Tag Archives: new homes ombudsman

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.

The Home Builders Federation (HBF) fingerprints are all over these revisions. The HBF latest Annual Report confirmed the “HBF sits on the Code advisory forum to ensure house builder’s interests are represented. We submitted a response to the ongoing review Consultation and are working to ensure that any changes are workable for the industry.”
Well that’s mission accomplished! 

Code approval and compliance with EU Directive

Revising the Code provided an opportunity for the Code to evolve and attempt to meet the requirements of the Chartered Trading Standards Institute’s (CTSI) Standards for Alternative Dispute Resolution (ADR). Approval by the CTSI is required to comply with EU DIRECTIVE 2013/11/EU (21 May 2013) on ADR for consumer disputes. This requires the ADR to be provided by a certified body to show it meets the principals set out in the Directive and associated regulations. ADR schemes cannot achieve certification unless they meet strict criteria for impartiality and independence.

“In 2014, the Code’s management board took the decision to gain approval through the Chartered Trading Standards Institute (CTSI) Consumer Codes Approval Scheme (CCAS). It was important to show how the Code helps strengthen consumer protection and improve customer service standards by approval of the CTSI under their CCAS. This facilitates self-regulation.” 

Despite the latest revisions, the Consumer Code for Home Builders has not been approved or accredited by the CTSI. Indeed, the now defunct Office of Fair Trading (OFT) withdrew its endorsement of the scheme in 2010 before it was even launched! This was because the Code’s dispute resolution service would only deal with complainant claims below £15,000. The OFT had wanted a cap of £150,000. At the time, Rod MacEachrane, a former NHBC commercial director and chair of the CCHB management board, confirmed that the OFT was:
“no longer part of the equation. It (OFT) said we were not meeting our commitments under the market study” [OFT report in 2008]. MacEachrane told Building magazine that “a cap of £15,000 would deal with 95% of disputes and was vital to ensure it remained a low-cost dispute resolution service.”
Low cost for house builders that is!

To add to the confusion, complaints can be covered by a different and separately operated Code – the Consumer Code for New Homes  (CCNH) – which is not available to buyers with NHBC, LABC or Premier Guarantee warranties. Under the CCNH claims  “are subject to a maximum aggregate award of £50,000 inclusive of VAT and maximum awards for financial loss of 25% of the purchase price of the Home and maximum awards for emotional distress and/or claims for inconvenience of £1,000” –  far more generous than the “protection” buyers allegedly have with the CCHB!

The CCHB annual report (2015)  said:  “Consumer Code is a central part of the core criteria for the Help to Buy schemes in England Scotland and Wales.” Nevertheless many housebuilders regularly breach one or more of the Code’s 19 requirements as can be seen from the Adjudication Case Summaries which show multiple Code requirement breaches in the 57 homebuyers’ claims that succeeded in 2016. Nevertheless, the awards in these successful cases represent less than a fifth of the total amount claimed by new homebuyers. 

So what are the changes to the Consumer Code for Home Builders?

The new CCHB 4th edition April 2017  comes into effect on 1st April 2017, but there is a transitional period and for reservations made before 1 July 2017complaints will be assessed against the previous version (Version 3) of the Code.” 

Re definitions:

Consumer Code with Builder's GuidanceFirstly there are a few re definitions most notably that the “Dispute Resolution Scheme” is now referred to as the “Independent Dispute Resolution Scheme”, no doubt an attempt to give the impression of independence from industry interference and to head off the growing calls for a New Homes Ombudsman  to be appointed by government, which will make the CCHB entirely redundant. The needs of ‘vulnerable customers’ should now be considered at all times. In the absence of any definitive guidelines, we can only presume that housebuilders will have to formulate their own views of defining vulnerable customers. But I doubt naïve first-time buyers will be considered “vulnerable.” 

Scope of the Code

The Code does not apply to investors now defined as buying more than one property on the same development for investment purposes. 

Making the Code available – Code Requirement 1.2

Strikingly, for a Code that so few new homebuyers are aware of, with just 55% being given the Code on Reservation (requirement 1.2) according to responses to Q19 of the HBF survey, the requirement to display the Code and give a copy to anyone who asks for it has been removed. The Code scheme Logo must now be displayed in housebuilders’ and agents’ sales offices and in sales brochures, but the requirement for the housebuilder to inform their customers that further guidance is available and how they can get this has also been removed.

