Tag Archives: quality

Persimmon Homes Announce Independent Review

Persimmon Homes announces an “independent review of workmanship, culture and customer care”

Following on from Persimmons announcement last month of its 1.5% homebuyer retention scheme, made in response to growing criticism about the quality of its homes, Britain’s worst housebuilder – rated only 3 stars by its own customers five years in a row, is now launching an independent review of its customer care, culture and workmanship as part of an attempt to move on from the executive pay scandal and complaints about its defective homes.The wide-ranging, independent review will be led by Stephanie Barwise QC of Atkin Chambers,  and will look into Persimmons customer care approach, systems and culture, quality assurance processes, and the speed and consistency of its response to issues. The company intends to publish the findings towards the end of 2019. It seems strange that Persimmon has chosen to employ a QC to conduct its independent review. However with her “expertise lies in civil engineering and construction disputes” and “considerable experience in alternative dispute resolution methods including adjudication and mediation.” perhaps not.Independent review of Persimmon homesSince the introduction of Help to Buy in 2013, Persimmons share price has more than doubled. Persimmon relies heavily on the scheme with almost half of its buyers having used Help to Buy last year.

In a company statement Persimmon said:

“Persimmon has been focused on rapid change and improvement of its customer care culture and operations, and on eliminating cases of poor workmanship. To assess the effectiveness of the new measures and processes and to determine whether they appropriately position the business for the future, Persimmon’s board … has commissioned an independent review.”

This Persimmon “independent review of its culture, workmanship and customer care” looks to me little more than a plastic, public relations stunt designed to obtain some credibility with third parties and a government that has already indicated it is mindful to suspend Persimmons access to Help to Buy. Even the death of a 4-year old child caused by a defect in a Persimmon home didn’t force change, but as soon as James Brokenshire threatens to take away access to the Help to Buy gravy train, Persimmon make two press release announcements in as many weeks!

Persimmons culture is one of unparalleled boardroom greed. Driven by a hunger for increasing profits year on year, whatever the cost, with total indifference to its reputation, build quality and its customers.

Year after year Persimmon has said in their annual reports:

In 2016, Jeff Fairburn said:

“The Group’s priority is to serve our customers well by providing good quality new homes and great service. During 2015 we invested substantial resources in new customer focused initiatives to improve our customers’ buying experience and our NHBC/HBF 3 star rating.”

In 2017, it was repeated:

“During 2016 we have continued to invest additional resources in new customer focused initiatives to improve our customers’ buying experience and our NHBC/HBF 3 star rating.

In 2018:

“Delivering good quality new homes with a high standard of customer service is a priority for the Group. Although we have increased our build numbers significantly in recent years, our quality control procedures and increased use of standard house types have helped to maintain our build quality.”

This year Persimmon said:

“Delivering a good quality product for our customers and providing high levels of customer service throughout the home buying process is a top priority for the business.” and more recently: “we hear the message that we need to continue to raise our game in customer care.”

Do Persimmon Homes really need an in-depth, independent review of the way it has been operating to find out where it could, if it chose to do so, improve? It is inconceivable that those on the board haven’t known for many years what they are doing, building very poor quality defective new homes and what they are most definitely not doing, putting their customer first. Why do Persimmon routinely refuse to allow buyers’ professional snagging inspectors access before legal completion?  “Company policy” they tell their customers”

Persimmon could ask their employees. Here is what a Contracts manager no less said about the company!

Ask the thousands of unhappy customers


And Persimmon need an independent review?
They could ask their buyers 13,476 members on the Facebook Group Persimmon Unhappy Customers’  There are many stories like this online, going back many years. Persimmon even made a counter claim against one of their buyers for the cost of repairs to his home! Persimmon appear to go out of their way to be confrontational and intransigent to any customers who take issue with the builder. The phrase “the Customer is always right” isn’t even on their radar if this story from the North East Evening Chronicle is anything to go by. Persimmon   failed to fix defects for nine months in this house.

Why don’t they also publish their 9-month NHBC customer survey results for the last 5 years?  Plenty in there to show those head burying, bean-counters on the board that are now, apparently, so keen to discover where it all is going wrong!

So do you really need a root and branch “independent review” of your business practices at Persimmon. It’s obvious what is wrong when you do things like this?

“They chop down trees, build shoddy homes and go to the lavatory. On Wednesdays they sell dodgy leaseholds and have buttered scones for tea!”

Cutting down around 260 trees and more than 80 metres of hedgerow from the eastern boundary of their Millennium Farm development is hardly going to improve Persimmons public image. North East Lincolnshire Council believe Persimmon have “breached planning regulations”, and has launched an investigation to discover whether they have been working outside their agreed terms.

Persimmon built homes with missing cavity fire barriers. In Cornwall  In Devon with their development in Cranbrook was the first development site identified. In fact this could be a widespread systemic omission/defect. Perhaps Persimmon owe it to their customers to be conducting an independent review into why and how hundreds, maybe thousands, of their new homes can be built with a potentially fatal defect.

When it is discovered by buyers they first deny it then say it is limited to one site. Eventually forced to check many developments as the issue becomes known to BBC Watchdog.   The difference between Persimmons financial performance and customer satisfaction is so stark, this, surely, is an area where the government should take an interest. James BrokenshireYet the most we have heard are comments from James Brokenshire, the housing secretary, that he will be “considering carefully” how developers that are part of an updated Help to Buy scheme from 2021 should “meet the standards and quality that customers expect and deserve”. We’ve heard it all before James – nothing has changed! Be careful, as voters will remember you as ‘James Brokenpromises’

Persimmons latest headline grabbing homebuyer retention scheme is strangled by restriction and limited only to the defects buyers spot the day they get their keys. How daft do Persimmon think we all are?

These smokescreen PR gestures will not change Persimmon. In fact, I firmly believe that once the company has fooled government and secured approval to continue with the next extension of Help to Buy, the homebuyer retention scheme will be quietly ended and the independent review report will be ignored, gathering dust on a boardroom shelf. If Persimmon did really want to change, it needs to do much more and even then, it will take a generation to repair its terrible reputation as Britain’s worst housebuilder.

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HBF Satisfaction Survey shows number of buyers reporting defects as high as ever

HBF New Home Customer Satisfaction Survey Results 2019

So the latest 2019 new home customer satisfaction survey results have finally been published by the Home Builders Federation (HBF) – six months after the survey year ended on 30 September 2018. All HBF housebuilder members having known their current star rating and individual survey scores as they come in throughout the year via the NHBC portal.  Taylor Wimpey and Bovis even crowed about their “achievement” in their annual reports last month. Persimmon has (again) pledged to improve its five year run of 3 star ratings, by announcing its 1.5% homebuyer retention last week.

But do the general public take note of the housebuilder star ratings?

Persimmon Homes 3 star rated 5 years running!Apparently not. On the face of it 16,449 still bought a Persimmon new home in 2018 despite its continuously poor star rating, with just 8,234 of these returning the survey! Amazingly, 7,404 buyers bought their new home from Bovis despite the builder being rated an industry low of just 2 stars in both 2016 and 2017.

So why is this survey so important for the industry?

For a start it is the ONLY survey of new home buyers “satisfaction”. Even if this is an in-house survey, controlled by the industry with carefully crafted questions and sent to new homebuyers just 8-weeks after moving in, it is all there is. The HBF and its PR machine goes into overdrive, making crass overstatements with headlines such asHomeowner satisfaction with new build homes increasing” 
more people happy with their new homes than ever” “new homes are built to a higher standard than ever before”  when the reality is, this is a small increase over two years, from an all time low in 2017 (84%) and way below the all time peak of 91% in 2013 – results from the year before Help to Buy was launched!

“The improvement in satisfaction levels have been achieved as output has continued to increase.”
That is according to the HBF, who were apparently oblivious to the weak mortar issue in Britain’s crumbling new homes! HBF Steve Turner grilled on national TV about weak mortar The HBF have stated that the primary purpose of this 8-week satisfaction survey is to “provide data to rebut negativity” What other industry at the outset, designs a survey so it can rebut negativity? Surely the sole purpose of any customer survey should be to indicate unknown areas of weakness so these can be demonstrably positively addressed. Not the HBF survey, where the HBF crows: “two thirds of those polled said the number of defects was in line with their expectations” Satisfcation? New homebuyers expect defects!Actually it was 43%, with another 34% indicating more “problems” than they expected. Again, in what other industry do consumers buy a product in the full and certain knowledge and expectation that it will be faulty?

The latest government figures show “output”, despite the twice extended, government subsidy for the industry, Help to Buy and the HBF’s spun  “78% increase in housing supply in the last 5 years”, is still below the peak of March 2007 12 years ago! Actual government figures for the last survey year to 30 September 2018 (2017/18) show private sale completions at 126,970 (116,350) with a total homes completed of 155,250 (142,870) (previous year in brackets)

HBF satisfaction survey - 99% of new homes have defectsOne survey response the HBF never care to highlight, one that cannot be easily influenced, is the indisputable fact that virtually all new homes have defects, with 99% of buyers surveyed reporting defects to their builder within a few weeks of moving in, and an increase this year to 42% reporting more than 10 defects! The HBF spins it “new homes are complex bespoke products and the number of problems (snags, usually minor such as paint drips, cupboard doors out of line etc) was in line with buyer’s [low] expectations” and “58% having less than 11 issues with their new home” Cigars all round, break out the champagne!

