The Building Research Establishment (BRE) is introducing a national quality mark for new housing that it claims should give home buyers and renters a clear indication of the quality and performance of a new home.
The BRE says it is a “world leading building science centre that generates new knowledge through research. This is used to create products, tools and standards that drive positive change across the built environment.” The BRE claim its ownership structure enables the BRE to be “held as a national asset on behalf of the construction industry and its clients, independent of specific commercial interests.” Allegedly protecting the “impartiality and objectivity of the BRE Group in providing research and guidance.” The BRE Trust is a registered company limited by guarantee and also registered as a charity in England.
A number of stakeholders are currently working with BRE on the development of their Home Quality Mark from its beta testing stage. Of the housebuilders, only Galliford – with its perennial ‘four-star’ HBF-rated Linden subsidiary, ‘minnow’ Cala, and Kier are currently involved at present.
CALA Homes, plan to trial the Mark. Cala Chief Executive Alan Brown said: “Independent benchmarking of new homes is hugely important. For CALA, it provides third party recognition of our commitment to consistently build high quality, sustainable homes. For homeowners, it offers a simple and reliable measure of the energy performance of the property they are buying. We look forward to working with BRE on the new Home Quality Mark.”
The BRE say “the new national quality mark will transform the way consumers choose the homes they buy and rent and will provide house builders with a valuable independent quality mark they can use to highlight the innovative features of their homes and differentiate themselves in the marketplace at a time of rapid growth.”
The latest figures released by the Department for Communities and Local Government report the 137,000 new homes were started in 2014 – a 10% increase on the previous 12 months. The total of just 118,760 new homes completed in the 12 months to 31 December 2014 was up by 8% on 2013.
If ever there was proof that house builders are hoarding land and restricting supply this is it. Nearly every major plc house builder now has around five or six years’ supply of building land. Despite this their lobbyists the Home Builders Federation (HBF) are still bleating on about the planning system.
Stewart Baseley, executive chairman at the Home Builders Federation claimed that more than 100,000 extra people were now employed in house-building, providing a boost to the economy. Yet the HBF is demanding further incentives to encourage more development.
He said, “We are still way short of building the number of new homes the country needs, and that despite the government’s Help to Buy scheme, it was still too difficult for developers to get planning permission.”
Buying a brand new home built to exacting standards, the latest energy-efficient designs with a ten-year warranty, where could naive, trusting new homebuyers possible go wrong? Read on to discover the twenty most common mistakes made by Britain’s new home buyers and make sure you don’t become yet another victim of the UK housebuilding industry.
1) Buying a new home because they can not because they should Various government schemes such as Help to Buy schemes make it easier and often the only financially possible way to get on the housing ladder. Being able to buy is not alone a good enough reason to buy a new home.
2) Using the housebuilder’s recommended, suggested or nominated firm of solicitors
The number one mistake made by new homebuyers. Despite it being illegal for housebuilders to insist that buyers use a certain solicitor, it still occurs. One major plc housebuilder even pre-filled in reservation forms with their preferred solicitor! By using the housebuilder’s solicitor buyers are not only relinquishing control of the process to the housebuilder, they are actually putting themselves at a legal disadvantage by not having their interests represented. Issues include; buyers legally completing on unfinished houses, a buyer of a flat later discovered specifications had been changed and the length of lease reduced and being told that completion certificates and warranty documents had been received when they had not even been issued, due to unresolved compliance and warranty problems with the home.
3) Not having their new home independently professionally snagged and inspected
The second biggest mistake new homebuyers make is not having their new home professionally snagged and inspected before they legally complete. It is a sad fact that around 96% of all new homes buyers will have defects and problems with their new homes after they have moved in. Many, if not all of these could have been prevented if the property had been properly inspected at each construction stage by both the housebuilder’s site management and warranty provider. It is therefore essential that new homebuyers use an independent professional to thoroughly snag and inspect their new home before they legally complete. This not only ensures it is, at the very least, fully completed before they pay for it, it also highlights all visible defects, snags and breaches of regulations and warranty standards. Unfortunately both the housebuilders and warranty providers cannot be relied upon to properly carry out the inspections and oversee remedial works to correct defects.
4. Not doing any research regarding housebuilders or new homes before buying
Websites such as our sister site www.brand-newhomes.co.uk and various forums have a wealth of information available for the new homebuyer. This enables them to make a fully informed choice, aware of what can and does go wrong and what steps they can take to reduce disappointment and feelings of regret and resentment after moving in.