Homebuyers must still be provided with the Code (Code Scheme) with the Reservation agreement “but this can be done by electronic means” – a link to the Code website or an attachment in an e mail presumably. In addition, there is no requirement to provide the version of the Code that contains the ‘House builder guidance’ – essential for those wishing to make a claim using the CCHB Dispute Resolution Scheme. The version with ‘builder guidance’  can be found here but can hardly be considered easily accessible!

Consumer Code for Home Builders LogoI recently visited an 18-month old Barratt sales office and can confirm they were no CCHB logos anywhere to be seen. On mentioning the CCHB to the sales advisor, I was given their only hard copy, a second edition CCHB dated April 2010! However, it was confirmed that the CCHB was given to all buyers with warranty details at reservation. 

Sales and advertising – Code requirement 1.5

High pressure selling techniques are now excluded to meet CTSI requirements. Previous references to the Property Misdescriptions Act 1991 and the Consumer Protection from Unfair Trading Regulations 2008 have been replaced with “comply all relevant legislation” 

Pre purchase information requirement 2.1

All “event fees” such as deferred management charges and fees on re sale must be declared at the Reservation Stage. This is especially relevant to retirement homes, a sector that has been heavily criticised. It will also be relevant to other leasehold new homes especially leasehold new houses.

The requirement to be shown “the layout” has been qualified to now show a “general layout” following adjudication decisions made on historic complaints using the dispute resolution scheme, no doubt designed to reduce the likelihood of a claim succeeding. 

Health and Safety – Code Requirement 2.4

There is a clarification that access to areas under construction may be properly barred or restricted. In other words, you cannot view or inspect your new home until all works are completed. As is often the case, works are ongoing right up to and after buyers legally complete and are given their keys, this has the potential for confusion. No doubt all housebuilders will use this requirement as and when it suits them to do so.

Pre Contract Information – Code Requirement 2.5

It is illegal for a housebuilder to require any homebuyer to use a specified firm of solicitors. Nevertheless, under the Code, buyers can be induced to do so by builders offering incentives such as legal fees paid, part-exchange or stamp duty paid.

Reservation – Code requirement 2.6

Various clarifications including how long the price is valid and the likely range of monetary deductions from the reservation fee, if the sale is cancelled. Most important to note is that due to “a high number of adjudications have been found against home builders”, the guidance now suggests that “appendices and schedules be attached to the reservation agreement” evidenced by both the housebuilder and the homebuyer in recognition of them having been seen and received and to act as proof “that the home and its specification was agreed and explained at the point of reservation.”

The Contract – Code requirement 3.1

Reference to specific legislation has been removed. Namely the Unfair Terms in Consumer Contracts Regulations 1999. No doubt to make it more difficult for buyers to find out how they have been wronged.

Timing of construction – Code Requirement 3.2

Due to issues surrounding “completeness” of the home at handover, guidance has been extended to suggest that the housebuilder should explain to the homebuyer that there may be “minor items outstanding.” No doubt if there is a written record, this may head off claims from buyers moving into incomplete homes. The definition of “minor items” was not clarified. Builders are guided to inform buyers that they should “give reliable and realistic information when construction of the home may finish”, but housebuilders should “make it clear that they cannot be precise.” So how can it be reliable?

Health and Safety for homebuyers- Code requirement 4.2

Reference to specific legislation, namely the Construction Design and Management Regulations 2007, has been removed. Too many pesky new homebuyers were no doubt using the legislation to report contraventions to the HSE.

Changes to the Dispute Resolution Scheme

The most shocking changes concern the so-called “Independent Dispute Resolution Scheme.”    From April 2017, a claim cannot be brought until 56 days has passed since first raising it with the housebuilder and no later than 12 months after the housebuilder’s final response. Previously homebuyers had just three months to do this. These changes bring the Code in line with the timeframes set out in the Alternative Dispute Resolution Directive.

The award for “Inconvenience” can no longer be claimed by homebuyers! Considering that in 34 of the 57 successful cases in 2016, the £250 maximum payment was all they were awarded, this is certainly a retrograde step, designed to reduce the payments housebuilders are required to make. The very inconvenience of making a claim using the CCHB is enough on its own to justify the payment. However the good news is from 1st July 2017 the maximum for inconvenience is to be doubled to £500, in line with current best practice in other IDRS. The bad news is any “awards will be made by the adjudicator at their own discretion and consideration and where a breach of the Code has been identified.” Worse, a buyer cannot receive an award for “emotional upset and stress, as awards are to be judged as a matter of fact and on the resulting financial loss caused.” Strangely 4.6 of the guidance states that “home buyers may not receive an award for inconvenience alone” but the case summaries would indicate the opposite!

