumer data that can be passed to housebuilders!
In all likelihood, the housebuilding lobby will get what they want, an ineffective ombudsman, which the industry has control over, that consumers don’t know about (just like their ineffective Consumer Code for Home Builders) and it could well be buried within a wider “Housing Ombudsman” which government would prefer. Great job Jibber Jabber!
If new homebuyers don’t know about this consultation, or worse can’t be bothered to complete it, nothing will change.
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This 8-week consultation, hot on the heels of the ‘behind closed doors’ sessions of the APPG EBE Inquiryto “look into the potential and detail for a New Homes Ombudsman”, announced by Sajid Javid on 29 November 2017, was finally launched on 18 February 2018 and is indeed taking place “in the New Year” It is titled “Strengthening consumer redress in the housing market” but is it what it seems?
Is Javid fully committed to giving beleaguered new homebuyers a statutory New Homes Ombudsman? This being paid for by a levy on housebuilders as recommended in the APPG EBE strangely titled Inquiry report “More Homes – Fewer Complaints” published as long ago as 13 July 2016!
Since this Inquiry report, we have had three housing ministers, yet none of them has seen fit to implement any of the APPG Inquiry report recommendations. We have reviews, considerations, discussions with stakeholders and all manner of excuses and delays. In the meantime, I have encouraged new homebuyers to write to their MPs and demand a new homes ombudsman be set up. So now 20 months later, we have yet another ongoing APPG EBE Inquiry (with any report due August at the earliest with October more realistic) and Javid’s 8-week Consultation ending on 16th April 2018.
The last housing 8-week consultation regarding unfair leasehold practices was from 25 July to 19 September 2017. The government response, dated 21 December 2017, (91 days after that consultation ended) indicted that just 5,336 private individuals took part. The Facebook National Leasehold Campaign Group has 10,000 members! It is to be hoped that at over 15,000 new home buyers will take part in the current consultation and leave the government in no doubt that a stand-alone new homes ombudsman is badly needed. Given previous experience, the government response can be expected around 16 July 2018.
So let’s go through the nitty-gritty, of the Consultation notes, page by page:
So first point to note on page 4 is “Any policy changes brought forward as a result of the consultation would be subject to appropriate assessment” A ‘Get out of Jail Free’ card for housebuilders?
It is clear from Javid’s Foreword that he personally favours a single housing ombudsman. But a Housing Ombudsman already exists, so is Javid saying it isn’t working effectively? Is he using the furore surrounding defective new homes as a way to force through root and branch changes to the existing Housing Ombudsman? It would appear that the current proposal he favours is to combine the various existing ombudsman dealing with housing issues into one and add a function within that for new home buyers to seek redress against their failing housebuilders. Page 25 states that “primary legislation would ultimately be required to create an entirely new organisation to combine most of the existing housing redress functions and potentially also new functions” (a new homes ombudsman?)
On page 6 we find another ‘Get Out of Jail Free Card’ this time for the warranty providers as consumer redress would still remain with the Financial Ombudsman Service. Issues with new homes can be both technical and complicated and not suitable for an assessor at the FOS to rule on even though a new home warranty is in essence, an insurance product.A great deal of this consultation scope relates to tenants, social housing, estate agents, park homes and finally, buyers of new build homes (page 9) where it states that if the housebuilder fails to resolve issues and “the buyer disagrees with the warranty provider’s decision, or no action is taken the consumer can find they have no route to redress.”
Finally, on page 19 we have three paragraphs under the heading “Buyers of new build homes” there is an acknowledgement that “there are gaps in protection and there needs to be more robust protection for homebuyers in the first two years after purchase.” It also states that “We [the government] are working with the Home Builders Federation and warranty providers to address these issues and we want them to continue to drive improvement.” The clear reality is there has been deterioration in the last 20 years. The HBF will always seek to protect the interests of their member plc housebuilders and warranty providers will protect their own interests, both ahead of those of consumers.
Guidance for new homebuyers completing the consultation survey:
Question 2 answer “A person who has recently bought a new home” This is important as it will show the number of new home owners that took part in the consultation and demonstrate the need for a specific new homes ombudsman.
