Although new homes are increasingly the first choice of affluent buyers happy to pay over £150,000 to avoid the hassles of repair and renovation, many builders appear to be struggling to achieve service and quality standards required by more demanding purchasers.
A large majority of new homes are sold with the protection of a warranty issued by the National House-Building Council (NHBC), which is intended to handle complaints in the first 10 years after the home is completed.
The NHBC has published its annual review and revealed settlement of claims from aggrieved homeowners cost £26.9m this year. Although a slight improvement on the previous year- £27.3m – the new figures show that two thirds of current claims arise between years three and 10 of the warranty.
This is usually the time when serious defects occur, after initial snagging problems are sorted out. NHBC says nearly half the money – 46% – handed out relate to foundation/substructure problems, with load-bearing walls accounting for 27% of the bill, and roofs 12%.
In total, around 1.6 million homes are currently under NHBC protection. Nearly 18,000 members subscribe to NHBC rules and regulations.
But these figures are bound to cast doubts on builders’ regular claims that they are emulating the significant achievement of car makers in the last couple of decades: transforming production standards to produce the higher quality needed to satisfy the more demanding standards of better-off consumers.
Indeed, NHBC has effectively admitted much still needs to be done to improve quality standards by announcing a new “Quality Assurance Framework” to oversee the industry’s approach to “modern methods of construction”.
In essence this will mean switching more of the building process to the factory production line, including timber-frame methods of construction. Timber-frame means the inner skin of a home’s outside walls is made in timber sections and transported to site to create a well-insulated, watertight box much earlier in the building process.
In the 80s, consumers in England and Wales were reluctant to accept timber frame and builders rapidly back-tracked on the concept after a TV documentary portrayed it as an attack on `traditional’ building methods.
In Scotland, by contrast, buyers have fewer qualms and the use of timber frame is much higher as builders try to limit damage caused by harsh winter weather.
Now the NHBC is getting ready to say that timber frame and possibly other prefabricated building methods are OK – providing they are well supervised.
NHBC says 18% of 170,000 new homes registered with it each year employ “modern methods of construction, and 5% of these use innovative methods beyond well-established timber-frame systems”.
“Three years ago,” says NHBC, “the figure was negligible, and NHBC predicts this trend will continue.”
However, an analysis of new homes quality standards in Building magazine suggests many customers remain highly critical of their new homes.
The magazine quotes a survey by Zurich Insurance, which runs the rival warranty scheme to NHBC. It shows, according to Josephine Smit of Building Magazine, that “the common refrain of many homebuyers is: `Once they had my money, they just didn’t care’.”
This is the fourth year in which Zurich has commissioned a survey on customer attitudes – and findings suggest builders are making little progress in keeping customers happy.
Zurich identifies top 10 problems areas in new homes as: external doors (47%); heating/hot water (46); water leads (43); windows (42); seals around bath (38); internal doors (34); walls/ceilings (34); sanitaryware (29), kitchen appliances (29) and kitchen, bedroom, bathroom furniture (28).
Says Helena Pennycock, Zurich’s business development manager: “The cost of remedial works is two or three times the cost of doing it right in the first place, and then there is lost goodwill and staff time that are spent on it.”
However one recent change to the homebuying procedure might trigger an improvement in the quality of new homes when they are handed over to new owners.
A rule applied by the Council of Mortgage Lenders (CML) in April, and soon to be applied in Scotland too, means a mortgage is not released until a home is certified as complete.
Before this new crackdown came into force, the NHBC was signing off up to a third of new homes after the date of legal completion, but that figure has now fallen to 6%.
WILL SELLERS’ PACKS WASTE EVEN MORE MONEY?
The Government is nailing its mast to Sellers’ Packs – now known officially as Home Information Packs (HIPs) – to speed the home-buying process and reduce the risk of abortive costs when agreed sales break down, and the proposal could receive the Royal Assent in July or autumn next year.
However, agents critical of the plan have been looking at the comparison between present abortive costs caused by “fall-throughs”, when agreed sales collapse under the present system, and abortive costs likely in the future when Home Information Packs fail to achieve a sale.
According to Negotiator magazine, a leading publication for agents, estimated current wastage is £234 million. When HIPs come in, however, in 2005/6, the likely wastage soars to £294 million.
The big difference, of course, is that a much bigger part of the bill in the new system falls on the seller – and much less on the buyer. That could be an underlying reason for reform, in that vendors are usually seen as far wealthier than buyers in most cases.
Melfyn Williams, president of the National Association of Estate Agents (NAEA) sees another potential snag in the proposed new law which means a house can only go on sale when the HIP is complete, possibly four or five weeks after the owner has decided it’s time to go.
“Where I am, in Anglesey, estate agents are well-known characters. If, when we have HIPs, someone sees me coming out of a house and asks me if it is for sale, I am either going to have to break the law or lie,” he says.
So how does the Office of the Deputy Prime Minister (ODPM), John Prescott’s empire, present the case for HIPs?
Negotiator magazine quotes civil servant Richard Footitt, ODPM’s head of housing, private sector division, in a recent address to NAEA.
Said Mr Footitt: “There is a need to view HIPs in a wide debate about the national economy, preparation for the Euro and so on. They will also raise awareness of home owners about the physical condition of the property.”
Mr Footitt’s remarks are an interesting indication that our rulers believe the way we buy and sell homes has to change partly to mesh better with the Europe – even though, at the last count, barely 30% of the electorate is actually in favour of such a move.
If the public wakes up to the full implications of HIPs in 2004, the subsequent debate could be interesting. Change will be all the more contentious if there really is a European dimension involved.