Finally the onus is now on homebuyers to correctly identify which Code requirement has been breached when making an application for dispute resolution, apparently “to avoid generalised complaints which may have little or no specific relevance to the Code.”

Once the homebuyer accepts an award decision, in writing, the housebuilder must pay the award in full, within 20 working days of the adjudicator’s notification.

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Petitions to Government – Are they a waste of time?

The parliamentary petitions system has come under criticism lately when it was revealed that fewer than ten of the thousands of petition appeals launched by the public had led to a change of policy.Petitions debateAs at 3 March 2017, more than 28,400 applications were submitted to the Commons petitions committee in the past 19 months.

The Petitions Committee review all petitions published. The website says they “select petitions of interest to find out more about the issues raised” and “have the power to press for action from government or Parliament.”

At 10,000 signatures requires a response from the government. At 100,000 signatures means the petition will be considered for a debate in Parliament.

Attaining the required number of signatures required for an official response is all but impossible without media coverage and support. Petition for New Homes OmbudsmanMy own petition  calling for a New Homes Ombudsman and other measures that would protect new homebuyers and drive up the quality of new homes has managed a disappointing 793 signatures with just 19 days remaining.  Previous petitions for a New Homes Ombudsman also failed. This change.org petition got just 159 And this you.38 degrees  just 5! This petition for a New Homes Ombudsman  was rejected because it was “unclear.”

So what petitions were important to the British public?

A petition to  “Make the production sale and use of cannabis legal”  had 236,995 signatures, making it the ninth highest of all time. But a petition calling for the “legalisation of Medicinal Cannabis” attracted only 23,414 people signing. Surprisingly a petition calling for “more funding into brain tumours the biggest cancer killer of under 40s” was at number 44 with 120.129 signatures.

Other more popular petitions include “Remove the need to display a front number plate” with 31,122 signatures despite the fact it would bring no benefit. There were two separate petitions calling for a “Ban on driven grouse shooting” with 123,077 and 33,655 signatures. And there is still ten days left to join the 12,769 who have signed a petition “For the Robin to become our official National Bird!

Of the total (mostly pointless) 28,427 petitions, 18,581 were rejected. Under the rules, any that are defamatory, unclear in their aims, party political, about a personal issue, or about honours or appointments can be thrown out. Currently there are 2,772 petitions open and 7,074 that are now closed as petitions are only permitted to stand on the parliamentary website for six months.

Of the petitions permitted to stand on the parliamentary website for six months, 9,846 (35%)  fewer than 433 (4.4%) were backed by more than 10,000 signatures, the barrier for receiving a government response. Of these, just 72 (0.73%) gained 100,000 signatures and yet only 58 were debated in parliament. Only seven resulted in, or coincided with, government action to address the demands made by the petitioner.

Those who favour the system, claim petitions encourage political engagement from voters saying that even if a petition does not lead to a change in the law, it raises awareness among legislators.

Andrew Bridgen, Tory MP for North West Leicestershire told The Times: “If any petition reaches 100,000 signatories, then we should debate it. If just one petition leads to meaningful change, that’s significant.”

Helen Jones, the Labour MP and chairwoman of the petitions committee, also defended the system. “The advice I always give to people is that you have to consider a petition as part of your campaign, and not the end of your campaign”

After over three years campaigning for the government to appoint a New Homes Ombudsman, you are certainly not wrong Helen!

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No Problem With New Home Quality Says HBF Stewart Baseley

Stewart Baseley, Executive Chairman of HBF interview on BBC Radio 4 Today – Saturday 11 February

Stewart Baseley HBFTrue to form the Home Builder’s Federation [HBF] the industry’s PR and lobby group, conducts a perfect whitewash on the facts as their executive chairman Stewart Baseley trots out a well-used, well-rehearsed HBF rhetoric. The two main points the industry is keen to focus on at the moment:
“promoting awareness of increases in output and rebut negative claims on build quality” are well covered. Mission accomplished! Move along there is nothing to see. Money well-spent? The HBF was funded mostly by its house builder members to the tune of £3,037,449 in the year to 31 December 2015.

Questions to Stewart Baseley, Executive Chairman of HBF
Do you accept there is a problem?
“No I don’t accept there is a problem although clearly there are in some cases that you have highlighted some of those on your report and I totally accept that anybody that’s in a situation where they have got a problem, it’s very serious for them.”

“No problem – some cases”
Fact: As Stewart Baseley knows, the NHBC paid out £90million in warranty claims for remedial works to fix serious defects in 11,000 new homes (an average of £8,181 each) in the 12 months to 31 March 2016. That equates nearly 9% of the 124,720 new homes built in the same period. In the previous year, the NHBC spent £86million on remedial works including £23million on foundations and £32million on superstructures to 11,000 new homes.

