Tag Archives: Consumer Code for Home Builders

Consumer Code for Homebuilders – Causing the Confusion!

So much for “Clearing the confusion” the Consumer Code for Home Builders (CCHB) appears to be creating it with its latest webpage purporting to “answer” consumer’s questions following the government announcement last month that a statutory new homes ombudsman was being created.

It would seem that the conclusions in the APPG Report published in July 2015 “More homes Fewer Complaints” appear to be lost on the Consumer Code for Home Builders as it ramps up rhetoric in a battle for its very survival now government has announced the creation of a statutory new homes ombudsman.

Under the headline “Clearing up the confusion”  the CCHB allegedly answers questions from consumers:

 

“Will the proposed New Homes Ombudsman replace the need for the Consumer Code?

Consumer Code for Home BuildersYes it would. The APPG Inquiry Report number 1 “Key recommendation” that a New Homes Ombudsman be set up saying “it would need to be completely independent and replace the dispute resolution service offered as part of the Consumer Code for Home Builders. This same Inquiry reported that the Consumer Code for Homebuilders:

  • “does not appear to give homebuyers the safeguards we think they should expect”
  • “it does not appear to us objectively to offer consumers a wholly satisfactory form of redress”
  • “is limited in its scope”

Yet the Consumer Code for Homebuilders ‘clears the confusion’ saying:

“The spotlight is on proposals for a new homes ombudsman once again, and we are actively working with government to understand how the new proposals will work in practice and what rights consumers would have under the scheme. In the meantime, however, there has been some confusion about the role of an ombudsman.

There are clear rules about what an ombudsman can and can’t do. While they can award a remedy (including money) to rectify a problem, they don’t have jurisdiction to fine organisations or apply standards. So introducing a new homes ombudsman may help with dealing with the complaints about existing problems, but it won’t prevent future problems arising.”

Wrong! An Ombudsman can award substantial justifiable compensation to consumers which would amount to a fine in all but name. All adjudication decisions would be publicly available in full with housebuilders named and shamed. By its very existence it would, as the APPG Inquiry Report alluded to, “put pressure on housebuilders to up their game in the first place and spur them on to improve workmanship and increase levels of customer service”

“We want service standards in home building to improve. Training and compliance checks are needed which is one of the areas we focus on.”
[The training being of housebuilders’ sales staff and estate agents – The CCHB specifically does not cover defects, poor quality or warranty issues]
“Furthermore, under the Consumer Code, builders can and have been held to account for not complying with an adjudicator’s decision.”
Really? Where is the evidence? James Brokenshire said the new homes ombudsman would go further and “champion homebuyers, protect their interests and hold developers to account”

This is an industry-led and industry funded Code that would never bite the hand that feeds it.

“Our Advisory Forum advises the Code on policy and action. We also have a fully independent disciplinary and sanctions panel which considers what action should be taken against those builders that breach the Code requirements. For example, one builder was suspended from building any new homes until all staff had been trained on the Code to prevent further breaches of the Code.”
But presumably not many, if any, have had their registration cancelled by the warranty providers. We don’t know because it has never been published!

Does the Consumer Code offer any more rights than existing legislation?

“Unfortunately, the Consumer Rights Act 2015 does not cover purchases of new homes.”   That’s why the protection provided by the Consumer Code is so important – the Code gives buyers of new homes protection if they change their mind or find sales literature misleading or inaccurate.”
Wrong! It does as far as ‘services’ are concerned. However, no consumer legislation at all specifically covers property. The CCHB does not give consumers any “Protection” it is merely a set of requirements that plc housebuilders appear to pay little more than lip service to at best.

“The Consumer Protection from Unfair Trading Regulations 2008 offers some protection.”
Wrong again! Not “some protection” – it covers every area regarding selling property. The CCHB was set up by the industry to prevent housebuilders being reported to Trading Standards and ending up in court.

“However, it requires Trading Standards to take enforcement action or consumers to bring their own action, which can be complex and costly.”
That is specifically why the Statutory New Homes Ombudsman is being created.