Questions 6 and 7. If you tick “The Consumer Code (IDRS)” please also give your opinion of how satisfied you are. Around 61% of new homebuyer’s cases with the CCHB adjudication scheme succeeded since it started but awards averaged just £1,498 – just 18% of the amount claimed! The government may try to claim the CCHB IDRS is effective even though the previous APPG Inquiry found it “limited in scope” and “does not appear to us objectively to offer consumers a wholly satisfactory form of redress”
Question 8 answer “there are gaps in redress” That is, there is no independent, government-appointed new homes ombudsman!
Question 9 has no option for a New Homes Ombudsman. Those completing are advised to select “Other” and write “new homes ombudsman” in the box
Question 10 answer “Yes” and add “an independent statutory new homes ombudsman” in the box.
It is vital that the new home disputes are regarded as a separate issues from the existing housing ombudsman that deals with tenant disputes etc so,
Question 11 should be answered “NO – different sectors require different practices.”
Question 13 should be answered “Yes” All ombudsmen should publish decisions as it is in the public interest to do so.
Question 14 “Time to deal with a complaint” is more difficult, so answer -“it depends on the complexity of each case” as specialist testing and reports may be required for new home issues.
On page 16 we learn that the Housing Ombudsman awarded compensation in a third of cases ranging from a ‘massive’ £20 to £8,195 – hardly suitable for new homebuyers! Most common awards across the three existing property schemes were stated as a paltry £50 to £500. Clearly miserly awards like these are not going to force housebuilders to improve what they do and don’t do!
Question 16 “Sanctions” Answer – “Financial award greater than £25,000” as justifiable, meaningful compensation must be available for the new homes ombudsman to award. Be wary of “Do you want to continue with the survey?” Click “YES– continue to section 5 addressing the gaps” otherwise you will miss the crucial questions for new home buyers! Was this a cynical attempt by government to avoid responses from new homebuyers? Question 17 Answer “Yes” adding in the box that “the CCHB does not cover disputes regarding snagging, quality and defects in new homes or any warranty issues or disputes with warranty providers.”
Questions 18, 19, 20 and 21 are crucial for all new homebuyers and need your responses as shown below: Question 30 is perhaps the most significant question as it is the only opportunity for a response to ensure that a new home ombudsman is separate from a general ‘one-size-fits-all’ “housing ombudsman” that Sajid Javid appears to prefer.It is imperative that the link to this consultation is shared via social media with all those that have bought a new build home. It needs a high response from new homebuyers to force government to sit up and take note and set up an independent new homes ombudsman as soon as possible. https://www.surveymonkey.co.uk/r/Housingredress
If such a new homes ombudsman existed, all new homebuyers would be able to claim justifiable compensation, not just get their defective new homes rectified eventually! This is in everyone’s interests, those that have bought a new home and those that will in the many years to come! It is just too important to ignore.
Non-Disclosure in ‘Closed’ APPG EBE New Homes Ombudsman Inquiry
Despite 15 organisations and 19 individuals submitting written evidence to the APPG EBE Inquiry “looking into the potential and detail for a New Homes Ombudsman”, there is scant sign of any progress. Initially, written submissions were required to be in by a 22 December 2017. This “deadline” was then extended by the Construction Industry Council (CIC) to 12 January 2018. Yet only recently did a list of those who submitted written evidence appear on the CIC website! At the time of writing there are no details or links to pdfs of these written submissions to the APPG EBE New Homes Ombudsman Inquiry.
So I asked why and the CIC confirmed that:
“We will not be providing links to the submissions this time as some of the witnesses requested not to do so. Therefore, we decided not to be selective not to publish any of them on our website instead of being selective. The evidence received was submitted to us by those who voluntarily wanted to provide information and all evidence has been accepted – and the only selection criteria used was the relevance to the scope of the Inquiry and the questions presented in the “call for evidence”.
Whilst I can understand that many of the individuals who made written submissions might fear repercussions from their housebuilders for doing so, there is no reason why any organisation or institution would not be happy for their submission to be available to download on the CIC submissions page. The CIC spokesperson confirmed to me: “If CIOB or Housing Ombudsman would like to share their evidence they can do so on their websites or issue press release about it.
“The CIC/APPGEBE page is not a public information source.”