Well not quite. The Government has announced it is proposing to get tough on housebuilders that fail to deliver good quality and service. James Brokenshire - talk but no actionBut whether James Brokenshire who spoke at the HBF Annual Conference and would do well to distance himself from this broken industry, is daft enough to use the industry’s star rating as his yardstick remains to be seen! Government need to take a much tougher stance against the industry wolves dressed in Granny’s nighties (covering up everything) and avoid being taken in like Little Red Riding Hood, by their meaningless pledges, promises and plastic PR spin.

New cars are also “complex bespoke products”, some models have around 1,000 different customer options yet they are routinely, delivered to the customer defect-free having been inspected many times, both during and after manufacture. Those collecting the keys of a new car would be horrified to discover “misaligned doors and paint drips” defects which the HBF attempts to state as “usually minor” but nevertheless, are not inspected, checked or eliminated, being left for the customer to discover by the profit-driven industry the HBF serves and promotes.

So its congratulations to Russell Armer Homes awarded a 5-star rating, this from only 20 of their customer’s survey responses! No doubt contributing to:  “This year’s further improvement is a clear demonstration that the intense focus within the industry on build quality..” so spins the HBF. It is interesting to note the percentage “sample size” of buyers returning the survey/answering Q1 for the main plc housebuilder has fallen dramatically this year to an average of around 44% of total homes built. The stated ‘sample size’ for each housebuilder totals 48,001, this despite 60,955 surveys being returned. Perhaps many of those dissatisfied buyers, badgered and threatened by housebuidler’s to complete the survey form favourably, believed they would hurt the housebuilder more by not doing so, rather than completing to survey to reflect their discontent.
Some new homebuyers do not even get the survey. SM said on the Unhappy New Homebuyers Facebook Group
“I never got a questionnaire for a survey. Wonder how they were selected. I did have great fun completing my 2nd NHBC survey about Persimmon though!” “Intense focus on build quality” HBF?
For those that do get notification codes from the NHBC, the survey can be completed online here But many new homeowners find out after they move in that broadband is painfully slow or in some cases, non-existent.

In 2016 I asked the HBF why the total number of surveys “sampled” for the Star Rating was less than the number of surveys returned?  This year it was 78% of the total. It would seem that more and more surveys are being sampled out! Why there is a need to sample at all? Surely all the surveys responses can be counted?
The HBF responded:

“The industry scores are based on every single valid response NHBC (who operate the survey) get to what is an industry-wide survey. Valid simply means completed by an owner occupier within the 20 week response window. Not one single valid survey was ‘not used’. So all the industry scores shown in the charts on the website in the results we released are based on every single (45,342) valid response we got this year.  Whilst the ‘industry survey’ covers more than HBF members, 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 45,342 responses as other non-HBF members are sampled as we want to get as full a picture as possible.”

In 2011, I asked the HBF why it did 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.”

No surprise there! The industry also keep the results of the NHBC 9-month survey under wraps too, no doubt for similar reasons. The NHBC told the an APPG Inquiry in 2015: “The NHBC 9-month customer satisfaction survey scores generally 5-10% LOWER than the HBF 8-week survey”   Taylor Wimpey - 3 star rated in reality?This year Taylor Wimpey indicated that its overall satisfaction star rating score at nine months was 76% – 3 star territory, 2 stars and 15% below their official 5-star rating.

The survey, and in particular the all important housebuilder star rating question, can be manipulated by housebuilders.  Often buyers tell me they were told their faults would not be fixed if they answered “No” to question 1 – “Would you recommend a friend?”

In the halcyon years of “customer satisfaction” 90% in 2012 and 91% in 2013 with the number of surveys returned were 23,778 and 29,330 respectively. The financial crisis was in 2008 and housebuilders reduced their production between 2009 and 2012. This was ramped up in 2013 when the taxpayer-funded Help to Buy gravy train was launched and plc housebuilders had pound signs in their eyes.

HBF chief Stewart Baseley who by his own admission is apparently  “a great believer in transparency” says:

“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.”
“The survey proves conclusively that the people who buy and live in new build homes are overwhelmingly happy with their purchase. There has been a huge focus on quality and service across the industry and this is reflected by successive annual improvements across all question areas.
“The intense focus on quality and service, allied to a huge recruitment and training campaign has enabled builders to further raise standards whilst increasing output. New build buyers already have far more protection than second hand buyers with the security of a consumer code and ten year warranty.
“The vast majority of customers are already happy with the service and quality of their home, but the industry is determined to deliver even higher levels in the years to come. The industry is committed to further increases in protection and redress and is working with a range of stakeholders on how an ombudsman can be introduced.”

Quite how the likes of Mr Baseley sleep at night after saying those statements I don’t know! His HBF even have the nerve to use the creation of the statutory new homes ombudsman, (that I campaigned 5 years for) as a marketing tool “further enhance build quality and consumer protections for new home buyers.”  Build quality is at best poor and those buying a new home have no “consumer protections” at all as many thousands have discovered to their cost! This is precisely Why a statutory new homes ombudsman is being set up! The HBF must not be allowed any opportunity to weaken the new homes ombudsman powers and effectiveness.

The HBF has recently announced it is teaming up with charities to provide support and highlight mental health amongst construction workers, with 400 taking their own lives last year. A construction worker is now 10 times more likely to die through suicide than a fall from height! Many mental health issues originate from bullying and the unrealistic production demands by site managers, contracts managers and regional construction and managing directors, who in turn face similar from the main board directors in their pursuit of every increasing completion numbers and record profits for their dividend hungry shareholders. Those affected will no doubt be delighted by the Building Mental Health Framework and the £100,000 the whole housebuilding industry has donated to the charity and the 24/7 helpline! But the irony is, a great many new homebuyers suffer mental illness too, becoming drained as a result of engagement with indifferent housebuilders which for some, the mental anguish is unbearable as they try to cope with the daily frustration and dealing with plc housebuilders and their broken promises.

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Persimmon Launches Homebuyer Retention Policy

Persimmon announce 1.5% homebuyer retention policy

Persimmon homes - giving greed a bad nameIn a blaze of positive publicity, under headlines such as Persimmon homebuyers can withhold money until faults fixed (well not exactly); the housebuilder everyone loves to hate, has launched what is claimed will be a ground breaking initiative and a first for the industry, in response to overwhelming criticism about the quality of its homes, the obscene corporate greed-fest of executive bonuses and its part in the leasehold scandal,  Persimmon homebuyer retention “allowing buyers to withhold an average of £3.600 per home until all faults are fixed”

Nils Pratley in The Guardian suggests the homebuyer retetention could have been called the ‘Jeff Fairburn memorial clause’ – an eye-catching gesture designed to combat Persimmon’s reputation for corporate greed, as embodied by Fairburn’s infamous £75m bonus.”

A few weeks ago Nils said, in another well-written article: “It’s nice that the housebuilder wants to address its substandard scores for customer service, but shouldn’t this thought have occurred when the executives, Jenkinson included, were racking up their millions?” 

Not forgetting, this is a company that has also now admitted it lobbied government in 2015 to abandon the zero carbon policy for new homes.

In the Financial Times, Persimmon’s recently-appointed CEO Dave Jenkinson said:

“Persimmon is listening hard to all of its stakeholders and we hear the message that we need to continue to raise our game in customer care.

CEO Dave Jenkinson announces Persimmon homebuyer retention

“The initiatives we have already announced, including the action taken in the new year to deliver greater accuracy of anticipated moving in dates by adopting a more targeted approach to the phasing of sales on specific sites and the improvements and investments that we have made in our customer care team, operations and technology over the last few months are beginning to take effect.

“We are now accelerating the pace of change through the introduction of a contracted retention, which will give homebuyers far greater satisfaction at the completion of the purchase.  

“Moving into a new home should be a positive experience enhanced by all the benefits of a new build that is designed for modern living.  We are determined that the experience is not overshadowed by teething problems and providing a homebuyer’s retention is an important step towards achieving this.

Chairman Roger Devlin, said:
“This is a first among the UK’s large housebuilders and I hope will lead the way in change across the sector. This move, and the urgency with which we will introduce it, is a clear and unambiguous signal of cultural and operational change at Persimmon putting customer care at the very centre of the business.”

Other “improvements” include offering maintenance appointments at weekends and out-of-hours opening of customer care departments.

In the big announcement, Persimmon said it “would implement the homebuyer’s retention, by writing into its standard sale contract that 1.5% of the property value (£3,600 on average) could be withheld by the buyer’s solicitor until any faults identified at the point of key release are resolved

The homebuyer retention policy, announced in haste, won’t be fully in place until the end of June 2019 – so much for its claim “we are now accelerating the pace of change”! But why wait until June? It’s hardly Brexit! Well, the end of June is Persimmon financial half-year, so homes could be rushed to get them included for the half-year. In addition, Persimmon will need to start building better, much better and all homes completed after the end of June, will not yet be started.

But quite frankly, this could easily be implemented at the beginning of April, fittingly perhaps on April Fool’s day as in my opinion, buyers and the government would be fools if they believe this small sticking plaster on a disgraceful housebuilder that gives greed a bad name, will make any noticeable positive difference for buyers.

Unlike the Barratt 5-year warranty, which despite its exclusions, was a corporate statement of quality: “our product is so good we are so confident we can afford to give our buyers a longer warranty”  The Persimmon homebuyer retention announcement shouts: “our product is so bad, we have decided to allow our customers to withhold part of their payment until we have sorted out defects”

This scheme is also  unlikely to cost Persimmon anything, with any costs being borne by the sub-contract companies it employs.  Retentions are deducted on all sub-contractor payments. Half is usually returned 6 months after the buyer moves in, with the balance normally after two years. The percentage retention is negotiated at the time the contract is drawn up, often used by housebuilders as a bargaining tool to force their sub-contractors to discount their rates or accept payment terms “monthly valuation on account.” Most sub-contractors tend to view any returned retention as a bonus, as it is priced into their rates.