But the main housebuilders, satisfaction ratings have gone down
“They have gone down, well as an industry of course you have to put that into context the fact that first of all we went through the most tremendous recession seven or eight years ago and we lost getting on for half our workforce. As Oliver Colvile quite rightly says, capacity is a challenge and we have increased output over the last three years, by in excess of 50% and we are taking on and training tens of thousands of people to do that; in that context, we actually conduct what I believe is the biggest opinion poll audience research that is undertaken in the UK every year, I am not aware of anything bigger. We sent out 85,000 questionnaires in the last survey year to customers of new homes of all the builders that have been mentioned, we get about a 56% response rate we have about 45,000 returns, which is pretty impressive in terms of the sample size compared to most surveys, and around 85% of the customers of all those homes would recommend their builder to a friend. Clearly there are 15% who wouldn’t and there are a variety of reasons for that and I don’t want to suggest in any way that those reasons are not important and vital to the people that have got those challenges.”

“We have increased output by 50% in the last three years.”
Fact: In the year to 30 Sept 2013, 108,270 new homes were completed. The latest official government figures to 30 September 2016 show 141,690 new homes completed a rise of 31%! Furthermore the number of new homes being built is still 23% lower than the peak in the year to 30 March 2007. Surely Stewart Baseley is aware of the official statistics?

New Home Customer Satisfaction Survey
Yes satisfaction scores, in even this industry’s own manipulated survey (with some buyers being given £250 John Lewis vouchers for favourable responses!) have indeed gone down to 85%. It was good that Stewart Baseley acknowledged this. But of a total of 135,860 homes built in the last HBF survey year, 80,582 surveys were sent out by the NHBC and just 56%, 45,342 were returned representing just 54% of the homes sold privately.  Furthermore, not all survey responses are ‘validated’. Surveys returned late (not within 7 weeks of the date of the letter) are not counted as are those that are “not filled in correctly.” I would suggest if the responses of these surveys were favourable to the industry, they are used in the results!

The HBF state in their Annual Report:
“The Customer Satisfaction Survey and star rating scheme has played a key part in measuring industry performance and providing data to rebut negativity. To ensure the survey is seen to be as robust as possible, HBF and NHBC will be launching a review of the scheme.”
In other words, people like me can see through the hype and are (along with the APPG Inquiry) calling for a survey that is completely independent of the industry.

Well Stewart Baseley has certainly used the “data” to try and “rebut negativity”. By way of comparison, the John Lewis’ customer satisfaction survey score in 2016 was 84.9% and Amazon were top with 86.6%, both are streets ahead of anything the housebuilding industry does!

It is true the industry “lost” a large proportion of the workforce, not forgetting this was something companies within the industry chose to do at the time!

The level of dissatisfaction of those buying new homes is at its highest level since 2009 according to your national new homes survey, are you saying that survey is wrong?
“No I am saying that’s our survey, we are talking about a drop from 90% to 85% all companies and I know the CEOs and I know the managing directors of all the companies that were mentioned in the report, plus many other companies across the country and I am absolutely convinced of one thing and that is they all get up in the morning and go to work and all their people go to work with the intention of delivering a good product to a high service across the country.“ 

”they all get up in the morning and go to work with the intention of delivering a good product to a high service across the country”
Fact:  You only have to look at Taylor Wimpey’s Loddon Park development recent press coverage especially concerning Bovis, to know this just cannot be true, otherwise surely action would have been taken long ago to address the issues. 

“Now clearly things go wrong on building sites, we are working in all weathers with all sorts of raw materials that have to be imported and clearly there are challenges and I think most customers accept that actually is not necessarily possible to always produce a perfect house. The key thing is to make sure we deliver their house on time and where they do have issues and when they do have problems making sure we address.”

“not necessarily possible to always produce a perfect house”
Fact: The housebuilding industry that Stewart Baseley is attempting to defend, cannot even produce a home that is 100% finished by the date builders say it will be. There can be no excuses for handing over a defective, poor quality and often unfinished new home. Whilst it is true a new home is exposed to ‘all weathers’, but so are new hospitals, schools office blocks etc all built to much higher standards handed over 100% compete, on time, with very few (if any) defects. It is not impossible to build a perfect new home. All that is required is care, desire and sufficient time. The industry has lowered expectations, so buyers expect to have defects and faults. You do not expect to have faults in a new car. You don’t drive it for a week and then take it back to the dealer with a list of things that need sorting out!