Surely that is the purposes of any publicly accessible website? It is also strange and unexplained, that this is the only Inquiry that does not have listed details of the evidence sessions. In addition, half of the Inquiries on the CIC APPG EBE web pages give links to pdf notes of sessions and written submissions.
So when exactly are the sessions?
It is not being disclosed! It would appear this APPG EBE New Homes Ombudsman Inquiry is being conducted behind closed doors with the CIC spokesperson confirming to me that:
“Information will be available to invitees in due course. I am afraid, one must be invited to give evidence or to attend the session. The evidence giving sessions have already started and there will be three of them. The Committee members can only commit to three 2-hour meetings and will invite those whom they would like to ask further questions.”
Just three 2 hour sessions! Really? Is that it for such an important Inquiry that has the potential to help many tens of thousands of people every year? The Inquiry “Into the impact of Brexit on future skill needs” had five sessions! It is such a great pity that the previous APPG EBE chair Jo Churchill was promoted in Theresa May’s January re shuffle. I have no doubt that Mrs Churchill, who is passionate about the issue of defective new homes and indifferent housebuilders, would have taken this APPG EBE New Homes Ombudsman Inquiry by the scuff of the neck and pushed through the setting up of an independent, government-appointed new homes ombudsman. The new APPG EBE New Homes Ombudsman Inquiry chair Eddie Hughes, an MP for all of seven months, would appear to prefer to spend his time tweeting about pancakes!
Laughably, for this important Inquiry, the CIC have said:
“The only room available [at the House of Commons] to hold the last session was hardly big enough for all members of the committee and all witnesses to sit at one time!”
The comments from the CIC spokesperson are as enlightening as they are frustrating.
Why is this important APPG EBE New Homes Ombudsman Inquiry being conducted in secret, behind closed doors?
Who has been invited to attend the three evidence sessions?
Are any from the 19 “Individuals” being “invited” to give evidence?
Are representatives from this dreadful industry being given an opportunity to corrupt the Inquiry report?
Will this Inquiry Report when it does eventually get published, even be in the public domain?
There are most certainly more questions than answers for an Inquiry that has barely begun. Even worse, this Inquiry is being conducted outside of public scrutiny!
Do APPGs achieve anything?
As I already knew, the CIC confirmed the “APPG EBE – is a voluntary initiative of a few parliamentary members, who share interest in issues related to the built environment – not housing/ new built exclusively.”
APPGs have the potential to be used covertly, by organisations representing big business as a lobbying opportunity. But in my opinion, most APPG’s generally serve little purpose, Parliament is not required to act on their findings or research. There are literally hundreds of APPGs, more than 630 on 2nd May 2017. An APPG appears to me to provide little more than something for MPs to do before the restaurants open and the London rush hour subsiding. With many MPs using them as a means to get noticed and an opportunity to be interviewed by the media, promoting their personal political profile in the process. Not that it did previous chair Oliver Colville (58) any favours; he lost his Plymouth seat in the 2017 general election.
This APPG, Excellence in the Built Environment has in the last 6 years, according to the CIC, followed a format of:
Autumn [September-November] – call for evidence
Winter [December – February] – evidence gathering and evidence-sessions
Spring [March – May] – composing the report
Late spring [May]/ early summer [June/July] – launching the report.
So pretty much a whole year per Inquiry – so no great sense of urgency then?
Nice work if you can get it! So given the ‘call for evidence for this Inquiry was in December, (winter) we can’t expect the Report much before the end of August at the earliest. Taking into account the 2018 summer recess from 30 June to 2 September and the following party conference season (15 September to 3rd October 2018) there is a potential that this Inquiry report won’t see the light of day much before October 2018!
Meanwhile the Government announced on Sunday 18th February 2018 an 8-week consultation “Strengthening consumer redress in the housing market” which I will examine in depth, in my next article. The CIC have already confirmed the APPG will: “participate in the recently announced MHCLG consultation by feeding in our findings to them by 16 April, (using the same channels available to wider public)”
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The great weak mortar scandal that housebuilders and warranty providers want to keep hidden.