Persimmon homebuyer retention – so what is not to like?
This is not as it first appears. For a start, this only applies to “faults” (I prefer the term defects) that excited and distracted buyers note and report at the time they are first given the keys. Why not make it for ALL DEFECTS notified to Persimmon in the first 6 or 9 months? It should not be limited to just those small, quickly dealt with, cosmetic “faults” which may, or more likely, may not be spotted by buyers on the day they first get the keys to their new home.  This will certainly not be of any help to buyers that later discover they have weak mortar, cracking render, issues with their floors or serious fire safety issues like this 

If Persimmon really are “determined that the experience is not overshadowed by teething problems” why does the company routinely refuse to allow their buyers and/or their professional snagging inspectors access to their homes to check the property before legal completion?

Persimmon "Teething" problem?The homebuyer retention monies are also to be held by the buyer’s solicitor. In most cases this is highly likely to be one that Persimmon has suggested, recommended, or in some cases, even bribed or required the buyer to use. A recent government inquiry found conveyancing solicitors are too close the house builder. There is a clear conflict of interest. The report says: “buyers’ interests ‘cannot be served where they are coerced into using developer-recommended conveyancing solicitors, who rely on repeat business from developers and may not be inclined to put their client’s interest first.”
This is also against the Law – The Consumer Protection from Unfair Trading Regulations 2008, In addition, it also breaches requirement 2.5 of the “limited in its scope” Consumer Code for Homebuilders and SRA rules on conflicts of interest. Yet this has been going on for years! Furthermore, as Patrick Hosking notes in The Times, “there’s a danger the scheme will descend into countless legal disputes, with buyers’ solicitors quickly swallowing up that cash buffer in fees” indeed, as sure as night follows day.

Sebastian O’Kelly, 58, chief executive of the Leasehold Knowledge Partnership, told The Times: “Persimmon has an open-ended liability on the snagging issues. If they build something appalling, and so many of our plc housebuilders build houses and flats with major defects, then they have a responsibility to fix them. I don’t think consumers would be able to take much comfort from this.”

So why are Persimmon doing this?
The homebuyer retention initiative comes following statements that the company is to improve customer satisfaction levels after being dogged by complaints about poor build quality. There had been murmurings lately about a buyer’s retention. Paula Higgins from the Home Owners Alliance told The Times last month that her idea of buyer’s being able to hold a 2.5% retention for 6 months “would be a powerful incentive for builders to put problems right”   I told The Times it would be an “administrative nightmare” and that “6 months would be too short.” Unbelievably, I even found myself agreeing, for the first time, with Steve Turner of the Home Builders Federation , when he said that “introducing retentions as the rest of the construction sector is scrapping them is a crude and naïve suggestion that could reduce consumer protection and risks creating a long drawn out legal process – the new homes ombudsman is a better way to help buyers.”  Trade bodies call to scrap retention Retention in construction under review

Pressure from Government – withdrawal of Help to Buy
In February, The Guardian reported that Persimmon’s right to use Help to Buy was under the scrutiny of Housing Secretary James Brokenshire, who was considering stripping Persimmon of its right to sell properties using Help To Buy because of poor satisfaction levels and concerns on the housebuilder’s behaviour. Persimmon has benefitted immensely from the Help to Buy scheme. Nearly half its 16,449 home sales last year were made through the taxpayer-funded scheme.

A source close to the minister said:
“Leasehold, build quality, their leadership seemingly not getting they’re accountable to their customers, are all points that have been raised by the Secretary of State privately,”

Help to Buy, should never have been extended and should now be cancelled on economic grounds but, if the government wants to keep the housebuilders’ gravy train running, originally due to end in 2016 yet twice extended, first until March 2021 and more recently to March 2023, Government should at least attach a few requirements and conditions that specifically benefit new homebuyers.

Persimmon needs evidence to shoe that they are changing their behaviour under the threat of parliamentary time being found to debate this, perhaps even a select committee inquiry. The homebuyer retention scheme, weekend appointments and the changes to customer care availability hours are little more than tokenism to keep government at bay. It looks like a cheap PR job which has given the company some much needed, positive, coverage in the quality national press.

Persimmon’s premium rating by the NHBC and LABC/PREMIER GUARANTEE may have increased dramatically. The homebuyer retention scheme may be being used to reduce their warranty premiums like an insurance voluntary excess.

An attempt to improve Persimmon’s dire HBF 8-week survey 3 star rating
Persimmon rated 3 star for 5 years in a row!Persimmon Homes have been rated just 3 stars for the fifth year in a row. Jenkinson even mentions the “contracted retention, which will, give homebuyers far greater satisfaction at the completion of the purchase” –  in other words early on, just as the 8-week, HBF survey arrives in their post or inbox. Is it really an “unambiguous signal of cultural and operational change at Persimmon, putting customer care at the very centre of the business.” or a calculated measure to improve their HBF 8-week survey scores and 3-star rating? Given Persimmon claims 79% “satisfaction” which is just 1% below the 4 star rating, you would think giving a few £250 John Lewis vouchers to buyers would have been a cheaper option!

A spokesman for the Home Builders Federation told The Times: housebuilders had “delivered consistent improvements in customer satisfaction over the past two years” and he was again not keen on Persimmon’s housebuyer retention saying it “should not be seen as an option for housebuilders generally.”

No doubt with Persimmon now learning how to “play the star rating game” the heavy weighting of their current 3-star rating drag on the overall satisfaction scores over the last 5 years, the overall satisfaction score at least, is certain to improve, even if in reality, the actual new homebuyer satisfaction does not.

This industry’s reinterpretation of defect into snag has been one of the great distortions of the narrative surrounding new homes in recent years. The likes of Persimmon will be more than happy to agree a 1.5% retention – which they are likely never to have any intention of recovering, is cheap when compared to the loss of access to Help To Buy and other possible government sanctions such as a land-banking tax.

A clear indication that Persimmon has got this wrong is their statement:
“we hear the message that we need to continue to raise our game in customer care.” When actually it is the quality of construction and inspection regimes where improvements are required. It is not a case of putting out the fires quicker, but of fire prevention, getting it right first time, or at least before buyers get their keys!

As with Barratt in the eighties, it will take a generation to turn around Persimmon’s reputation, forever historically tarnished by corporate greed, poor quality homes and contempt and indifference to its own customers. Britain’s top site managers won’t want to go there and have their CVs forever tarnished. Those that do, will justifiably demand huge salaries for their sacrifice. In directing attention to the newly moved in and including quality and customer care in site managers’ bonus calculations is a step in the right direction that should improve their HBF survey star rating. It is a recipe that Barratt have adopted with success over nine, 5-star rated years. It is amazing it has taken Persimmon so long to either begin to care about it, or cotton on!

Persimmon Annual Report 2018 27 Feb 2019
Range of new customer service initiatives implemented in late 2018 showing encouraging initial results. The Group is confident these measures will improve its customer satisfaction score once they have had time to take effect”

CEO Dave Jenkinson “A wide range of projects to improve customer satisfaction commenced in late 2018 and the initial results have been encouraging, giving us confidence in our ability to make progress in this important area”

Chairman Roger Devlin: “Alongside that we are changing our pay and incentives to include greater emphasis on both quality and customer care with plans that are more rigorous than we have had in the past.

“Delivering a good quality product for our customers and providing high levels of customer service throughout the home buying process is a top priority for the business. For the year to 30 September 2018, the percentage of our customers who would recommend Persimmon to a friend under the independent Home Builders Federation (HBF) survey was 79%, in line with the prior year and just short of the four star threshold of 80%. The Group has continued to invest in its customer care systems and resources during the year and this will continue to be the case in 2019 as we remain determined to improve customer satisfaction levels.”

But talk is cheap! Persimmon have said it all before!

Persimmon Annual Report 2016 27 Feb 2017
“During 2016 we have continued to invest additional resources in new customer focused initiatives to improve our customers’ buying experience and our NHBC/HBF 3 star rating. This is yielding further improvement in performance with the majority of the Group’s operating businesses showing progress. Prior to customers moving into their new home we have improved our communication processes with them to provide greater understanding of the progress we are making in constructing their new home. We have strengthened our build management processes to facilitate delivery to expected timeframes. Additional support is being provided through reinvigorated processes to demonstrate the features of the new home to customers, assistance with identifying any small remaining issues on moving in day and providing improved systems and processes for our customer care teams to support the prompt rectification of any outstanding matters. Customer care performance is reflected in relevant employees’ remuneration to support a closer alignment to the Group’s objectives. Whilst these initiatives are delivering tangible improvements in our customer satisfaction ratings we remain determined to deliver further advancement this year.“

Persimmon  Annual report 2015 on 22 February 2016.
CEO Jeff Fairburn stated:
“The Group’s priority is to serve our customers well by providing good quality new homes and great service. All of our team are[sic] responsible for delivering high levels of customer satisfaction….Our sales teams across the business are trained to provide excellent levels of service to our customers.”

“During 2015 we invested substantial resources in new customer focused initiatives to improve our customers’ buying experience and our NHBC/HBF 3 star rating. We have introduced dedicated customer liaison managers on our larger sites, improved communication processes with our customers, introduced new processes to strengthen our build programmes and provided additional resources in our customer care teams. These initiatives are showing some early signs of improvement in our customer satisfaction ratings and we will continue to pursue this agenda to secure further progress this year.”