But that doesn’t always happen people have to go through complaints procedures etc
“Well I accept that and Oliver Colvile talks about an ombudsman and we already have procedures in place. If you have a warranty like the NHBC or Premier or LABC there is a disputes resolution service, we set up a Consumer Code for Home Builder back in 2010 that also has a disputes resolution service for areas that are not covered by the warranty provider, and I’m a great believer in transparency and I’m a great believer in people having access to services that are cheap for them to use to get quick remedies to their problems.”

“We already have procedures in place”
Fact: Dispute resolution by warranty providers, that are funded by housebuilders, to adjudicate on disputes with those very housebuilders about their reluctance to fullfil their obligations under the warranty policy!

“The NHBC Dispute Resolution Service can help with help to settle disputes over defects which relate to the NHBC standards. The NHBC standards require builders to fulfil all of their obligations under the Buildmark policy.”
The fact is house builders don’t and the NHBC has to mediate in disputes, which they find in favour of homebuyers in around 70% of disputes.

The Warranty dispute resolution cannot help with non-warranty matters, such as disputes over boundaries, planning, contractual or financial matters or if arbitration or legal proceedings against the builder have started.

“we set up a Consumer Code for Home Builder back in 2010 that also has a disputes resolution service for areas that are not covered by the warranty provider”
Fact: Unsurprisingly the HBF “sits on the Code advisory forum to ensure house builder’s interests are represented….to ensure that any changes are workable for the industry”  

The new revised Consumer Code for Home Builders comes into effect 1 April 2017. I believe the revisions to the Code are further to the detriment of the homebuyer. They have been made following decisions in cases of claims made by new homebuyers. These include the abolition of the ability to claim £250 for inconvenience, the removal of the requirement to give a copy of the Code to anyone that asks and non-provision the “home builder guidance” – so much for transparency Mr Baseley! Furthermore, in the case summaries since the Code was introduced in April 2010, there have been a total of 193 cases to June 2016. Out of these, 56% that succeeded or succeeded ‘in part’ resulted in total awards of just £221,869, just 19% of the total claimed £1,150,755.

Stewart Baseley says: “I’m a great believer in transparency”
Fact: The Customer Satisfaction Survey and builder star rating for example has no access to NHBC survey portal so buyers can see survey responses and builder scores in real time, [as house builders can] just the industry adjusted results in March. The HBF should publish all builder scores not just the Q1 star rating score. Why do they not publish the NHBC 6-month survey results? The NHBC could publish details on how many claims for each builder and how many disputes for each builder go through the resolution process.

The NHBC should publish details on the number of warranty claims for each builder and how many disputes for each builder go through their resolution process. The Consumer Code for Home Builders should not be confidential. The CCHB should publish the names of housebuilders in case summaries along with what sanctions (if any!) have been made to the housebuilder. 

Fact: The LABC and Premier Guarantee warranties are administered by MD Insurance Services. The Dispute Resolution Service Team is supported by Claim Investigation Surveyors; Premier Guarantee Surveyors is the trading name of MD Warranty Support Services Limited. The NHBC has entered into a joint venture with MD Insurance Services Limited under the name of the Consumer Code for Home Builders Limited (CCHB). The CCHB operates a code providing protection and rights to purchasers of new homes. Ian Davis, Executive Director of NHBC, is a Director of the CCHB. The NHBC paid the Code £235,000 in 2016 and £175,000 in 2015.

The use of ‘Gagging Orders’ isn’t transparency!
Fact: The NHBC and housebuilders use of ‘Non Disclosure Agreements’ also known as “gagging orders” is hardly “transparent” and used for no other reason but to conceal the extent of defects in homes built by housebuilders and the amount of compensation paid. The NHBC also use them when settling warranty claims, especially when further claims might result on particular developments such as weak mix mortar.

“We do not want to increase quantity at the expense of quality”
In order to do this, new homes would need to be being built to a certain higher quality to begin with. Does Stewart Baseley really mean that “we [his house builder members] must be careful not to build homes with even more defects as they slash them up to increase the quantity the government is asking us for?”

It’s time that Stewart Baseley, the industry (NHBC, HBF, house builders) and government came clean, admitted that there is a problem with both the poor quality of new homes being built and the poor service customers receive from indifferent house builders and implement the ten recommendations of the APPG Inquiry Report starting with setting up an independent, government-appointed, New Homes Ombudsman. Anything less is unacceptable.