There is now increasing incidence of new homebuyers reporting the issue of weak or soft mortar in the brickwork of their new homes. The solution if carried out, could in the worst case scenario, involve the demolition and rebuilding of the entire home, perhaps even all the homes on a development as it is also highly likely that most, if not all, of the houses were built with the same weak mortar. Needless to say both housebuilders and the warranty providers don’t want this and obstruct and frustrate new homebuyers who report weak mortar at every turn.
I first came across the weak-mix mortar issue when a foreman bricklayer I knew said he was taking down all the brickwork on a completed Bryant Homes site in Ashington, West Sussex in 2003. It would seem the mortar is question had ‘insufficient cement’ and just a quarter of the required strength.
Ten years later, I was contacted in October 2013 by an owner of a Bellway new home built in 2004 at De Haviland Way, Skelmesdale Lancs WN8 6DG. It had weak mortar and other serious structural issues. In April 2014, the then homeowner thanked me for my support, help and advice I gave regarding his NHBC warranty claim and said he could not discuss it further with me. The home, bought for £159,995 on 26 November 2004, was finally resold for £132,500 on 30 November 2016 – at a loss of £27,495 over 12 years in a rising market! I can only presume that the home was blighted, hence the knock-down price!
Just add water
Since the days, when hod carriers were entrusted to mix mortar in the required proportions, often simply half a bag of cement per mixer batch, most housebuilders have switched to using pre-mixed mortar, delivered dry by tankers to site silos. All the hod carrier has to do is turn on the water tap, switch on and out comes ready to use mortar.
This has advantages over the sand and cement being mixed on site. The primary one being that all mortar would be of consistent strength, colour and workability. “High quality constituent materials are used to produce the perfect dry mix under rigorously quality controlled conditions.” And, according to the manufacturers, the availability of many different colours, any of which would be consistent throughout the building or development. The new silos offered flexibility, with easily adjusted water content to compensate for wet bricks and blocks and the ability to “mix” only use what was needed avoiding waste on site. The new electrically-powered silos meant less noise, fewer deliveries and tidier sites. Above all, the mortar was Quality Assured being manufactured to BES 6001 and BS EN 998-2:2003, and “guaranteed unrivalled quality and technical expertise.”
So what’s not to like?
In recent years there have been a growing number of new homebuyers discovering the mortar in their brickwork is crumbling and “powdery”. This is not confined to a single housebuilder or a particular geographical area. The weak mortar, which can be easily brushed or lightly scraped from mortar joints is being washed away by the effects of weather and is evident in many newly-built homes across the country. The solution (the most commonly one offered by both housebuilders and the NHBC warranty) is to rake out mortar joints to a depth of 25mm and re-point using new, sometimes higher strength mortar. However, the mortar not replaced would still be of inadequate strength. More importantly, the wall ties connecting the inner and outer skins of a cavity wall will be structurally less effective. Unless the external mortar is different, it is conceivable that the structural load-bearing walls of the inner skin, hidden from view, would also have been built using the same weak mortar. During a debate in the House of Commons regarding quality in the built environment, the then APPG EBE chair Jo Churchill MP for Bury St Edmonds, used the example of:
“…the repointing of joints on walls where purposeful demolition and reconstruction should have happened”
No doubt in response to the growing incidence of weak-mix mortar.
Is the weak mortar weak caused by a site issue?
The first line of defence used by mortar manufacturers is to claim the mortar was subject to circumstances on site beyond their control, resulting in the mortar being weakened. This can be caused by the following:
1) Building masonry walls in low or freezing temperatures and/or not protecting walls from freezing overnight. “The agent lets you build at 0 degC if the NHBC is not in”
2) Mortar is damaged or weakened by the use or overuse of brick acid cleaners and/or jet washing.
3) Mortar is remixed on boards after the initial set and has started to harden.
4) Walls are built in dry hot weather and the dry bricks suck water from the mortar before it is fully hydrated.
5) Too little or too much water added during mixing.
This is often further substantiated by their own in-house factory production control compressive strength testing data. It should be pointed out that this mortar is mixed and cured in ideal, controlled conditions, which could never be realistically exactly replicated on a building site.
However, I have seen independent test results which have analysed the mortar mix proportions and these reports categorically prove that in this instance, the mortar has insufficient cement and does not meet the NHBC mortar mix technical and performance standards.