5. Paying too much – not getting a discount
All house builders have a price list but only a fool actually pays the full price. Site sales staff nearly always have “negotiables” they can offer buyers with discounts amounting to 5-10% off the full advertised price on certain plots at certain times of the year. In addition, many new homebuyers buy at or near the top of the market paying too much only to later watch as the resale value of their home plummets just as interest rates rise and the housing market crashes.
The Daily Telegraph recently published a story featuring Taylor Wimpey CEO Peter Redfern claiming that new regulations following the Mortgage Market Review, which have restricted borrowing for second-hand homes, have not adversely impacted the business and Help to Buy is still being used by their first time buyers. The company also announced that it is fully sold for 2014 and has confirmed a profit upgrade.
Mr Redfern, in a somewhat blatant attempt to talk up the prospect of further new home price increases, is claiming that housebuilders have more room to adjust prices upward since they were starting from a lower base, having fallen behind valuations for existing homes after the great recession. So are we to interpret that, housebuilders such as Taylor Wimpey have not increased their prices in line with the general local market since 2008?
“Housebuilders have to keep liquidity in the business and have more room for price adjustment sellers of existing homes by contrast may take their property off the market if they are not getting the right offer. Big houses in the country market are also proving harder to sell, where housebuilders are not that prevalent. This is having a negative impact on the outlook for the market for existing homes.”
Schemes, in particular Help to Buy, continue to give the new home industry a taxpayer-subsidised helping hand. “………..attractive products that help credit availability and affordability – whereas stricter mortgage rules have started to affect sales in the second-hand market. After the downturn mortgage lenders penalised new build specifically apartments as they felt young buyers posed a greater risk with good incomes but low deposits, but these differences are starting to unwind.”
If new homes were penalised, it was because there is always a 10-20% price premium. Lenders required higher deposits to give more of a buffer to account for the premium and added risk of steeper falls in valauations should the market turn.
Hardly a person to let an opportunity slip to gripe about the perceived failings of the planning process and other woes of the house building industry, Redrow’s CEO Steve Morgan, is becoming a regular whinger whenever his company release results or issue interim statements to the City. His latest tirade this week concerned the release of greenbelt land for house building, capacity issues relating to labour and materials shortages and his perceived restrictive planning policies.
Reasons to be cheerful?
Morgan’s company Redrow released a record set of results and doubled the dividend paid to its shareholders on the back of a 91% increase in profits to £132.6 million for the year to the end of June. The average selling price of a Redrow home is also up 13% to £239,500 – the fifth highest of the large house builders. The number of new homes built was also 27% higher, up 727 to 3,597. All of this thanks to the government’s Help to Buy scheme, acknowledged by Redrow and facilitating over a third of their private sales (35%).
You would think this would make for a very happy bunny – especially when you consider that Morgan will be £3million richer as he owns 150 million shares in his company – but not apparently so.
On brick shortages:
According to Morgan, there are just not enough bricks being made to go round. Strange, as his competitors Barratt managed to build 13,663 new homes, nearly four times more than Redrow and Taylor Wimpey also managed to get bricks for the 11,600 new homes they built last year, again over three times the number Redrow built!
It takes around 10,000 bricks to build the average UK house. Around 1,560 million bricks were made last year – enough for 156,000 new houses. Nowhere near that number of houses will be built in 2014; in fact, it would be a surprise if a total of 156,000 new homes are built this year! So enough bricks are being made and Redrow’s competitors manage to order sufficient quantities so perhaps Morgan should be looking closer to home!
Why we need to start building council houses again.
It is not in house builder’s interests to build the 200,000 new homes required each year. Not only would it use up their five-year landbank supply, it would also mean new house prices would fall as would house builder’s profits. So house builders voluntarily building more homes for motives other than increasing their profits is about as likely as a turkey looking forward to Christmas!
It is also a fact that house builders do not have sufficient skilled labour and the necessary management skills to build a combined 200,000 every year, year in, and year out. So if, as has been the case for the last 25 years, house builders continue to drip-feed new homes on to the market what is the solution?
Let’s start building decent council houses for decent people.
