Quantity vs quality of new homes: Why not have both?

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Kim Vernau, Chief Executive Officer of BLP Insurance highlights how you can have both quantity and quality when it comes to building new homes

The shortage of homes in the UK continues to be a pressing issue for the construction industry. Recent measures to combat the situation have been both applauded and criticised, but they have also raised a debate over the quality of new build homes. Are developers and builders sacrificing quality in order to meet the government’s high construction targets? How can future buyers make sure that their new homes are up to scratch when it comes to quality? These are just a few of the issues analysed by the All Party Parliament Group (APPG) inquiry into the quality and workmanship of new build homes, which in July published its report highlighting the quality gap between customer demands and industry delivery.

The report “More Homes Fewer Complaints” made a number of hard-hitting recommendations. These ranged from creating a New Homes Ombudsman to independently mediate disputes between home buyers, builders and warranty providers, to requiring developers to produce a Home Information Pack and giving buyers a right to inspect and survey the property before financial completion.

These recommendations support findings from the 2016 Homeowner Survey conducted by YouGov for HomeOwners Alliance and BLP Insurance, which sought to explore the importance of quality for potential buyers of new build homes, alongside the key quality checks buyers would wish to undertake. While there is a pressing need for more new build homes, the perception of the consumer is that this pressure to build is coming at the expense of quality.

Key findings from the survey:

•    58% of respondents would want to undertake a survey as a quality check before buying a new build home;
•    New builds are not popular, with more than twice as many respondents preferring an older home (49%) to a new build home (19%);
•    When considering the quality of new homes, people are likely to focus on size of rooms (74%), the feeling of space on the development (65%), layout (62%) and the level of finish (61%);
•    The reputation of the house builder, the quality of the sales process and the provision of detailed floor plans fall further down the list in terms of what signals quality.

When assessing quality, consumers currently place less emphasis on the sales process or particulars of the property.  In its report, the APPG has made the recommendation that these aspects require greater attention and are potential risks for new build homebuyers.  A standardised house purchase contract, alongside a detailed information pack provided by the builder should make it clear what consumers are buying together with both parties’ legal obligations.

Key recommendations

The DCLG has initiated the first steps to set-up a New Homes Ombudsman. Its objective is to mediate disputes between homeowners, their builders and warranty providers to offer a quick resolution procedure paid for by a levy on house builders. This procedure would be completely independent.

This follows the move by a number of warranty providers, including BLP Insurance, to implement codes for the sale of new homes in recent years. The rationale for a New Homes Ombudsman is to replace the independent dispute resolution service offered as part of these codes. This would ensure consistency of response to consumers where the complaint can be referred for resolution as well as providing for a maximum level of compensation available to the homeowner. When something is wrong, consumers want an affordable and accessible means of putting it right. This process should address that requirement.

The report also recommended that the DCLG commission a thorough review of warranties to assess whether they meet adequate or minimum requirements. This should focus on the changes necessary to achieve the required level of cover and the cost implications. Furthermore, the recommendation for an easier form of redress as part of New Homes Ombudsman role highlights that the Financial Ombudsman Service is not always the most effective procedure to address the types of disputes that arise.

Another key recommendation is to set out more clearly at the time of conveyancing what the warranty actually covers. Currently, this is an assessment of the build in order to manage the risks, rather than a quality control process. On this point, the APPG highlighted that consumers should not rely on building control and warranty inspections as an indication of the quality of the build, and instead that a minimum standard should be set for compliance inspections. A defined minimum number of inspections should be provided by local authority building control, approved inspectors and warranty providers.  This should be determined in consultation with the industry.

A review of warranty providers and their cover has also been mooted. Such a review would help to ensure consistency in terms of what is covered by the warranty as well as the financial standing of the warranty provider.

However, the APPG has found that responsibility for defect free homes remains with builder who should not rely on third party compliance inspections to drive up quality, despite their importance. These requirements should be managed through house builders instigating a new quality culture by adopting quality systems to international standards. This should be driven by the Home Builders Federation.

There are a number of far reaching recommendations in this report which should be capable of implementation to help address consumers concerns.

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Kim Vernau

Chief Executive Officer
BLP Insurance
kim.vernau@blpinsurance.com
www.blpinsurance.com

Twitter: @ChooseBLP

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