The NHBC warranty “protection” for new homebuyers
As previously mentioned, the first line of defence (claim mitigation) is to offer a 25mm repointing of joints in the affected areas. If the homeowner refuses, the NHBC have a “mortar expert”; 85-year old Barry Haseltine, who the NHBC dispatch to buyers’ homes to carry out “independent assessments”. I am given to understand he is kept very busy!
I possess one of Haseltine’s reports and it makes very interesting reading. For a start, the disappearance of the mortar is being credited to “erosion” not caused by insufficient cement. He says:
“the surface [of the mortar] is somewhat dusty, and when rubbed can allow sand to be removed.”
“For the last 20 years or so, cement has become a complicated subject compared with the relative simplicity that existed when we had Ordinary Portland Cement and a small number of specialist mixtures for example masonry cement”
“It is a regrettable fact that mortar has become a potential problem with regard to durability in recent years, probably linked to the use of cements that have considerable proportions of additions which reduce the active cement in the mixes.”
Haseltine’s report shows the results of 14 test samples, analysed by three different and unrelated laboratories, all reporting a cement : sand mix ratio of 1 : 7.5 at best, to 1 : 9.6 at worst, all being below the required mix ratio in the NHBC standards 6.1.14 Mortar for “general use” (not severe exposure) being 1 : 5.5 cement : sand by volume – designation (iii) under BS EN 1996-1-1.Despite these clear proven results – at least 26% less cement than NHBC standards require and with less cement equating to weaker, less durable mortar – Haseltine concludes:
“The mix proportions that are listed in the table of analyses should not be used to judge the compliance of the mortar with the masonry codes that cover the strength of masonry, or with the Building Regulations simple rules, since the mortar supplier has supplied a design mix not a prescribed one.”
“Unless one has evidence that the strength of 4N/mm2 (M4) that defines a designation (iii) mortar has not been achieved on control tests, there can be no objection to the mortar or the strength of the walls in which it has been used. I do not think that the reduced amount of cement in the mix, as illustrated by a comparison of the analyses with the prescribed cement sand mixes in standards, will have any deleterious effect on the structure of the house, even if such a comparison were to be accepted as being relevant”
A “prescribed mix” is one where the mortar is made in pre determined proportions the properties of which are assumed from the stated proportions (recipe concept). A “design mix” is a mortar whose composition and manufacturing method is chosen by the producer in order to achieve specified properties (Performance concept)
So in summary, the NHBC’s go-to mortar “expert” doesn’t “think” that a significant (26.6%) reduction in cement quantity in a mortar mix would structurally weaken a wall or reduce its durability to withstand the extremes of weather!
Can Barry Haseltine from Jenkins and Potter be considered independent?
The Jenkins and Potter website states that “We have formed a number of close associations with housing developers after many years” – in my opinion, it is a moot point that any of their consultants could be considered truly independent of the housebuilding industry. Barry Haseltine was Chairman of the CEN Eurocode Committee for Masonry and chairman of the British Standards Institution Code of Practice Committee for the design of masonry and its sub-committee responsible for the structural masonry codes. His own reputation and credibility could be called into question if it can be shown that he is wrong. It could therefore be argued it is in his own best interests to protect the housebuilders and in doing so, ring-fence his own reputation.
It is ludicrous that mortar tested by the manufacturer’s in a controlled environment to above a 4N/mm2 compressive strength can be sold as an M4 Design Mix mortar and deemed equivalent to a mortar designation (iii) Prescribed Mix with a cement : sand ratio 0f 1 : 5.5 when the laboratory proved cement content is circa 26% less than the mix proportions required in the NHBC warranty standards require.
What is the cause?
This has yet to be fully established, there are several theories which I will explore in detail in my follow up article. However, whilst mortar suppliers are free to put whatever they like, in whatever proportions, as long as they can achieve a compressive strength of 4N/mm2 in their own tests and the warranty providers appear indifferent to requiring the specific mortar mix proportions in their standards and banning cement replacement additives such as GGBS, the number of homes with weak mortar can only continue to rise. Until there is an industry recognised compression test for mortar in-situ, new homebuyers will be forced to accept sporadic repointing as a “solution” to defective weak mix mortar, with potentially catastrophic consequences, not only for many thousands of individual homeowners, but the overall housing supply. Further reading: What is happening to masonry mortar – (Oct 2017) by Graham True of GFT Use of Ground Granulated Blastfurnace Slag (GGBS) in mortar (Jan 2008) Best practice- potential site problems 2014 – Mortar Industry Association
The government has finally recognised the need for an independent New Homes Ombudsman and an APPG Inquiry is currently calling for evidence on how it would operate.