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Redress? When will New Homes Ombudsman be operational?

James Brokenshire re announces the statutory New Homes Ombudsman but when will it be operational?

Whilst housing secretary James Brokenshire has announced an “overhaul of broken housing complaints system” it is evident to me that any redress will not be implemented fast enough. When I first suggested a New Homes Ombudsman to the APPG EBE Inquiry 2nd session I attended way back in November 2015, it was well received and became the number 1 “Key” recommendation in the inquiry report, published 13th July 2016.
New Home Expert at APPG Inquiry evidence sessionSadly since then and until James Brokenshire’s announcement on 1st October 2018, little if anything has been done. Indeed, it can be interpreted from the government response to the Housing Redress Consultation, which took this government 283 days to publish; it is highly likely that legislation supposedly being “brought forward at the earliest possible opportunity to require all new developers to belong to the Ombudsman” will not in fact be the statutory new homes ombudsman so badly needed. It would appear, at least for the time being, that “an interim voluntary service will be established requiring developers of new build homes to participate”  is favoured by government.

James BrokenshireMore worryingly, the government has indicated that “developers will also have to belong to the new body by 2021 if they wish to participate in the government’s Help to Buy scheme”. This suggests the non-mandatory ‘voluntary’ new homes ombudsman will still be in place in April 2021, indicating that legislation for the statutory new homes ombudsman may not be on the statute until after the next general election, currently due on 5th May 2022! Hardly “the earliest opportunity” Mr Brokenshire! Could this be a cynical ploy to delay legally mandated, effective redress for new homebuyers, so that the industry’s political party donations keep flowing in to fight the next election?

The government has said that it is to create a ‘Redress Reform Working Group’ with redress schemes, which will work with industry and consumers on developing the new service and the other options set out. Why is government even contemplating working with those responsible for the existing failures of an industry fraught with scandals and controversy? Will government be prepared to work with me, on behalf of UK new homebuyers, to ensure that the new homes ombudsman is created as the government good intention “to champion the interests of new homebuyers and hold developers to account” or is it going to facilitate ‘big housebuilding’ to mould and manipulate any new homes ombudsman to protect the interests of all those incestuously connected with this dirty industry, to limit its effectiveness, stifle justice for new homebuyers and maintain their current balance of power?

Code of Practice

The government has set out its desire to see a “single Code of Practice on complaint handling across all tenures.” Hopefully this will stipulate how complaints are to be dealt with and the timescales required. However, the nature of defects in new homes vary and no single timescale will suit rectification of complaints about poor quality, defects and breaches to building regulations and warranty standards.
Redress for newhomebuyers -New Homes OmbudsmanAs I said in my submission to the APPG EBE Inquiry in January 2018 “New Homes Ombudsman – Call for Evidence” a single, separate, stand-alone, statutory new homes ombudsman is required. I am pleased the government has listened and will be legislating for exactly this, albeit eventually, and not one hidden and delayed by a new, ‘one-size-fits-all’ Housing Ombudsman which was, at the time, preferred by government despite it being more problematic, taking longer to create. It would appear that many of the inquiry report recommendations, published in June 2018,  have been taken on by government.

The New Homes Ombudsman must not be restricted to a new single, industry Code of Practice

One recommendation in particular, poses a distinct risk to the potential effectiveness of the statutory new homes ombudsman. Government has stated its intention “in the meantime” to “work with industry, warranty providers and consumers to ensure that the distinct practices for the new build sector are addressed and that these are reflected in an agreed single consumer code of practice which would be used by a New Homes Ombudsman to adjudicate against”

There are apparently currently 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 subsequent to the Consumer Protection Regulations 2008.

But it would appear the worst recommendation of the APPG Inquiry report, 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”  has been seriously considered and in particular, the industry-led, “limited in its scope”  Consumer Code for Homebuilders (CCHB) appears, unsurprisingly, to be chomping at the bit to be front and centre for drafting the new Code – adding to the “confusion”.

Not only will this give the housebuilding industry an opportunity delay the creation of any new homes ombudsman (voluntary or statutory), it will also provide the industry with a golden opportunity to influence what the new homes ombudsman can and cannot rule on, possibly shackled by the requirements of this single, industry-approved code of practice. I cannot think of any statutory ombudsman, in any sector, that can only adjudicate within the confines of a specific industry code. Statutory ombudsman such as the Financial Ombudsman Service and the Legal Ombudsman have compulsory jurisdiction over certain regulated sectors and their decisions can be enforced by a court. The statutory new homes ombudsman should be no different.

No single code could possibly cover every eventuality for new home consumer redress. It could get even worse with the Homebuilders Federation (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 along the principles 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”.

New home ombudsman to only cover disputes within first two years

Government has indicated: “We will look to strengthen protection for the first two years after purchase when the majority of problems occur and minimise the variance in the levels of protection and schemes that are currently available.”  This is another let off for housebuilders. The other reason given in the APPG report is 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 APPG committee acknowledging my observation that the “The Financial Ombudsman Service (FOS) is not the best organisation to preside over technical disputes.” Hopefully the government will also look at redress for those who already own a defective new home and allow the New Homes Ombudsman to consider complaints retrospectively for the remaining duration of their 10-year warranty, to ensure that owners that reported issues that were never properly dealt with, can also seek redress.

Builder buy-backs (“reversing the sale”) and levy funding

Builders should be forced to buy back seriously defective new homesThere was no mention of the APPG inquiry report recommendation requiring developers and housebuilders to buy-back new homes, those with serious problems that would require occupants to move out. In addition, whilst all those concerned recognise the need for all housebuilders to contribute via a levy, to fund the new homes ombudsman, there is no detail on this in the government’s response. My suggestion remains a levy of £100 for each new home built each year by every housebuilder and a £500 “case fee” to cover the cost of investigating each claim made against them. The government has confirmed the new homes ombudsman will be “free of charge to buyers of new build homes” unlike the CCHB!

“We propose to bring forward legislation to underpin a New Homes Ombudsman in statute and we will work with industry and consumers prior to legislation so purchasers of new build homes have access to better redress now.“

So “now” by definition is “at the present time or moment” Presumably at the time the government published the response to the consultation on 24 January 2019, better redress or a new homes ombudsman was about to start work, helping beleaguered new homebuyers get justice and their homes fixed? Perhaps this would go some way to explain why the publication of the consultation feedback and government response took 283 days! “Bring forward legislation”   – When was it originally scheduled?  What “now” is the new date?

As the government stated: “it is clear from the responses that more needs to be done to strengthen consumer redress in relation to new build homes, and to drive up standards across the industry. The need for an easy, effective and independent body for consumers to go to is evident, and supported by the industry.  We consider that the fastest way to improve redress is to work with industry and consumers to implement a better redress scheme for purchasers of new build housing as soon as possible
But when exactly? How long will the process take? And note, this is not the new homes ombudsman but potential backsliding, enabling the industry to continue to short-change its own customers on both quality and service, whilst at the same time no doubt, using its in-house “customer satisfaction survey” “to provide data to rebut negativity”.

The government has stated that “as the proposed new homes ombudsman legislation includes devolved matters, we will continue to engage and consult the devolved administrations to seek agreement to introduce UK-wide legislation.” It is to be hoped that the devolved governments do not become a cause or excuse, for delaying legislation to bring in the statutory new homes ombudsman.

Oh no not another consultation!

We will consult on the detail of the proposed legislation to statutorily underpin a New Homes Ombudsman. This will include the approval mechanisms and standards that a New Homes Ombudsman must meet as well as whether a Code of Practice for developers should also be underpinned in legislation.”

Could this mean that a housebuilder that does not comply with the requirements of a Code of Practice will be prosecuted? So now we have a clear indication that a Statutory New Homes Ombudsman has the distinct potential to take years not months to create and legislate.

Redress with a ‘Voluntary’ Ombudsman?

“As we introduce statutory arrangements, we will work closely with industry and consumer groups to establish a voluntary new homes ombudsman ahead of legislation. We expect this ombudsman to be:
•  Free to the consumer and funded by industry;
•  Independent from the organisations the ombudsman will investigate;
•  Fair in dealing with disputes;
• Open and transparent and have public accountability through regular reporting;
•  And have effective powers to hold developers to account.

Not sure how this can come to be if it is “voluntary” (as is the ineffective CCHB) created in conjunction with the housebuilding industry. Indeed, it may even give the industry an opportunity to suggest that legislation is not necessary as it seeks to prove the voluntary new homes ombudsman has been effective.

Of one thing we can be certain, government cannot and must not, allow the housebuilding industry to make the same bodge job with a new homes ombudsman (whether voluntary or statutory) as they do with the defective new homes they build.

As it stands, the current new home redress proposals are just that, well-intentioned but lacking detail and clarity. Government must act and do so quickly. It must ensure the housebuilding industry,  building defective new homes up and down the country and causing untold misery for those that live in them,  is not given any opportunity to water down the potential effectiveness of the new homes ombudsman. Let’s make sure these bold proposals become bold actions. You can be sure I will be watching, commenting and will miss nothing. After five years campaigning, the new homes ombudsman is too close for me to allow the industry to manipulate and interfere, or an ineffective government to delay it.

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Housing Redress Consultation – Government finally publish response

The wait is over the results are in, and the winner is……
the new homebuyer!

Housing redress consultation

After what has seemed an eternity and without any explanation for the nine-month delay, the Government published its response to the ‘Strengthening consumer redress in the housing market’ consultation on 24 January 2019, which had closed 283 days  earlier! As I mentioned in my last article about government dragging its heels on housing reform, uploaded 10 days before this consultation response was made public, MHCLG minister Heather Wheeler stated in a letter to my MP on 1st October 2018, “access to redress is a priority for this government.” 