I am grateful to Mary Glindon MP for asking housing minister Gavin Barwell the question on Monday 27 February 2017:
The current system is clearly inadequate
A Bovis buyer said:

“we took the decision to take Bovis to court last year – but our contract doesn’tt allow it unless NHBC resolution process has been activated and failed – it has been 7 months since we got NHBC involved and they have played us as much as Bovis – the result is always the same nothing happens.”

We are currently waiting for NHBC to start the agreed work – we had to complain to the financial services ombudsman who upheld our complaint to get some action from NHBC, but it is over 18 months since we complained to NHBC and work has still not started. Once the work has completed we will then pursue Bovis for breach of contract and compensation. We have legal expenses cover on our home insurance so can use that if needed”

A Wainhomes buyer told me:

“it is stunning how little comeback you have, the whole system is massively skewed in the developers favour and they know that and completely abuse it. NHBC is just a method by which they give some apparent credibility and peace of mind to their victims, it’s virtually worthless and also crucially means they don’t need to answer to local authority Building Control. It’s akin to fraud/organised crime, yet you have less protection than when you buy a loaf of bread.”

BBC Radio 4 Today said they asked the big companies if they wanted to take part in the programme – none of them did. But Bovis wanted to apologise and said:
“in some recent cases we haven’t met our customers’ expectations for which we apologise”

Taylor Wimpey PR statement:

“We sincerely regret that some of their customers have experienced issues with their homes at London Park and they apologised for the disruption this has caused. They say they are working with those affected customers and said they would like to re assure them that they are fully focused on completing their programme of remedial works as soon as possible.”

“We are sorry  ….    we are working with those…” blah blah blah!  In one case they have been “fully-focused” on one particular house at Loddon Park for over two and a half years!  Stewart Baseley and his builder members have their work cut out! The poor build quality of new homes cannot be dismissed like this.

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Sajid Javid’s Housing White Paper – Britain’s Broken Housing Market

“We were promised a White Paper, but we have been presented with a white flag – feeble beyond belief”.. said John Healey shadow minister of state for housing. Others commented it was a “predictably damp squib” and a “missed opportunity.” Even Redrow said it was “disappointing” with chief executive John Tutte saying the housing white paper was very light on details and he was surprised it was more of a consultative document.  This is hardly surprising as the stench of the Home Builders Federation (HBF) was all over this housing white paper, an example being the caving into pressure from the likes John Tutte regarding newts “delaying” new home buildingSajid Javid the builders puppetBritain needed ‘Donald Trump’ style action and got a Donald Duck builders’ puppet. “Hard-hitting” proposals were watered down to Westminster’s famous thin gruel, generally becoming ideas for consultation, subjects for further discussion and situations to monitor. This 104 page housing white paper is little more than a plan for more talking and a missed opportunity for decisive, positive action.

On Tuesday DCLG secretary Sajid Javid declared that Britain’s housing market was indeed broken. With the average home costing eight-times average earnings and a total of 2.2 million working households with below-average incomes, spending a third or more of their disposable income on housing, it’s hard to disagree! Mr Javid claimed his housing white paper will provide “radical lasting reform” to fix it.

Build more homes to slow rising costs

Housing White Paper Sajid Javid statementThe whole mistaken premise of this housing white paper is to “build more homes to slow the rise in housing costs. We need to build many more houses, of the type people want to live in, in the places they want to live.”  How many times did we hear that one?  Yet it is that very demand, fuelled by ultra-low interest rates and government subsidy, that further stimulated demand, exceeding supply with the resultant increase in prices. This is what markets do. Rising housing costs are systematic of years of political economic interference and meddling. If prices are unaffordable, measures put in place that subsidise housing will only serve to enable price increases to continue. Think housing benefit, low interest rates, help to buy, quantitative easing. All of these contributed significantly to Mr Javid’s “broken housing market” and his housing white paper won’t be fixing it anytime soon.

History shows private housebuilders will never build enough new homes

What was needed was an honest admission from Mr Javid that the private market alone will not build the 250,000 new homes each year needed to meet the government’s target of one million new homes by 2020. Loosening the planning system even further and helping smaller builders will not alter the fact that out of the 270,000 homes that are approved through the planning process each year, less than half are actually built. In fact I would go further and suggest even if planning was no longer required at all, Britain would still have a housing crisis! Since the 1970’s, Britain has added on average just 160,000 new homes a year, well below the 250,000 “target”.

Thirteen years ago Dame Kate Barker, now an independent non-executive director at Taylor Wimpey, warned of the crisis to come with the first large-scale report into the shortfall of housing provision. At the time she said 245,000 homes a year would be required to keep house price inflation at 1.1%, but average house prices have risen 50% since then. The Lyons review in 2014 revealed a shortfall of 1 million homes.