It is not impossible to build a defect-free new home. All that is required is the will to do so – building with care and with a thorough inspection regime that requires all sub-standard work to be taken down and re done. Yet 98% of new homebuyers report defects to their housebuilder within a few weeks.
Defects in UK new homes are injuring children!
For far too long the industry has used the “built in the open in all weathers” excuse and lowered buyers’ expectations. Bricklayers do not and cannot work in the rain! Render is not applied in the rain, yet there are many defects associated with both. Superstructure accounted for 38% of all NHBC warranty claims in the year to 31 March 2017, costing £35million (41% of total claims) to rectify. Adverse weather does not contribute to walls being built out of plumb, render cracking or missing insulation! All other trades (apart from groundworkers) work inside, often in the same conditions found in most factories.
The APPG Inquiry Report, published on 13th July 2016, concluded:
“Housebuilder’s own quality control systems are not fit for purpose”
“there needs to be an industry aspiration to achieve a zero-defects culture”
“good practice should be seen as building a new home that is defect-free”
It clearly stated the number 1 “key recommendation” – the Department for Communities and Local Government (DCLG) setting up a New Homes Ombudsman:
“The role would include mediating disputes between consumers and their builders or warranty providers to offer a quick resolution procedure paid for by a housebuilders’ levy.
We see this is as the key recommendation to provide more effective consumer redress, if things go wrong, and a good way of applying pressure on housebuilders and warranty providers to deliver a better quality service.
Our view is that the new service should be funded by a levy on the sector, but it would need to be completely independent and replace the dispute resolution service offered as part of the Consumer Code for Home Builders. Our recommendation picks up on one made by the Office of Fair Trading, in its 2008 market study into the house building industry, which suggested that, if the industry failed to make satisfactory progress, it would recommend further intervention in the form of a statutory redress mechanism for new homebuyers funded by a levy on the industry.”
So it is somewhat disappointing that, 18 months after the report was making the recommendation that an independent, government-appointed New Homes Ombudsman be set up to give buyers an independent form of redress, there has been so little progress. It is to be hoped that following this latest Inquiry, an independent New Homes Ombudsman will be set up by government without recourse to further delay, consultation, consideration, or review.
“Too many new homebuyers are suffering, many are physically drained as a result of engagement with errant housebuilders when trying to get their new homes brought up to warranty standards and statutory regulations. For some buyers the mental anguish has become almost unbearable.” – Rob Wilson ex MP Reading East
The housebuilders’ lobby group the Home Builders Federation (HBF), will no doubt tell this Inquiry that (according to the industry’s own customer satisfaction survey) “84% of new homebuyers are satisfied with their new home.” But as Communities Secretary, Rt Hon Sajid Javid alluded to in his speech at the NHBC on 29 November 2017:
“too many new-build homes are simply not good enough.” You [HBF] can point to customer satisfaction levels of between 80 and 90%, something I’m often told about but [of new homebuyers] finding faults that take months and sometimes even years to remedy. It’s not just disappointing – it’s devastating. But just think about those 217,000 new homes built last year. Even if 80% of them have no issues, that still leaves well over 40,000 families living in accommodation that they don’t think is good enough.”
An ever growing number of new homebuyers have to move out of their new homes, often for several months, whilst their house is taken apart to rectify serious, often structural defects. More recently, there is a growing incidence of weak-mix mortar.
It is to be noted that the APPG Inquiry deadline for written submissions has recently been extended – the day after the BBC reported on the dire quality and defective new homes – from 22 December 2017 to 12 January 2018. It is hoped this is not to give the industry extra time to get its “ducks in a row.”
The current “procedures” limited as they are, serve to protect housebuilders and the warranty providers rather than help consumers. The only “alternative”, as has been written in many letters from various housing ministers and staff at the DCLG over the years, is for buyers to take action through the courts for monetary compensation.