“Where issues are identified under the Consumer Code, home buyers can use the Code’s Independent Dispute Resolution Scheme rather than take lengthy and costly legal action through the courts. We’re raising awareness of the Code  because we want more home buyers to make use of this scheme to seek redress where a breach of the Code has been identified.”
The CCHB has existed for over 8 years yet apparently raising awareness is still necessary? A statutory new homes ombudsman would give consumers a right to redress in any dispute with housebuilders, in the same way the Financial Ombudsman Services does with financial providers. The statutory new homes ombudsman would not and must not be, restricted and shackled by specific Code requirements drawn up in collaboration with the industry and its own vested interests.

Why doesn’t the Code deal with more cases?
Good question!
Because no housebuilder is going to promote the CCHB as it would make complaints more likely! In addition, the CCHB has charges consumers an administration fee of £120 to register a complaint, and in some “successful” cases, this fee has not been refunded.
“We are continually raising awareness of the Code”
It hasn’t improved in the last 8 years! In fact I’ve done more to raise awareness of the CCHB and encourage buyers to use it after they sought my advice.
“so that we can encourage more people to access our independent dispute resolution scheme, including lawyers involved in new home purchases.”
The majority of solicitors being those that housebuilders force or coerce buyers to use even though this breaches requirement 2.5 of the CCHB!
“We are also working on removing/reducing any barriers that may exist to raising a complaint as well as investigating options to raise the maximum award limit.”
This is too little too late. Now consumers will hopefully soon be able to use the new statutory new homes ombudsman:  FREE – FAIR- FOR EVERYTHING

“Satisfaction with new homes has increased according to the Home Builders Federation which surveys new home owners.”
Wrong! Satisfaction has not increased. True it is 2% higher than in the previous years survey at 86%, but still way below the 91% in 2013!

“The latest survey response rate was 62% (57,972 responses), in which 90% said they would buy a new build again. Warranty bodies have also seen a drop in claims raised.”
Spin and PR?  An example of this industry never letting an opportunity for a bit of HBF survey spin pass by!
FACT – 99% of new homebuyers reported defects to their housebuilder within weeks of moving in.
FACT – 41% reported more than ten defects!

There is a danger that Government will bow to industry pressure and propaganda like this, placing limits on the effectiveness and powers of the statutory New Homes Ombudsman.

Bearing in mind the government said it “will work with consumers and industry to develop our proposals and publish more details in due course.”  But is this a delaying tactic? Whatever the perceived necessity for “further work”, the housebuilding industry is grasping it as an opportunity to lessen the impact that a statutory new homes ombudsman will undoubtedly have on their businesses.

Any perceived failure, collusion or delay with regard to the creation of the statutory new homes ombudsman will only serve to increase consumers (voters) existing and growing belief that  government is ‘in bed’ with the housebuilding industry, for example some have already questioned the recent extension of  help to buy to 2023, albeit restricted to first time buyers. It is time that for once government ignored the whining of this broken uncaring industry, one that has been running roughshod over new homebuyers for decades ans is ruining lives. This Hansard debate from 22 April 1998is as relevant today as it was then Why have so many successive governments failed to act? They must do so now.

 

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MPs back plan for New Homes Ombudsman

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.

 

Better redress for new homebuyersMuch 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?

The good

Need for a New Homes Ombudsman is recognised

New Homes OmbudsmanOn 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.

Tough sanctions

“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.”

The bad

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!

The Ugly

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.

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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.

So what are Noel Hunter Chairman ‘Consumer Code for Home Builders’ Management Board suggestions to the Consumer redress consultation?

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.

"limited in its scope" - The Consumer Code for Home BuildersNot 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.

Four revisions to the CCHB in 8 years! “Updated and improved” – for who? The latest CCHB evision making it more difficult for new homebuyers to get justice. The CCHB is not even a Chartered Institute of Trading Standards approved scheme!

Moving forward
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.

Sanctions
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.

Next Steps
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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Are new homebuyers taken in with bogus builder star rating?

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?
HBF 8-week Satisfaction Survey

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 than 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.

HBF 8-week Satisfaction SurveySurvey 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 the Consumer 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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Strengthening consumer redress in the housing market – A Consultation.

An 8-week consultation is launched with the potential to give new homebuyers a route to an independent new homes ombudsman

Sajid JavidThis 8-week consultation, hot on the heels of the ‘behind closed doors’ sessions of the APPG EBE Inquiry to 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.NHBC New Home Warranty not within scope of the consultationA 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.” 