Landbanking is a reality, not a myth!

Measures to ban letting fees, longer term tenancies and the ‘use it or lose it’ landbank compulsory purchase are not new ideas, they all came from Ed Miliband in 2013!  From the housing white paper:

“there is also concern that it may be in the interest of speculators and developers to snap up land for housing and then sit back for a while as prices continue to rise. We propose to encourage more active use of compulsory purchase powers to promote development on stalled sites for housing.” But it’s “under review” and “representations are welcomed.”

No wonder shares in Britain’s listed housebuilders rallied as few believe this housing white paper will make any big difference.

Housing white paper makes no mention of the quality of new homes

Most disappointingly of all, was the total absence of any measures to tackle the dire quality of the new homes that are actually being built. It is pointless having a plan to build even more new homes if new homes are soon demolished because quality standards were so poor.See no evil - hear no evil - speak no evil

MPs push for report recommendations to be implementedThe word “quality” was mentioned 42 times in the housing white paper, but only once regarding actual build-quality. This government seems content to ignore growing calls to appoint a New Homes Ombudsman  which would have powers to hold housebuilders to account and award justifiable compensation to beleaguered new homebuyers. Whilst the housing white paper did acknowledge the existence of the APPG for Excellence in the Built Environment (2016) More Homes, fewer complaints – report from the Commission of Inquiry into the quality and workmanship of new housing in England, it only said it would:

“keep requirements under review, to ensure that they remain fit for purpose and meet future needs. This includes looking at further opportunities for simplification and rationalisation while maintaining standards.”

In December last year, the housing minister Gavin Barwell said:
“The Government will be considering the recommendations in the report in developing future policy on new homes”

“More Homes, Fewer Complaints.” Retrospectively, a better, more accurate title could have been “Fewer Homes, More Complaints!

There will be more on the main points of the housing white paper such as it is, to follow. Watch this space!

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NHBC and David Wilson Homes on BBC Radio 4 You and Yours

The BBC Radio 4 ‘You and Yours’ programme on 26 October 2016, was  a great opportunity to further promote the setting up of a government-appointed New Homes Ombudsman and the implementation of the other nine APPG report recommendations. This is necessary because as the APPG Inquiry discovered, both housebuilders and warranty providers are failing new homebuyers despite a record £81million being spent on claims under the NHBC warranty to April 2015. It was disappointing that this Petition to Government was not mentioned.

The recent repeat of a BBC TV documentary, “Inside the Commons” – showed how government works and without a parliamentary debate, the APPG recommendations are very unlikely to be implemented anytime soon. Individual MPs, even if they are successful in the Private Member’s Bill ballot, rarely see their bill become law.

This You and Yours broadcast on BBC Radio 4 featured the ubiquitous new home buying “victim” selected to tell their ‘tale of woe’ with possible practical solutions to the widespread problems the industry is causing, overlooked or touched on very briefly. The programme gave housebuilder David Wilson Homes the opportunity to issue the usual insincere housebuilder  statement:- “rare isolated incidence – we are truly sorry – working with the homeowner to remedy as soon as possible”

Factual Errors:

There were factual errors made in statements with the BBC presenter referring to the NHBC ‘warranty’ as a ‘guarantee’.

nhbc-buildmark-warrantyFor the avoidance of doubt:

Warranty: 1) A written guarantee promising to repair or replace an article if necessary within a specific period. 2) An engagement by an insured party that certain statements are true or certain conditions shall be fulfilled.

Guarantee: 1) A formal assurance that certain conditions will be fulfilled, especially that a product will be of a specified quality. 2) Something that makes an outcome certain.

The new home warranty, is in essence an insurance policy paid for by the builder, to provide cover against any latent defects that may occur in the new home. It is not and never has been, a guarantee of any kind.

NHBC warranty claims

The £87million “compensation” figure for “2015” mentioned by the presenter was in reality the amount the NHBC spent rectifying defective new homes after claims were made by buyers under the warranty to April 2015 – not “in 2015” as stated. It was most definitely NOT compensation directly paid by housebuilders as the presenter implied. Nevertheless the NHBC do receive the majority of their funding from the housebuilders as insurance premiums for new home warranty policies. The NHBC do not pay buyers any compensation under the warranty.

This is why a New Homes Ombudsman is so important and so essential!

On the feature the presenter said that new homebuyers “can’t get problems fixed. The NHBC can recommend that the builder does repairs but the builder can refuse to do them.”

