The NHBC 2014 ‘Pride in the Job’ Quality Awards have recently been announced and it is clear that most of the major house builders have not improved the quality of the homes they build. See the house builder league tables here for awards in 2014 and previous years.
Last year Barratt made history with 102 of their site managers winning awards for quality. This year, despite building more homes on more sites, Barratt won 13 fewer awards – 89 in total, followed by Taylor Wimpey with 70 – just two more than last year!
The remainder of the largest house builders won just a handful of quality awards, much as they did last year – Linden 5, Bellway 29, Redrow 13, Crest 12, Bovis 4 and Berkeley 12. The biggest shock was again Persimmon, the largest house builder by market value, winning a pitiful 8, even less than the meagre 13 their site managers won in 2013! Clearly this company has problems and appears to be indifferent to the quality of the homes it builds.
It is becoming an increasing concern that the NHBC hand out awards to certain builder’s site managers regardless of their personal management ability or the quality of homes built on their site. Last year, the NHBC gave Taylor Wimpey’s Richard Crawford a Quality Award for his site at The Chariots in Andover. Since then, many unlucky homebuyers have discovered their homes were not only poor quality, but in some cases also potentially dangerous, with various electrical faults despite passing an “inspection” and incorrectly wired boilers. One buyer (full story here) has taken over 35 days off work to allow various trades access to his home to fix and repair the defective workmanship. So far (8 months on) CEO Peter Redfern has failed to get personally involved and has not even replied to the owner’s many detailed letters. Yet this site manager won an NHBC Award for “Quality” for this site!
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”:-
New home buyers will come across the same phrases and statements used by house builders’ to market their homes and when dealing with distraught new home buyers. But what are the house builders really telling you?
“Attention to detail”
If we can save a few pennies by not doing something and we can get away with it, we will.
“An exciting development”
We hope to make a lot of money on this site
“All of our staff are trained”
We have told them what they can and cannot tell you
“Our friendly site team”
The site manager is always in the sales office chatting and drinking coffee.
Larger than the usual rabbit-hutch new homes we build“Our sales team are fully trained to offer you expert guidance and practical assistance throughout the buying process”
Our sales staff will try to sell you optional extras and force our choice of solicitor and mortgage broker on you.
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!
The National House Building Council’s (NHBC) Annual Review 2012/13 announced survey results showing of 29,330 new home buyer’s, 91% are ‘very’ or ‘fairly satisfied’ with the quality of their new home and the same number would recommend their house builder to a friend. The NHBC claim “with another year-on-year increase, these levels of customer satisfaction still match or exceed those in almost any other industry or sector and are testament to the industry’s commitment to deliver quality new homes that meet the expectations of their homebuyers.”
However, the “increase” is just 1% more than the HBF 2013 survey results from a sample size of just 20,313. The HBF survey represents barely a fifth of the total number (109,730) of privately sold new homes built in the survey year, which is hardly representative.
The NHBC claim to send out over 100,000 questionnaires annually with a response rate was between 50 and 75%. They have now also launched a new online platform enabling participating house builders to easily review their feedback in much more detail than before and they can also compare their customer satisfaction scores with those of their competitors. The platform also gives builders opportunity to add a number of bespoke questions to the surveys, allowing them to change the questionnaire to meet their own specific requirements.
Read any of the largest house builders year-end reports and it is all about profit, earnings per share, return on capital employed, sales, turnover, number of homes built, the average selling price and land bank values – all financial matters. Forecasts for the coming year are about the potential to increase these numbers. So it should be, after all they are commercial businesses and these numbers matter to investors, shareholders and the banks lending them money.
But what about announcements regarding improving quality and customer satisfaction? Surely these matter to shareholders too, as any successful business must have happy satisfied customers. But it is very rare that any of the CEOs make any reference about the actual quality of their product in their year-end statements. Even when they do, it is normally a reference to the potentially manipulated HBF Customer Satisfaction Star Rating. The star rating is only based on around 30% of the homes that the larger house builders build each year so is hardly representative. CEOs may also mention awards won in the year such as the NHBC Pride in the Job Awards. However, some of the larger builders, whilst winning a handful of awards, have a poor record in the competition considering the number of active sites they have in any given year.
Top left to right: Jeff Fairburn – Persimmon * Pete Redfern – Taylor Wimpey * Mark Clare – Barratt/David Wilson * Steve Morgan – Redrow * Greg Fitzgerald -Linden. Bottom left to right: Ted Ayers – Bellway * Tony Pidgley Berkeley * David Ritchie – Bovis * Stephen Stone – Crest * John Bloor – Bloor