Apparently The Consumer Protection from Unfair Trading Regulations 2008 are enforced by Local Trading standards Services” (page 10). So can we expect a prosecuting for this blatant and proven breach?  

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?
Consultation trick to miss new home questions?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:
Consulation New Home Buyer questionsQuestion 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.A separate New Homes OmbudsmanIt 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.

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Consumer Code For Home Builders Revised

New homebuyers are short-changed as the latest revision to housebuilders’ ‘non-mandatory’ Consumer Code is published.

A year ago, I wrote an article that I showed the Consumer Code for Home Builders (CCHB) is failing new homebuyers.  The all-party parliamentary group (APPG) Inquiry Into the quality of new homes concluded in its Report that: 

  • “The evidence points to an industry…..which will at times ride rough-shod over dissatisfied buyers”
  • the Code [Consumer Code for Home Builders] does not appear to give homebuyers the safeguards we think they should expect”
  • “it does not appear to us objectively to offer consumers a wholly satisfactory form of redress”
  • “The Consumer Code for Homebuilders is limited in its scope”

Well it’s about to get a whole lot worse!
In September 2015, the CCHB announced a triennial review of  Code, at that time changes were expected to come into effect in 2016 – “to ensure it continues to evolve with the industry and changing consumer needs and as a result of adjudication cases.” It claims “The industry has now made great strides in producing an updated Consumer Code which is fit for purpose in today’s world”   Talk about hype!Changing consumer needs? Fit for purpose?
Consumer CodeLast week the CCHB published the 4th incarnation of their consumer code, which I believe now contains specific revisions which severely diminish the likelihood of a successful claim by new homebuyers seeking redress and justice from errant housebuilders. The changes, place additional restrictions that can best be described as obstructive, the sole purpose of which is to protect the industry from the very few homebuyers that go through the rigmarole of Code’s dispute adjudication process.

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Annual Report 2015/16 – Consumer Code for Home Builders

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

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

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

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

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

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

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APPG Inquiry – ten recommendations to improve the quality of new homes

The All Party Parliamentary Group Inquiry Into the Quality of New Homes In England has made ten recommendations and says house builders should be “upping their game and putting consumers at the heart of the business model. Alongside this, Government should use its influence to promote quality at every opportunity.” The cross party committee of MPs and construction experts called on the Government [DCLG] to set up a New Homes Ombudsman to mediate in disputes between homebuyers and housebuilders. This is the number one “key recommendation” of 10 recommendations setting out measures to improve the quality of workmanship in new homes and provide consumers with easier and cheaper forms of redress, to get defects and problems fixed. 

APPG Inquiry Report Recommendations:

Recommendation 1: DCLG should initiate steps to set up a New Homes Ombudsman.

APPG Inquiry Report Recommendations“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.  

Although funded by the construction industry [housebuilders] it should be a public body not under the industry’s control. It should provide a cheap, quick and effective system of redress and have power to enforce standards and award compensation. This would put pressure on housebuilders to up their game in the first place and spur them on to improve workmanship and increase levels of service.” 

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More homes – Fewer complaints : APPG Inquiry Report

APPG Inquiry ReportMPs call for the DCLG to set up a New Homes Ombudsman in APPG Inquiry Report published on 13 July 2016.

At long last seven months after the last evidence session on 14 December 2015, the All Party Parliamentary Group for Excellence in the Built Environment (APPGEBE) has finally published the findings and recommendations in the report following its: “Inquiry Into the Quality of New Build Housing in England”

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Builders shares crash as Britain votes to leave the EU

It would appear that the house builders’ share price rise since the financial crash of 2008, has been built on the same dodgy foundations as some of their houses are. A business model built on selling sub-standard houses to sub-prime borrowers.

This was illustrated during the first two days of trading following the UK’s historic vote leave the EU. Worst hit in the initial market panic were Banks and shares in the listed house builders. Despite this, some ever-greedy directors used the Friday crash to buy more shares on the cheap, known as “catching a falling knife” and promptly lost another 15%! Taylor Wimpey Non-Exec director Dame Kate Barker, 59, who produced the Barker Review on housing supply in 2004 – which resulted in the industry setting up the HBF Customer Satisfaction Survey two years later, but has failed to have any impact on improving either supply or quality – bought 20,000 Taylor Wimpey shares for £26,953 but the shares closed down 15% leaving her with a paper loss of £3,800.

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