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.
It is not just house building that has dissatisfied customers. However, most other industries have an Ombudsman and official Regulator.
If you bought a new home in the last ten years, the following statements will have a familiar ring to them. After all, the house building industry has a dreadful reputation for both quality and customer service, yet makes every effort to smokescreen and spin the opposite.
- “Stop solving problems…just make the customer happy”
- “staff are under pressure to bat away complaints and instead focus on appeasing callers to boost satisfaction ratings”
- “persuading customers to believe all is fine is more important than getting to the bottom of their problems”
- “All [the company] care about right now is the net promoter score. Staff are rated on this survey it sends out after a call or web chat. Well actually, on the first question only, “How would you rate [the company] to a friend?”
- “one of the advisors I spoke to made promises they didn’t deliver. I wonder if this is the way they are trained – to reassure the customer but actually not to do anything.”
- “other support departments are unhelpful and more interested in their own KPI, pretending they care about customers, but the reality is they are treating them appallingly”
The idea for a New Homes Ombudsman is not new. I have been campaigning for nearly two years, see this blog, my website forum, the “Unhappy New Home Buyers” Facebook Group and lobbying on Twitter. More recently I attended the APPG Inquiry into the “Quality of New Build Housing in England” and proposed the introduction of a fully independent New Homes Ombudsman as one of a series of measures that would force house builders to improve both quality of the homes they build and the service they give their customers after they discover the inevitable defects and problems.
My proposal for a New Homes Ombudsman was met with widespread acceptance at the APPG Inquiry (2nd meeting) and during the question and answer session; Lord Richard Best said “I chair the property ombudsman which looks after estate agents and things like that and it works well, so at some stage I’d like to explore the Ombudsman concept as a way of trying to handle some of these disputes…..”
The quality of new homes is getting worse as housebuilders show contempt for their customers by refusing to tackle the issues in their poor quality, defect-ridden new homes.
This government has bent over backwards to help the house building industry, with taxpayer-funded subsidies such as the controversial Help to Buy equity scheme (£791million loaned for 19,394 new homes to 31 March 2014) and the ongoing relaxation of planning rules. So why are Britain’s housebuilders not doing anything to improve the dire quality of the new homes they are building?
The quality of new homes is getting worse as this recent article in the Daily Mail demonstrates; caused by a combination of a lack of skilled tradesmen, insufficient construction time, poor site management and the builder’s CEOs only caring about profit and numbers (and their bonuses!) – quality doesn’t come first (if it ever did), in fact it doesn’t even come fourth! To add insult to injury, housebuilders are even routinely refusing to take any action to fix defects that unlucky buyers discover in their new homes once the initial excitement wears off, coming up with “it’s within tolerance” and other excuses in an attempt to justify not fixing defects in their new homes.
Extensive remedial works still being done in a Taylor Wimpey new home nine months after moving in.
The sad fact is that the quality of new homes and many housebuilder’s reputations are now so bad, an increasing number of new home buyers are employing professional snagging inspectors to independently check for defects in their new homes before they move in. But yet again, housebuilders often refuse point blank to allow access to the new home for buyer’s inspectors until after legal completion, as a matter of “company policy”. This means that any issues identified cannot be fixed prior to occupation and even if the builder does attend to them later, (a big if!) it causes maximum inconvenience for the consumer taking time off work, moving furniture, mess etc.
After close examination of the recent Adjudication Scheme case histories, we ask……..Is the Consumer Code for Home Builders worth the paper it is written on? The clue is in the name “For Home Builders” not for homebuyers. At best, house builders tend to view the Code as voluntary or optional despite many of the Code requirements actually being required by consumer legislation. At worst, as is shown by the published case summaries, house builders knowingly continue to disregard the Code requirements in the full and certain knowledge that the worst that could happen would be slap on the wrists and a small award against them. Now in it’s fifth year, the Code is frequently referred to by the industry being used as an opportunity to promote new homes.
The Consumer Code for Home Builders was launched in April 2010 apparently as a response to the Barker Review in 2004 and Office of Fair Trading – Market Study of Home Building in the UK published in October 2008. The Consumer Code is allegedly the house building industry’s response to the issues raised in those reports relating to customer service and satisfaction. It was created by a “group of stakeholders within the industry” who “joined forces to consider the issues raised” to “produce a Code of Conduct for home builders.” It was first launched in April 2010 – over FIVE YEARS after the deadline in Barker’s report!
The Code claims to: “provide protection and rights to purchasers of new homes, ensuring that all new home buyers are treated fairly and are fully informed.” But the protection already exists with The Consumer Protection from Unfair Trading Regulations 2008, making it a legal requirement to treat consumers fairly and The Business Protection from Misleading Marketing Regulations 2008 reinforces the legal requirement not to make misleading or false statements. The Consumer Code for Home Builders if strictly followed, should result in compliance with the legislation, probably the main reason it was created by the house building industry.
The Code applies to all house builders registered with the new home warranty providers such as the NHBC, LABC Warranty and Premier Guarantee. It consists of 19 requirements and principles that house builders must adhere to in marketing, selling homes and their after-sales customer service. Failure by a house builder to adhere to the code requirements can result in exclusion from all registers run by the warranty bodies that participate in the scheme. Has this ever happened? Very unlikely!
But is the Consumer Code effective? – Do house builders strictly follow it? – Are punitive penalties being imposed on builders who are found to have deliberately breached the Code? Going by the latest published Adjudication Case Summaries for 2013 it would appear not.