Whilst the government consultation response relates to redress in all housing sectors, I will restrict my comment and subsequent observations to the government’s reiterated commitment to establishing a New Homes Ombudsman which will champion home buyers, protect their interests and hold developers to account.” as previously announced by James Brokenshire on 1st October 2018.

Disappointingly, just 1,209 responses were received for this consultation, only 355 (34%) from those having bought a new home and 385 (37%) from leaseholders. ‘Industry and organisations’ returned 172 (14%) responses. The consultation “Overcoming the barriers to longer tenancies in the private rented sector” which closed on 26 August 2018, received over 8,700 responses! Are new homebuyers uninterested in having someone fight their corner?  “holding developers to account”  Nevertheless, I would like to acknowledge and thank the few who did participate on behalf of many thousands of new homebuyers with defective new homes and thank Katie Kendrick of the National Leasehold Campaign who encouraged members of her group to also respond.

Consultation response - Redress in housing In the government housing redress consultation, just 12 people (7%) indicated that had made a complaint using the Consumer Code for Home Builders (CCHB) IDRS in the last FIVE YEARS! Some respondents said their complaints had been considered as ‘out of scope’ – a common phrase used in the CCHB Case Summaries!  A Government inquiry report in July 2016 also concluded the CCHB was “limited in its scope”.

Out of the 167 individuals who rated the service they received from a redress scheme in Q7, 40% were made by those who recently bought a new home and 35% from leaseholders. These two categories made up the majority (79%) of those who said they had received a ‘very poor’ service. In addition, 42% of purchasers of new homes said “yes, they had encountered gaps in current redress schemes.”

The majority of respondents (84%) who replied to Q20, stated that an ombudsman scheme for new homes should be statutory.

Nearly all, 91%, of the new homebuyers that responded said “that a redress scheme should publish decisions and the number of complaints relating to different providers should be made public.”

The response to Q30 regarding a single ombudsman or one for each sector was not disclosed. Nevertheless it is clear that the majority of new homebuyers want a stand-alone, independent statutory new homes ombudsman and this is what the government have pledged to create.

So what was the Government response to this Consultation as far as the New Homes Ombudsman is concerned.  I will endeavour to interpret the ambiguity in my next article:

Following the consultation, James Brokenshire announces overhaul of broken housing complaints systemJames Brokenshire“And to protect the interests of home-owners who buy new build homes, government has also reiterated its commitment to establishing a New Homes Ombudsman which will champion homebuyers, protect their interests and hold developers to account.

 

Legislation will be brought forward at the earliest possible opportunity to require all new developers to belong to the Ombudsman – giving homebuyers the confidence that when they get the keys to a new home they are getting the quality of build they expect.

Developers will also have to belong to the new body by 2021 if they wish to participate in the government’s landmark Help to Buy scheme.

First, I want to help plug the gaps in available redress services so that more people can get their housing disputes resolved without going through the courts. To that end, I am proposing a New Homes Ombudsman, underpinned by legislation following the establishment of an interim voluntary service, and requiring developers of new build homes to participate.

I want to see a single “Code of Practice” on complaint handling across all tenures.”

Consultation – Housing Complaints Resolution Service

Our aim is to provide a single point of access for all the current schemes in housing. We intend to develop this in collaboration with the redress sector, initially on a voluntary basis, but we will keep open the option of legislation to make this mandatory if necessary.

Our ambition ultimately is for the new service to cover all housing consumers including tenants and leaseholders of social and private rented housing as well as purchasers of new build homes and users of all residential property agents.

We propose to establish a Redress Reform Working Group with redress schemes, which will work with industry and consumers on developing the new service and the other options set out in this paper…”

Addressing the gaps “proposing legislation to extend mandatory membership of a redress scheme to:  c. developers of new build homes.

The government announced the proposal to create a New Homes Ombudsman service in October 2018. This response indicates how that service will sit in the wider redress landscape and the next steps of its implementation.

First, I want to help plug the gaps in available redress services so that more people can get their housing disputes resolved without going through the courts. To that end, I am proposing a New Homes Ombudsman, underpinned by legislation following the establishment of an interim voluntary service, and requiring developers of new build homes to participate. I will also bring forward legislation to require all private landlords, including private providers of purpose-built student housing, and park home site operators to belong to a redress scheme.

On 1st October 2018 we announced our commitment for a New Homes Ombudsman to protect the rights of buyers of new build homes. These commitments are part of the Government’s drive to close gaps in existing redress services and ensure that all housing consumers have access to redress when things go wrong. This consultation response provides more detail on the implementation of these measures.

We propose to bring forward legislation to underpin a New Homes Ombudsman in statute and we will work with industry and consumers prior to legislation so purchasers of new build homes have access to better redress now.

In the meantime, we will work with industry, warranty providers and consumers to ensure that the distinct practices for the new build sector are addressed and that these are reflected in an agreed single consumer code of practice which would be used by a New Homes Ombudsman to adjudicate against.

New Homes Ombudsman

99. It is clear from the responses that more needs to be done to strengthen consumer redress in relation to new build homes, and to drive up standards across the industry. The need for an easy, effective and independent body for consumers to go to is evident, and supported by the industry. A significant minority of respondents said that there is no current existing redress scheme which is best placed to deliver an ombudsman scheme for purchasers of new build homes.
100. There was very strong support in favour of purchasers of new build homes having access to an ombudsman scheme, and many respondents were in favour of such an ombudsman being statutory. We consider that the fastest way to improve redress is to work with industry and consumers to implement a better redress scheme for purchasers of new build housing as soon as possible.
101. We have announced proposals to ensure that a New Homes Ombudsman is established, working with industry and others. We will look to strengthen protection for the first two years after purchase when the majority of problems occur and minimise the variance in the levels of protection and schemes that are currently available. To ensure that consumers get the protection they deserve, we will introduce legislation to require developers of new build homes to belong to a New Homes Ombudsman, which will be underpinned in statute.
102. It is proposed that the New Homes Ombudsman would charge developers to ensure that the service is free of charge to buyers of new build homes.
103. Developers work across all nations of the UK. As the proposed legislation includes devolved matters, we will continue to engage and consult the devolved administrations to seek agreement to introduce UK-wide legislation.
104. We will consult on the detail of the proposed legislation to statutorily underpin a New Homes Ombudsman. This will include the approval mechanisms and standards that a New Homes Ombudsman must meet as well as whether a Code of Practice for developers should also be underpinned in legislation.
105. As we introduce statutory arrangements, we will work closely with industry and consumer groups to establish a voluntary New Homes Ombudsman ahead of legislation. We expect this ombudsman to be:
• Free to the consumer and funded by industry;
• Independent from the organisations the ombudsman will investigate;
• Fair in dealing with disputes;
•Open and transparent and have public accountability through regular reporting;
• And have effective powers to hold developers to account.
106. At Budget 2018, we announced that a new Help to Buy Equity Loan scheme will run for 2 years from April 2021 before closing in March 2023. We will establish the condition that housing developers must belong to a New Homes Ombudsman to participate in the new Help to Buy Scheme.
107. Although there are benefits to having competing redress providers as set out in the section on the Private Rented Sector which has an established redress system, it is clear that the number of schemes operating in the new build sector has created an unacceptable variance of standards and, as we have an opportunity to establish a new system without disruption to consumers and there is a need to reform all the existing schemes, we believe a single New Homes Ombudsman could solve these issues without unnecessary disruption. Our consultation will consider whether one or more organisations could provide a quality service to consumers under the principles above.”

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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 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 1998 is 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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Weak mortar – Britain’s crumbling new homes

The great weak mortar scandal – Part Two

Following my first article  exposing the weak mortar scandal, many more new homebuyers have contacted me. It would appear this issue is both widespread and serious. Whatever causes their mortar to crumble, sometimes in under a year, both housebuilders and warranty providers are doing everything they can to limit their costs and keep weak mortar issues quiet, out of the public gaze.weak mortarThe NHBC provide warranty policies for around 80% of all new homes built in the UK. Defective superstructures, which include external walls, is their most common cause of claims accounting for 41% of all claims in the year to 31 March 2017, costing the NHBC £27.2million. Weak mortar cannot be considered as minor snagging, this is the rectification of serious defects often affecting the structural integrity of the home. It cannot be explained away by the industry as a few “isolated cases” either.

Are NHBC Warranty Standards “Raising Standards – Protecting homeowners”?