New homebuyers Lee & Jackie Gilcrest moved into their 5 bed £480,000, David Wilson Home in December 2014. They told the BBC they have had constant problems with it ever since they moved in. It was cold so the radiators were upgraded to double radiators. The owners claim that in the winter it was costing £10 a day to heat their home – £300 month. They said the EcoTherm insulation installed was only 100mm thick and should have been 190mm. They also claimed that none of the windows and doors had been installed correctly and none have been sealed.

They said:

“We were talking to David Wilson Homes and getting nowhere. When you think you are finally making progress, in the end they turned around and said they are not prepared to do any more of your issues anymore despite it being under two years and their responsibility, handing over all our defects to the NHBC. The NHBC ruled in our favour and the builder had to rectify it, David Wilson Homes have turned round and basically spat us out, the NHBC are pretty much back-tracking on what they’ve been saying. We’ve been given a pot of money and been told to be quiet.”

David Wilson Homes told the BBC in a statement that they are sorry and are working hard to fix the problems. The overwhelming majority of buyers on the estate were happy and they had had few complaints.

The NHBC say they are: “committed to treating homeowners fairly as a central philosophy within our business strategy.” They aim to understand homeowners’ need and be recognised, understood and appreciated by homeowners for the ongoing development and delivery of high standards to improve the construction standards of new homes. Leading the industry in providing solutions to remedy new home construction problems and when home construction problems occur, provide homeowners with a fair and simple claims service which offers a lasting solution.

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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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Sign The Petition For Better Quality New Homes

With  greater protection for those that buy them!

The only way the housebuilding industry will change for the better, is if enough people sign this petition. This Government is pre occupied with its blinkered approach to increasing quantity of new homes being built, throwing billions of taxpayer’s money at housebuilders in the process. Just last week another £5bn was earmarked for an industry that cares so little for its own customers and the quality of the product they sell.

APPG Inquiry ReportAn all party group of MPs had an Inquiry last year Into the Quality of New Homes. The Inquiry Report made ten recommendations, including the number one “key recommendation” the setting up of a New Homes Ombudsman. All of the recommendation have the potential to not only force housebuilders to improve the quality of the homes they build, but also give those that buy new homes better protection via access to a New Homes Ombudsman.petitionWe have been here before with the Barker Review of 2004, Office of Fair Trading Market Study of Home Building in the UK October 2008, and now more recently the APPG Inquiry 2016. Yet surprisingly, there has not been any legislation to force this failing industry to improve.

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Why do so few new homebuyers complain and go public?

This was a question I was asked at the APPG last November. Surely, if there was a real problem with the quality of new homes, why is it that so few actually complain and go public with their experiences? It is a question I often ask myself, knowing as I do that 93% of new homebuyers will report problems to their housebuilder very soon after being handed the keys.  Imagine the public outcry if 93% of new cars went back to the dealer for faults to be fixed after a few days or weeks! Indeed, if new homes were cars they wouldn’t be fit to go on the roads! So why is it that out of a potential 129,300 people that bought a new home in the year to 30 June 2016 and reported problems to the housebuilder, most chose to stay silent? Even more astounding are 86% that the HBF claim “would recommend their housebuilder to a friend” – although the HBF 8-week customer survey results appear to be being manipulated by the big housebuilders.

Adversely  affect the future value – more difficult to sell

Lord Richard Best said: “I think another factor could be that people don’t want to moan about their new home having invested such a large amount of money, and knowing that one day they’re going to sell it to. It’s counterintuitive to rubbish something that you’re going to sell later, which you’ve invested so heavily in.”

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APPG push for Implementation of New Home Inquiry Report Recommendations

It has been nearly three months since the APPG Inquiry Report Into the Quality of New Homes was published along with its recommendations on 13 July 2016.APPG Report Publication 13 July 2016

After some not inconsiderable enquiring to the APPG MP’s, I was contacted by Helen Hayes (pictured below) last week who has kindly updated me and confirmed the current situation:

Labour MP Helen Hayes

“The APPG’s inquiry report has now been published and has been presented to the government for a response.  Oliver Colvile has met with the Prime Minister to discuss it, and I understand that the initial response was quite positive.

The APPG awaits the government’s formal response, and when Parliament resumes sitting we will seek to chase this if it is not provided in a timely manner.  It is not within the power of an APPG to implement the recommendations of the report, as this is a matter for the government, and the setting up of a new Ombudsman would require legislation which it would be for the government to introduce – even if the government takes up this recommendation, which I hope they will, this would take some time to progress through Parliament.

All members of the APPG are fully signed up to the recommendations of the report and will continue to work towards their implementation through the routes that are available to us as back bench MPs and members of the APPG.

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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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