The answer lies in a return of publicly funded council house building on a national scale. Not with Housing Associations building more social housing just for those on benefits, but by allowing councils to use their cash surpluses, currently earning little if any interest, to build council houses on their own land. It worked well in the fifties and sixties; millions of council homes were built to replace so-called slum housing. But they were not classed as ‘social’ housing – in fact they were quite the opposite. They were homes for everyone – especially for workers on middle incomes. Getting a council house was based on how long people had been on the waiting list. There was no rationing and no stigma. They were new homes on estates with genuinely mixed communities. Good, well designed quality new homes with decent sized gardens for working families. Homes where people would want to live for most of their lives. But this golden age came to an end with the advent of Right to Buy and Housing Acts in the 1980’s which prescribed who could access social housing and who could not.
So now is the time to start building council houses again
A council house building programme could be partly funded with a surcharge of say £1,000 for every new home sold by every UK house builder. The likes of Barratt, Persimmon and Taylor Wimpey would pay in around £37 million a year between them. They could hardly complain given that the taxpayer-funded subsidy Help To Buy has increased their profits by over 50% and more during the last twelve months. This would not increase the price of new homes as builders always price to the maximum the market can stand anyway, price too high and they won’t sell!
The UK average family home is now 2% smaller than it was ten years ago.
A recent report from the insurer LV, says the average family home has ‘fundamentally changed’ in recent years as houses have become smaller. The report states the average UK home, including both old and new-build properties, is 85sqm and has 5.2 rooms – with an average area of 16.3sqm per room. In comparison, the average new home in the UK is 76sqm with 4.8 rooms and an average area of just 15.8sqm per room.
The research has revealed that over the last 10 years the average family home has shrunk by two square metres, as more people ‘shoe-horn’ themselves into small new homes and unsuitable flats. The average UK family home is now just 96.8 square metres. The most common type of home for a family in England is still a semi-detached, three-bedroom house, but around one in ten families are now living in flats – a third of all flat-dwellers – and a 20% increase over five years.
John O’Roarke, managing director of LV home insurance says: “The average family home has changed dramatically in the last five years. More families are now living in flats and rented accommodation. Many families are now living with makeshift modifications that could be illegal and also unsafe. Building regulations are designed to ensure that home modifications are safe and we urge all those considering modifying their home to ensure any changes they are planning, meet regulation standards.”
A Consistent Approach To Failure?
Have you ever heard the phrase “within tolerance”? If you are a new home buyer the chances are it will have been said by a housebuilder’s representative using an industry-agreed degree of tolerance to dismiss your complaint of poor quality and justify an aspect the finish of your new home as acceptable and “within tolerance”.
The NHBC’s publication “A Consistent Approach to Finishes” was originally written for its inspection and a claim staff and was distributed to house builders in Spring 2000. It was also made available to homeowners who were in dispute with their house builder.
“A Consistent Approach to Finishes” set out to formally publish guidelines that could be used to settle disputes with disgruntled new home buyers, especially useful and often quoted and used by housebuilders when any remedial action would be messy, very expensive, inconvenient and time consuming to carry out!
These tolerances are now contained in Part 1 General Information of NHBC Standards – Chapter 1.2.
The NHBC state that:
“many sources of information relating to tolerances and finishes have been reviewed in the preparation of this Chapter. The tolerances and finishes given here are considered to be appropriate for the house-building industry and take precedence over other recommendations. This Chapter is not intended to deal with every situation that may arise and discretion should be exercised in its application in specific circumstances. The nature and extent of work necessary to remedy minor variations from the tolerance and finishes given should be proportionate and appropriate to the circumstances.”
Here are a few of the tolerances stated in the NHBC’s “A Consistent Approach To Finishes”:-
The standard and quality of new homes is not improving. Despite surveys and reviews, time and time again, house builders have demonstrated that they only care about profit and numbers. This was recently confirmed to a Taylor Wimpey new home owner last month, when the company’s regional director, visiting because the new home had over 400 faults including potentially dangerous electrical work, said: “we’re here to deliver profit for our shareholders” adding: “we don’t build perfect houses”
Remedial works cost builders money!
Indeed, many disappointed new homebuyers believe they should at least be forced to try to improve the quality of the homes they build! The reality is, it wouldn’t be too difficult to do. If there was a will, there is a way! It certainly would be unlikely to reduce the house builders’ profitability because it always costs less to do the work right first time, than it does to go back over and over again. All a successful business needs is great a product and satisfied customers. The house builders have neither, making their profit predominantly as a result of planning gain, land speculation and on the back of government initiatives such as New Buy and the Help to Buy subsidy!