The NHBC Warranty Standards are in general, recommendations or guidance as a means of compliance, with just five absolute Technical Requirements (in red) these are mandatory and must be met by the builder
Regarding weak mortar, two stand out. R2 Design Requirement;
“Design and specification shall provide satisfactory performance”
and R3 Materials Requirement; “All materials products and building systems shall be suitable for their intended purpose”  That is having “a life of at least 60 years.”NHBC Technical Requirements - Chapter 2.1If Performance Standards (in black bold) are followed, the Technical Standard for that particular work will be met. The NHBC are quick to highlight to buyers that the remainder of the warranty standards are just Guidance on how the Performance Standards may be met and surprisingly, are not mandatory. The NHBC have stated that “failure to follow that guidance does not constitute a non-compliance” [with warranty standards]

With regard to mortar, the Performance Standard is 6.1.14 “Mortar shall be of the mix proportions necessary to achieve adequate strength and durability and be suitable for the type of masonry…”
The Guidance table then state various mix proportions which enable the Performance Standard to be met, using Portland or sulfate resisting cement. No mention is made of cement replacement material such as GGBS. Clearly mortar with an insufficient cement mix proportion, namely less than that stated in the NHBC Standards “guidance” table (from BS EN 1996-1-1), will not meet the “adequate” performance standard required. It is certain that mortar which is crumbling and falling out of joints is not suitable for its intended purpose neither is it of “satisfactory performance”.Mortar mix designations
So what are the NHBC responses when new homeowners who make a claim under the warranty for crumbling mortar?
“We can never guarantee that a property will be defect free”
“The mortar was tested with a flat blade screwdriver [dragged over the surface] and examined for defects”
“I am advised that the cement/lime/aggregate ratios provided in our Standards are guidance only”
“We remain of the opinion……….. to rake out to a depth of 25mm and repoint are [sic] an acceptable method of repair”
“Where issues relating to mortar are concerned, we predominantly rely upon visual assessment of the performance of the mortar to determine our opinion on whether the mortar complies with our Standards.”
“It is the problem associated with exposure and weathering which is the main factor when determining remedial works required”
“Repointing the external walls of your home will ensure our Technical Requirements are met”
“Jenkins and Potter Consulting Engineers [Barry Haseltine] were tasked with providing an independent opinion on the durability and strength of the mortar to your home and provide any necessary recommendations for repair.”
“Under our standards the builder must ensure the Technical Standards are met. Mr Haseltine remains of the opinion that repointing works recommended, if carried out using a specialist contractor, will ensure the durability of the external walls and will also meet NHBC Technical Requirement R3.“
This does not necessarily make the weak mortar behind the repointing “suitable for its intended purpose”

“I am advised that the overall strength of the brickwork comes from the compressive weight of the brickwork and mortar”
The builder is responsible for putting right anything covered by Buildmark that isn’t built to the NHBC requirements. If we don’t consider that the resolution service is appropriate, or if you don’t accept the findings in our report, we may advise you to consider another form of dispute resolution. Bear in mind that your concerns were raised during the builder warranty period (first 2 years), so any action you take will need to be against the builder and not us.”
“You have the right to refer your complaint to the Financial Ombudsman Service (FOS)…. Some aspects of our Resolution service do not form part of our insurance regulated services”

Indeed they do not as the FOS have confirmed to me:
“Generally during the first few years of the policy the cover they provide isn’t an insurance product. And isn’t something we can look in to. “We can’t investigate when NHBC are acting to mediate under their resolution service. But if the resolution report isn’t complied with (deadlines for work are missed for example) the insurance element kicks in and we can then investigate.”

Mortars of Mass Degradation – Prescribed or Design mix?

A “prescribed mix” is one where the mortar is made in pre determined proportions, the properties of which are assumed from the stated proportions (recipe concept). A “design mix” is a mortar whose composition and manufacturing method is chosen by the producer in order to achieve specified properties a compressive strength (Performance concept) The M number being the expected compressive strength in 28 days so an M4 design mix mortar should attain a strength of 4n/mm2. Mortars are given a designation ranging from (i) highest cement content to (iv) lowest under BS EN 1996-1-1.

Mortar manufacturers can now infer the mix proportions of their mortar from compressive strength. BS EN 998-2 states the relationship between compressive strength and mix proportions for a limited range of strengths and mortar compositions in Table 2.

“Whichever type of mortar, in terms of its constituent materials, is chosen, its durability will be enhanced
as the cement content is increased”
BDA

NHBC “leading mortar expert” Barry Haseltine (85)

When a buyer makes a claim under the NHBC warranty eventually the NHBC normally dispatch their “leading mortar expert” Barry Haseltine (85) to the home. Having seen more than one of his reports, I was surprised by the similarity, with identical ‘cut and paste’ paragraphs, despite being at opposite ends of the country, different housebuilders, different mortar suppliers and different mix analysis results. Haseltine alludes to the fact that the mix proportions in the NHBC Standards mix are “a recommendation” and have not been revised since the use of factory produced ‘design’ mortar, covered by BS EN 998-2 in 2010, became more widespread. Haseltine also stated in letters and reports:
 “an M4 design mortar is the same as a 1 : 5-6 cement : sand mix.“

“an average batch volume proportion of 1:7.4 from which it is indicated that the mortar can be taken to agree with the designed mix and so there can be no complaint about it”

Yet in this case, of the 18 samples tested, by five different UKAS accredited testing laboratories, ranged from a best 1:7 to worst 1:9.6. In addition, the mix proportions from the manufacturer’s batch records fall well below the “guidance” mix table in NHBC Standards for M4 mortar, that would be deemed to meet Performance standard 6.1.14 and in turn, the NHBC mandatory Technical Requirements R2 and especially R3. When confronted by indisputable multiple evidence of insufficient cement.
Haseltine says:
it was very common for laboratories not to reach the same results as others. Although I am not a chemist, I believe it is not possible to find more soluble silica, the basis for cement content, than is there but it is possible not to find all that is there.”

“A cement content of 8.5% equates to a volume mix of 1: 9.3; looking at all the test results in my table… I conclude that the mortar mix can be considered to be a designation (iv) on the basis of mix proportions, one must remember that this mortar was a designed M4 mix so mix proportions are not a valid means of checking compliance”

A designation (iv) being a mix ratio of 1:7, equivalent to M2. The cement : sand ratio of 1: 9.3 is even weaker than this and in any case is not the designed M4, designation (iii) required and specified!

No samples were tested from mortar supplied to the site so there cannot be any allegation that the strength of the mortar that was supplied was incorrect. Factory Product Control (FCP) tests do not have to be related to any particular delivery of mortar”

“I would recommend M6 mortar for the repointing”

M6 is 1 : 3-4 cement : sand that is a minimum 25% cement content by volume. This for a new home constructed with mortar proven by laboratory testing, to have just 13% cement content.

Incorrect mortar specified at the design stage

Severe exposure areasThe mortar specified at the outset is often not as required by warranty standards for the level of exposure on certain developments. In geographical areas with ‘very severe’ and ‘severe’ exposure, new homes should be built using a mortar as designation (ii) – M6 which is an equivalent mix of 1:3 to 1:4 cement : sand. The Brick Development Association and Ibstock go further stating that in these areas, the cement used should be sulfate resisting cement (SRC). So mortar required to be M6 due to exposure, when M4 has been specified and used, clearly does not meet the NHBC mandatory technical requirements R2 or R3.

Insufficient cement

It is well known that the greater the cement content, the stronger the compressive strength of the mortar will be. It is relatively simple to take mortar samples from a wall and have them analysed in a laboratory. In most cases when buyers report crumbling mortar, these have proved the mortar has far less cement than is stated in NHBC warranty standards and in Table 2 found in the National Annex provided in BS EN 998-2:2010. In one case, laboratory analysis of samples found the mortar had just 36% of the cement (1:11) required in an area with severe exposure (1:4).

Testing weak mortar

There is no agreed UK or European Standard test method available for assessing the quality of questionable mortar, in-situ. However, when mortar samples have been taken and in one instance analysed by three accredited test houses they were found to contain far less cement (being in the range 1:7.5 to 1:10.5) than that required of a prescribed class (iii) mortar and has been classified as class range (iv) to (v). This casts doubt on the bond of wall ties that require a minimum of class (iv) mortar.

“Once mortar deteriorates it will compromise the
rest
of the brickwork.” BDA

Wall Ties

A weak mix mortar as opposed to say a purely durability issue due to weathering, can have serious structural implications. (The NHBC tend to use the word “erosion” specifically excluded under the Buildmark warranty) In any mortar proved by laboratory analysis to be a mix with a cement content of less than 16% (1:6 – designation (iii) M4), the bond to the wall ties should be considered as inadequate, meaning the brickwork outer wall could potentially fall away from the house in severe stormy weather.

The NHBC’s go-to “mortar expert” concludes the request for testing using a screw pull-out test which records the helical wall tie pull-out force from a 20mm to 30mm depth, 6mm diameter hole within mortar, is “unwarranted”. He says “the results would be very dubious” due to vibration, concluding: “the wall ties are entirely adequate and no work is required to justify them.” but fails to grasp it is the integrity of the actual composite cavity wall that has been compromised by weak mortar, creating an inadequate bond with the wall ties, not the strength the actual wall ties. He appears to completely overlook that it is the performance of the overall structure in adverse weather conditions, especially in severe and very severe exposure areas, that has the potential of structural collapse and in the worst case, even loss of life. Furthermore an unconnected report by Tarmac regarding weak mortar in a Persimmon home stated we are concerned about the fixity of the cavity ties into the outer leaf, which if not suitable will result in the cavity masonry wall mot acting as a composite structure when considering lateral wind loading. A 100mm thick brick single skin wall will be structurally inadequate when enduring high wind loading”

Erosion

The NHBC and their resident mortar expert make frequent use to the term “erosion” in letters to homeowners and reports. Could it be because erosion is not covered by the NHBC Buildmark warranty; “mortar erosion which does not impair the structural stability or protection from the weather” is specifically excluded. So in years 3 to 10, if the matter has not been addressed by the housebuilder, the NHBC can reject a claim and say it was caused by erosion.
Mortar Erosion not covered by NHBC Buildmark Warranty
Cement substitutes:
Ground Granulated Blast furnace Slag (GGBS) and Pulverised Fuel Ash (PFA)
GGBS is a by-product from the production of iron. PFA is a by-product of burning pulverised coal in power stations. GGBS hydration mechanism is more complex and the rate of strength development is slower than that of Ordinary Portland Cement (OPC). Graham True of GFT Materials Consultancy says in his excellent article “What is happening to masonry mortar” that National Annex NA1 guidance based on best UK practice, including limitations on the use of replacing traditional OPC with GGBS or PFA ash, is restricted to specific levels namely 6–35%. One mortar supplier has stated that the National Annex guidance in BS EN 998-2 is just that – ‘guidance’ not ‘mandatory’ – and therefore can be ignored! Graham says: ”On investigation it transpires that GGBS additions are being incorporated at levels well above the recommended limits of 35%, up to 50% and more, of the total cementitious content.”

