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APPG publishes report following inquiry into quality of new build homes

Date: 13/07/16

APPG publishes report following inquiry into quality of new build homes

The All Party Parliamentary Group (APPG) for Excellence in the Built Environment has today published the final report of a special Commission of Inquiry it established to investigate the quality and workmanship of new build housing in England. The Commission took evidence from a range of stakeholders, including HBF, before reaching its conclusions.

The report contains a series of recommendations it believes will lead to higher standards of build quality and customer service. We will consider the recommendations made and liaise with members before deciding on a course of action.

HBF provided the following statement following the publication of the report;

“We welcome the very in-depth and considered review undertaken by the Group. The industry is totally committed to delivering high quality homes and excellent customer service and we will now review all the recommendations made with members and consider how best we act on them. Over recent years, huge improvements in service and quality have been delivered and we look forward to working with Government, the APPG members and other stakeholders to use the recommendations to deliver further improvements for new build buyers.” 

Details of the Commission of Inquiry and its work, plus a copy of the report in full can be found here

The 10 Recommendations are as follows;

Recommendation 1: DCLG should initiate steps to set 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.


Recommendation 2: Housebuilding sales contracts should be standardised

This would remove much of the uncertainty that presently arises from the bespoke nature of each builder’s sales contract, which can deter so many from pursuing claims. The Law Society’s Standard Conditions of Sale work well for normal conveyancing transactions and there is no reason why a similar approach should not work for new homes. We would expect the contract to set out how defects are handled, including provision for dealing with disputes before referral to an ombudsman.


Recommendation 3: Buyers should have the right to inspect properties before completion

There should be a mandatory right (which could be introduced by the inclusion of suitable provisions in the standard form contract) for buyers to inspect and, should they wish, carry out a full survey of their property prior to financial completion. We suggest that they be given 10 days’ notice by the builder of when their property can be inspected. If after the inspection the buyer/ surveyor deems that the property is not capable of occupation, the final financial completion can be delayed. Such a provision would also discourage builders from serving notices to complete prematurely, or concealing major defects until after they have received the full purchase price, and would also encourage better quality control and site management pre-completion. In our view, the above suggestion would be relatively easy to implement, and would encourage improvements to construction quality without deterring capital investment or adversely affecting land values for developments already in the pipeline.


Recommendation 4: Builders should be required to provide buyers with a comprehensive information pack

The purpose would be to improve transparency of the design, building and inspection process. We would like to see housebuilders be required to provide prescribed and comprehensive written information to buyers during the conveyancing process as part of a standard contract (and in an electronic format) to make it easier for buyers to take issue if what they get is materially different to what they More homes, fewer complaints Report from the Commission of Inquiry into the quality and workmanship of new housing in England 8 contracted for.

The pack should contain:

  • Designs and plans, specifications etc.
  • Details about both warranty and building control inspections, when carried out and by whom.
  • What the warranty covers in plain English.
  • Which version of the Building Regulations the house was built to and complies with.
  • How to contact the builder to rectify defects.

Recommendation 5: There should be a review of laws governing consumer rights when purchasing new homes

There is a strongly held view that in disputes, the balance has been tipped too far in favour of housebuilders. This includes the Ruxley v Forsyth law case, which set precedent whereby housebuilders do not have to pay the costs for putting wrong work right if the costs are disproportionate to the impact of getting it wrong.


Recommendation 6: DCLG should commission a thorough review of warranties

At present warranty providers offer varying levels of cover and consumer protection.

Our evidence suggested that warranties on new homes did not match the expectations of the consumer and our suggestion is that they need to be reviewed. In the context of buying a new home, consumers may well be prepared to pay more if it meant getting a better degree of service and would pay for additional cover on what they already get as part of the warranty.

We would expect the review to:

  • Establish whether the warranties currently provided are adequate, what the minimum requirements should be, how they would need to change to achieve the needed level of cover and what the cost implications might be.
  • Establish easier form of redress with warranty providers as part of a New Homes Ombudsman role. At the moment, as financial bodies, warranty providers are covered by the Financial Services Ombudsman, which we were told was not always effective in dealing with the types of disputes we are looking at.
  • Look into ways that warranty providers and housebuilders can set out more clearly at the time of conveyancing what the warranty actually covers. Quality, workmanship, skills and inspection

Recommendation 7: Housebuilders should instigate a new quality culture by adopting quality systems to ISO standards

If defects are to be reduced and satisfaction levels improved, there needs to be an industry aspiration to achieve a zero defects culture, with greater emphasis on quality assurance and compliance measures adopted as standard by housebuilders. We would like to see the Home Builders Federation taking a more active part in driving this.


Recommendation 8: The industry should significantly increase skills training programmes

We would like to see greater emphasis on training and investment for both new and existing workers to embed a quality culture, whilst also bringing new people into the sector. We believe local authorities and Government should leverage more training by making it a condition on sale of their land.


Increasing trust


Recommendation 9: A minimum standard should be set for compliance inspections

The responsibility for construction of defect-free homes should rest with the housebuilder who should not rely on third party inspections to drive up quality. But we recognise that inspections from third parties do have a vital role to play and we need to make sure that the corners are not cut. We 9 are concerned that competition in building control might be fuelling a race to the bottom and we are therefore recommending there should be a defined minimum number of inspections that local authority building control and approved inspectors in the private sector and warranty providers should not fall below. We suggest that the minimum level should be considered by DCLG in consultation with the industry. We are also recommending inspection reports are made available to the public and form part of the information pack provided to purchasers when they buy a new home. (See Recommendation 4)


Recommendation 10: Housebuilders should make the annual customer satisfaction survey more independent to boost customer confidence

We believe it would boost consumer confidence if the Customer Satisfaction Survey is seen to be more independent of the NHBC and the HBF – bringing in a high profile third party to conduct and take ownership of the research in their name. Furthermore, we would like to see more in depth research on consumer trends based on the follow up survey carried out by the NHBC in their nine-month survey. We feel this could provide a real insight into how builders are tackling initial defects and complaints.


Steve Turner, Communications Director.