As most buyers realise, even those with legal expenses insurance, this is a lengthy and costly process with no guarantee of a successful and fair outcome. Indeed, housebuilders have deep pockets and vigorously defend every attempt by the very few new homebuyers who courageously take this course of action. Housebuilders do this in the certain knowledge that it will cost them far less to defend the small number of claims that could potentially end up in court, than routinely pay justifiable compensation to homebuyers. Even if an agreement is reached ahead of a court hearing, this is normally subject to a non-disclosure agreement clause, (“gagging order”) to avoid any precedent being established and to reduce likelihood of action being taken by others, often with identical issues.
It is no longer a case of getting (all be it eventually) a few minor defects and snags rectified by the housebuilder being a satisfactory outcome. Now there is a clear case for justifiable compensation paid by housebuilders and/or warranty providers, to all buyers of sub-standard defect-ridden new homes.
A recent announcement by Communities Secretary Sajid Javid on 29 November 2017, mentioned “bold options” that the Government “will look at to improve consumer redress across the housing sector” – Setting up an independent New Homes Ombudsman should be its priority.
Worryingly, it would appear that it is the Government’s intention of rolling all existing ombudsman (Housing Ombudsman, the Property Ombudsman and Ombudsman Services’ Property, and the Property Redress scheme) into one, all-encompassing, ‘one-size-fits-all’ “Housing Ombudsman” rather than a simplified New Homes Ombudsman, purely for consumers that buy new homes. I firmly believe a separate, stand-alone, fit-for-purpose, independent New Homes Ombudsman is the only way that this industry will be forced to look inwards at what it does and make both the quality of new homes and customers, their number one priority.
As it stands, housebuilders are showing no intention of taking proactive measures to improve the quality of the new homes they build. Consumers need a fully independent means of redress. It is now essential to appoint a New Homes Ombudsman for the house building industry. All existing legislation to protect consumers, including The Consumer Rights Act 2015, does not apply to property.
“I applaud the Department for Communities and Local Government for getting the Home Builders Federation to look into the voluntary ombudsman scheme, but perhaps the time for any such voluntary scheme has passed.” Perhaps?
“…the repointing of joints on walls where purposeful demolition and reconstruction should have happened” – No doubt in response to the growing incidence of weak-mix mortar.
“We must have not a nice, cosy, industry-led ombudsman, but an ombudsman process that has real teeth and the capacity to make a material difference” said Tony Lloyd MP for Rochdale
A New Homes Ombudsman, by its very existence would force housebuilders to look at what they do (and don’t do) forcing them to strive to do better, in the certain knowledge that a buyer can complain to an independent ombudsman who would potentially, be able to award unlimited, justifiable compensation. Such awards would become a matter of public record. No longer would housebuilders be able to delay and defeat buyers’ repeated attempts to have their defective new homes fixed.
New Homes Ombudsman: FREE – FAIR – FOR EVERYTHING
Free – At no cost to new homebuyers making a complaint following the housebuilder or warranty provider issuing a final deadlock letter.
Fair – A New Homes Ombudsman would (and must) be entirely independent of the housebuilding industry – something that clearly the warranty providers and the Consumer Code for Home Builders are most definitely not! Fully transparent, appointed and audited by Government.
For everything – Everything and anything that can and does arise when buying and living in a new home. Dealing with buyers’ complaints including misleading and incomplete marketing information and underhand selling practices, unfair contracts, poor build quality, defects, non-compliance with Building Regulations and/or warranty standards, inadequate or indifferent after sales service, conflicts of interest, tenure and boundary issues, contractual disputes – with the New Homes Ombudsman being able to order housebuilders and/or new home warranty providers to pay buyers justifiable and meaningful compensation awards.
The New Homes Ombudsman must be fully-independent and government-appointed, NOT one of many “Ombudsman” in the Ombudsman-services.org who act as little more than an outsourced dispute resolution service to various sectors. Cost Effective Dispute Resolution (CEDR) is not going to work either!