Even Barry Haseltine, the NHBC’s go-to 85-year old “mortar expert” acknowledged in at least one of his many reports that: “For the last 20 years or so, cement has become a complicated subject compared with the relative simplicity that existed when we had Ordinary Portland Cement and a small number of specialist mixtures for example masonry cement. It is a regrettable fact that mortar has become a potential problem with regard to durability in recent years, probably linked to the use of cements that have considerable proportions of additions which reduce the active cement in the mixes.”

Graham True says: “There has been, and probably will continue to be, issues related to the performance specification of mortar since it currently differs fundamentally from past UK practice but in addition so does the incorporation of high levels of cement replacements, in particular GGBS

Sulfate attack

It is well known that where there is a high risk of saturation and in [very severe/severe] exposed areas, even with an M6 design mix, sulphate resisting cement should be used. Simply put, sulfate attack encompasses a series of chemical and physical interactions that occur between hardened cement paste and sulfates. The soluble sulfate salts within a high proportion of clay bricks react with a constituent (Tricalcium Aluminate) of the Ordinary Portland Cement within the mortar forming calcium Sulfoaluminate (Ettringite). So when sulfate present in bricks is dissolved due to driving rain and saturates brickwork in severe exposed areas, the sulphates present will cause mortar to degrade. For anyone interested in the chemistry.

Importantly for new homeowners with failing mortar, the normal 25mm rake out and repointing with M6 mortar will not have any lasting longevity if sulfates are present in the bricks. In investigations by Tarmac which supplied mortar to Persimmon site in Leeds found “sulfate levels higher than would be normally expected” believing that “the mortar has been subject to sulphate attack and cement degradation over a long period” However, it should be noted that it is in the mortar supplier’s own best interests to find alternative explanations to failing mortar other than incorrect mix proportions.

Use of Non Disclosure Agreements (NDAs)“Gagging orders”

Weak mortar is the housebuilding industry’s dirty secret and it is doing everything it can to ensure it is kept quiet. It has become almost standard operating procedure for housebuilders and warranty providers to require the homeowner to sign a legally-binding non-disclosure agreement (NDA) also referred to as a ‘gagging order’ as part of any compensation settlement, especially when buying the home in question. One buyer on a Taylor Wimpey estate in Peebles Scotland tells me: “over the course of the following few years, houses started to empty with folk just literally disappearing overnight – Taylor Wimpey were buying back houses, probably around 10-12 houses but it was still being kept hushed up.
A plc housebuilder's 'Gagging Order'People were signing gagging orders and therefore kept quiet. Taylor Wimpey sent out letters saying there were a few houses that had mortar issues and scaffolding was to be erected for repair works but not to be alarmed as they were isolated cases.”

I am also aware that the NHBC often require buyers to sign NDA’s perhaps because the last thing either housebuilders or the NHBC need is everyone on the development becoming aware of weak mortar issues in their home and making a similar claim. The Home Builders Federation chief Stewart Baseley said on BBC national radio
I’m a great believer in transparency”  yet the industry he represents, promotes and defends, is anything but transparent.

New homebuyers with weak mortar tell me:

“The NHBC Resolution Service and recommendations are unregulated and totally outside the Financial Ombudsman’s jurisdiction making it open for abuse and for the NHBC to look after their direct customer, their housebuilder registered members.  It seems all the NHBC need to do is actually offer their Resolution Service in the first two years but they then have an open book to recommend whatever they want as we all know.” (e mail)

“The NHBC Consumer Affairs Manager made claims which contradicted their own findings report and they also went on to say that my mortar tests were meaningless and that the Mortar M classification rating system is only a guidance, and that BS EN 1996-1-1 Eurocode 6 can be ignored.” (Social media)

Yet the NHBC standards clearly state that the builder must comply with “relevant standards” this includes BS EN 1996-1-1 Eurocode 6 states: 3.2.2 Specification of masonry mortar (1) Mortars should be classified by their compressive strength, expressed as the 1etter M followed by the compressive strength in N/n1m2, for example, M5. Prescribed masonry m0rtars, in addition to the M number, will be described by their prescribed constituents, e. g. 1: 1: 5 cement: lime: sand by volume. 

NHBC have known about weak mortar issues for many years

NHBC Technical Newsletter July 2000 Issue 20
The consequences of getting it wrong are well known to NHBC. At the least it may mean raking out all joints and repointing and at worst it can be removing the outer leaf and rebuilding. The problem is that too little cement is added to the mix to ensure that the strength is achieved and, perhaps more importantly, the hardened mortar is durable.”

“Take appropriate action to ensure that the right mortar mix is used. The consequences of not doing so are costly and can easily be avoided. NHBC inspection staff will be looking at mortar more closely and may take samples for analysis where they believe the mortar is not up to strength.”

NHBC- "Low strength factory mortar"

NHBC Technical Extra September 2013 Issue 11

So why have warranty standards not been revised to reduce the likelihood of failing mortar in new homes?

Why have cement replacement materials such as GGBS not been banned in masonry mortar? Especially as the reduced cement (OPC) is more vulnerable to attack from sulphates in bricks.

Why have the NHBC Standards not been revised to include BS EN 998-2 2010 for factory supplied “design mixes” and requiring testing of site mortar samples by housebuilders to ensure compliance? 

Opinion

This industry must recognise the threat to UK homes posed by failing mortar. It must not be deliberately hidden, with homeowners that do reach agreement being legally silenced by NDAs. If Toyota can issue multiple recalls to around 7.43million car owners worldwide, surely the housebuilding industry has a duty to be open about weak mortar in new homes. This issue isn’t going away. Tens of thousands of new homes could, and in all probability do, have weak mortar. Many more are currently being built. As Jo Churchill MP for Bury St Edmonds said in the House of Commons debate on poor quality new homes:“…the repointing of joints on walls where purposeful demolition and reconstruction should have happened”

Nevertheless, “repointing to a depth of 25mm” is deemed by the NHBC as the industry’s normal practise where repointing works are required”  This, even when independent laboratory tests prove the cement content of factory-made design mix mortar is well below that required to achieve the durability, weatherproofing and structural performance required and when it is highly likely not to have “a life of 60 years” a definition of compliance with NHBC mandatory Technical Requirement R3

It is in my opinion inconceivable, that the NHBC’s “leading mortar expert” is not acting for and in the NHBC’s best interests, to limit the potential cost of weak mortar claims by understating and dismissing clear factual evidence of inadequate cement content in failing, independently tested, mortar samples. His repeated opinion and reliance is on the single fact that a ‘design mix’ need not meet the listed mix proportions solely on the basis that it is not a ‘prescribed mix’ and mix proportions cannot therefore be used to judge compliance with masonry codes and has no scientific basis of suitability or performance justification whatsoever.

The NHBC themselves do not cover themselves in glory either by making assumptions and dismissive statements in their letters to homeowners whose homes in some cases, are clearly and quite literally, disintegrating. Opinions are not fact. New homeowners that have homes built with mortar with insufficient cement content that is crumbling is an undisputable fact. The best they can hope repointing, without any investigations into the mortar bond strength with wall ties, the use of cement replacement such as GGBS or possible sulphate attack.

Unfortunately, this is an industry that runs roughshod over the interests of new homebuyers, fobbing them off with questionable expert opinions and interpretations, whilst hiding behind NDAs. Perhaps James Brokenshire’s  recent announcement of statutory New Homes Ombudsman will force  change.

Conclusion

Given the cost, disruption to homeowners and potential further reputational damage in this already tainted industry, you would expect that warranty providers would be updating their standards to reflect the now widespread use of factory produced mortar and covered by BS EN 998-2. If housebuilders persist in their apparent preference for design mix factory mortar, they must be required to take mortar samples during construction for their own independent testing, rather than relying on the manufacturer’s in-house test results.

Graham True told me: “I just do not know why the house builders can’t use the correct mortar. The cost difference is minimal. They should be made to use a Prescribed Mix since the Design Mixes fail.”
I totally agree.

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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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New Homes Ombudsman – APPG Inquiry 2018

The government has finally recognised the need for an independent New Homes Ombudsman and an APPG Inquiry is currently calling for evidence on how it would operate.

It is not impossible to build a defect-free new home. All that is required is the will to do so – building with care and with a thorough inspection regime that requires all sub-standard work to be taken down and re done. Yet 98% of new homebuyers report defects to their housebuilder within a few weeks.

Defects in UK new homes are injuring children!

For far too long the industry has used the “built in the open in all weathers” excuse and lowered buyers’ expectations. Bricklayers do not and cannot work in the rain! Render is not applied in the rain, yet there are many defects associated with both. Superstructure accounted for 38% of all NHBC warranty claims in the year to 31 March 2017, costing £35million (41% of total claims) to rectify. Adverse weather does not contribute to walls being built out of plumb, render cracking or missing insulation! All other trades (apart from groundworkers) work inside, often in the same conditions found in most factories.

I suggested the need for an independent, government-appointed New Homes Ombudsman when I attended the second session of the APPG EBE Inquiry ‘Into the Quality of New Homes in England’ on 23rd November 2015.

The APPG Inquiry Report, published on 13th July 2016, concluded: 

  • “Housebuilder’s own quality control systems are not fit for purpose”
  • “there needs to be an industry aspiration to achieve a zero-defects culture”
  • “good practice should be seen as building a new home that is defect-free” 

It clearly stated the number 1 “key recommendation” – the Department for Communities and Local Government (DCLG) setting up a New Homes Ombudsman: 

“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.” 

So it is somewhat disappointing that, 18 months after the report was making the recommendation that an independent, government-appointed New Homes Ombudsman be set up to give buyers an independent form of redress, there has been so little progress. It is to be hoped that following this latest Inquiry, an independent New Homes Ombudsman will be set up by government without recourse to further delay, consultation, consideration, or review.

“Too many new homebuyers are suffering, many are physically drained as a result of engagement with errant housebuilders when trying to get their new homes brought up to warranty standards and statutory regulations. For some buyers the mental anguish has become almost unbearable.”  – Rob Wilson ex MP Reading East

The housebuilders’ lobby group the Home Builders Federation (HBF), will no doubt tell this Inquiry that (according to the industry’s own customer satisfaction survey) “84% of new homebuyers are satisfied with their new home.”  But as Communities Secretary, Rt Hon Sajid Javid alluded to in his speech at the NHBC on 29 November 2017:

too many new-build homes are simply not good enough.” You [HBF] can point to customer satisfaction levels of between 80 and 90%, something I’m often told about but [of new homebuyers] finding faults that take months and sometimes even years to remedy. It’s not just disappointing – it’s devastating. But just think about those 217,000 new homes built last year. Even if 80% of them have no issues, that still leaves well over 40,000 families living in accommodation that they don’t think is good enough.” 

Indeed they do. The HBF frequently use the 84% “satisfaction” statistic. It is a fact that the HBF use their 8-week Customer Satisfaction Survey primarily to provide data to rebut negative claims on build quality.” HBF Chair Stewart Baseley who says he is a great believer in transparency and a great believer in people having access to services that are cheap for them to use to get qucik remedies to their problems”  Nevertheless this survey is all we have at the moment. Far from “if 80% have no issues” as Javid assumes, the HBF survey actually demonstrates that 98% of new homebuyers report “problems” (in other words defects), to their housebuilder within a few weeks of moving in. Indeed 41% report more than 10 defects. The quality of new homes has further deteriorated. This is an undisputable fact, now even demonstrated by the industry’s  dubious own customer satisfaction survey results 2017.

An ever growing number of new homebuyers have to move out of their new homes, often for several months, whilst their house is taken apart to rectify serious, often structural defects. More recently, there is a growing incidence of weak-mix mortar.

It is to be noted that the APPG Inquiry deadline for written submissions has recently been extended – the day after the BBC reported on the dire quality and defective new homes – from 22 December 2017 to 12 January 2018. It is hoped this is not to give the industry extra time to get its “ducks in a row.”

The current “procedures” limited as they are, serve to protect housebuilders and the warranty providers rather than help consumers. The only “alternative”, as has been written in many letters from various housing ministers and staff at the DCLG over the years, is for buyers to take action through the courts for monetary compensation.

As most buyers realise, even those with legal expenses insurance, this is a lengthy and costly process with no guarantee of a successful and fair outcome. Indeed, housebuilders have deep pockets and vigorously defend every attempt by the very few new homebuyers who courageously take this course of action. Housebuilders do this in the certain knowledge that it will cost them far less to defend the small number of claims that could potentially end up in court, than routinely pay justifiable compensation to homebuyers. Even if an agreement is reached ahead of a court hearing, this is normally subject to a non-disclosure agreement clause, (“gagging order”) to avoid any precedent being established and to reduce likelihood of action being taken by others, often with identical issues.

It is no longer a case of getting (all be it eventually) a few minor defects and snags rectified by the housebuilder being a satisfactory outcome. Now there is a clear case for justifiable compensation paid by housebuilders and/or warranty providers, to all buyers of sub-standard defect-ridden new homes.

A recent announcement by Communities Secretary Sajid Javid on 29 November 2017, mentioned “bold options” that the Government “will look at to improve consumer redress across the housing sector” – Setting up an independent New Homes Ombudsman should be its priority. 

Worryingly, it would appear that it is the Government’s intention of rolling all existing ombudsman (Housing Ombudsman, the Property Ombudsman and Ombudsman Services’ Property, and the Property Redress scheme) into one, all-encompassing, ‘one-size-fits-all’ “Housing Ombudsman” rather than a simplified New Homes Ombudsman, purely for consumers that buy new homes. I firmly believe a separate, stand-alone, fit-for-purpose, independent New Homes Ombudsman is the only way that this industry will be forced to look inwards at what it does and make both the quality of new homes and customers, their number one priority.

As it stands, housebuilders are showing no intention of taking proactive measures to improve the quality of the new homes they build. Consumers need a fully independent means of redress. It is now essential to appoint a New Homes Ombudsman for the house building industry. All existing legislation to protect consumers, including The Consumer Rights Act 2015, does not apply to property.

During a debate in the House of Commons 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.”   Perhaps? 

“…the repointing of joints on walls where purposeful demolition and reconstruction should have happened” – No doubt in response to the growing incidence of weak-mix mortar.

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” said Tony Lloyd MP for Rochdale

A New Homes Ombudsman, by its very existence would force housebuilders to look at what they do (and don’t do) forcing them to strive to do better, in the certain knowledge that a buyer can complain to an independent ombudsman who would potentially, be able to award unlimited, justifiable compensation. Such awards would become a matter of public record. No longer would housebuilders be able to delay and defeat buyers’ repeated attempts to have their defective new homes fixed.

New Homes Ombudsman:         FREE – FAIR – FOR EVERYTHING

Free – At no cost to new homebuyers making a complaint following the housebuilder or warranty provider issuing a final deadlock letter.

Fair – A New Homes Ombudsman would (and must) be entirely independent of the housebuilding industry – something that clearly the warranty providers and the Consumer Code for Home Builders are most definitely not! Fully transparent, appointed and audited by Government.

For everything – Everything and anything that can and does arise when buying and living in a new home. Dealing with buyers’ complaints including misleading and incomplete marketing information and underhand selling practices, unfair contracts, poor build quality, defects, non-compliance with Building Regulations and/or warranty standards, inadequate or indifferent after sales service, conflicts of interest, tenure and boundary issues, contractual disputes – with the New Homes Ombudsman being able to order housebuilders and/or new home warranty providers to pay buyers justifiable and meaningful compensation awards.

The New Homes Ombudsman must be fully-independent and government-appointed, NOT one of many “Ombudsman” in the Ombudsman-services.org who act as little more than an outsourced dispute resolution service to various sectors. Cost Effective Dispute Resolution (CEDR) is not going to work either!

But the New Homes Ombudsman should not be part of a wider, ‘one-size-fits-all’ one-stop, general purpose “Housing Ombudsman” as the current rhetoric from Government would indicate. I was horrified that merging the various existing residential Ombudsman into one “Housing Ombudsman” is being given serious consideration even though it would also include a mechanism of independent redress for new homebuyers for the first time. Whilst this is better than the complete absence of any independent means of redress that new homebuyers currently have, it would not be in the best interests of new homebuyers if the badly needed New Homes Ombudsman was set up as part of a wider “Housing Ombudsman” service.

It would take a considerable amount of time and presumably new legislation to combine the existing ombudsmen into one office. Furthermore, the new-build industry is sufficiently large and errant to fully justify a dedicated New Homes Ombudsman of its own – which would specialise in the many unique issues and technicalities of the new-build sector. Camouflaging a New Homes Ombudsman under the umbrella of a general “Housing Ombudsman” would also make the New Homes Ombudsman less conspicuous to the very people who would need and benefit from it.

Housebuilders and warranty providers operational basis is to ‘bat away’ buyers’ complaints and warranty claims rather than work in the consumer’s best interests. Despite many years of opportunity, this isn’t going to change. It is now time, as I would hope this Inquiry will conclude, that UK new homebuyers were given something from this government. A small concession that if (or rather when) they are unfortunate enough to discover major, preventable defects in their new home, or housebuilders fail to rectify defects in a timely manner, they can apply to an independent, government-appointed New Homes Ombudsman who could award justifiable and meaningful levels of compensation.

As Communities Secretary Sajid Javid MP announced on 29 November 2017 recognising the need for an Ombudsman to give new homebuyers a form of redress, I would hope, following the recommendations and evidence I have submitted to this Inquiry, he will announce that a stand-alone independent New Homes Ombudsman will be now be set up by the end of 2018.

In the past, government ministers and the DCLG have been hoodwinked into believing that the industry’s own voluntary Code, the new home warranty and the building regulations offer sufficient protection for new homebuyers. Government also believed that consumers are “more likely to be supported by independent professional advice from lawyers and others capable of giving advice top their clients and because the terms of the contract are more likely to be negotiated.” and “they can take action through the courts for monetary compensation.”

However, despite the obvious need and benefits a New Homes Ombudsman would give consumers, many within the industry, will maintain that a fully independent New Homes Ombudsman is not necessary. Their lobbyists, the Home Builders Federation (HBF) claim “the overall quality of new homes has never been higher than it is today” stating that “the overwhelming majority of people are happy with their new homes. In the small number of cases where buyers encounter problems the industry is fully committed to completing them as soon as practically possible.”

This is quite simply, not the case.

 

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