But the New Homes Ombudsman should not be part of a wider, ‘one-size-fits-all’ one-stop, general purpose “Housing Ombudsman” as the current rhetoric from Government would indicate. I was horrified that merging the various existing residential Ombudsman into one “Housing Ombudsman” is being given serious consideration even though it would also include a mechanism of independent redress for new homebuyers for the first time. Whilst this is better than the complete absence of any independent means of redress that new homebuyers currently have, it would not be in the best interests of new homebuyers if the badly needed New Homes Ombudsman was set up as part of a wider “Housing Ombudsman” service.
It would take a considerable amount of time and presumably new legislation to combine the existing ombudsmen into one office. Furthermore, the new-build industry is sufficiently large and errant to fully justify a dedicated New Homes Ombudsman of its own – which would specialise in the many unique issues and technicalities of the new-build sector. Camouflaging a New Homes Ombudsman under the umbrella of a general “Housing Ombudsman” would also make the New Homes Ombudsman less conspicuous to the very people who would need and benefit from it.
Housebuilders and warranty providers operational basis is to ‘bat away’ buyers’ complaints and warranty claims rather than work in the consumer’s best interests. Despite many years of opportunity, this isn’t going to change. It is now time, as I would hope this Inquiry will conclude, that UK new homebuyers were given something from this government. A small concession that if (or rather when) they are unfortunate enough to discover major, preventable defects in their new home, or housebuilders fail to rectify defects in a timely manner, they can apply to an independent, government-appointed New Homes Ombudsman who could award justifiable and meaningful levels of compensation.
As Communities Secretary Sajid Javid MP announced on 29 November 2017 recognising the need for an Ombudsman to give new homebuyers a form of redress, I would hope, following the recommendations and evidence I have submitted to this Inquiry, he will announce that a stand-alone independent New Homes Ombudsman will be now be set up by the end of 2018.
In the past, government ministers and the DCLG have been hoodwinked into believing that the industry’s own voluntary Code, the new home warranty and the building regulations offer sufficient protection for new homebuyers. Government also believed that consumers are “more likely to be supported by independent professional advice from lawyers and others capable of giving advice top their clients and because the terms of the contract are more likely to be negotiated.” and “they can take action through the courts for monetary compensation.”
However, despite the obvious need and benefits a New Homes Ombudsmanwould give consumers, many within the industry, will maintain that a fully independent New Homes Ombudsman is not necessary. Their lobbyists, the Home Builders Federation (HBF) claim “the overall quality of new homes has never been higher than it is today” stating that “the overwhelming majority of people are happy with their new homes. In the small number of cases where buyers encounter problems the industry is fully committed to completing them as soon as practically possible.”
This is quite simply, not the case.
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Posted on29/04/2017byNew Home Expert|Comments Off on Taylor Wimpey Announces £130m Leasehold Sticking Plaster Solution To Housebuilders’ PPI
Caught in a trap! Taylor Wimpey “sorry” for ripping off leaseholders!
Some mistakes are hard to fix. It is better to be careful – not sorry!
Taylor Wimpey used a trading statement last week to announce their ‘conclusions’ following a review into the company’s historic lease structures. This focused solely on a specific lease structure used from 2007 to late 2011, which provides that the ground rent doubles every 10 years until the 50th year. In doing so, the company created a new asset class that is now very attractive to specialist investors, because it equates to an annual interest rate of 7%. Taylor Wimpey claimed these leases “are considered to be entirely legal.” It remains to be seen whether the charges would be deemed by a court to be ‘fair and reasonable’ Under the Unfair Terms in Consumer Contracts Regulations 1999. Taylor Wimpey now admit that: “the introduction of these doubling clauses was not consistent with our high standards of customer service and we are sorry for the unintended financial consequence and concern that they are causing.” Surprisingly, Taylor Wimpey says the total cash outflow of around £130million “will be spread over a number of years.” In addition, this only applies to the “qualifying customers subject to eligibility checks” – only those owners who bought from Taylor Wimpey are to be “helped.”
Ground Rent Review
Taylor Wimpey has written to buyers who have complained about their leases with the onerous ground rent doubling clause. In the letter Taylor Wimpey outline its “Ground Rent Review Assistance Scheme” funded by the company, which offers to negotiate on the customers’ behalf with freehold owners for a ‘Deed of Variation’ to “convert existing doubling leases to an alternative lease structure incorporating materially less expensive ground rent review terms.” with Taylor Wimpey covering the financial cost of doing so”.