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Concerns about the quality of new build housing

A good deal of political attention is focused on the need to increase the rate of house building, but alongside this there have been growing concerns about the quality of new developments. MPs are encountering owners of newly built homes who are struggling to achieve satisfactory resolution when defects are reported to builders. The role of building control officers in ensuring compliance with the Building Regulations was the subject of Westminster Hall debates in 2015 and 2016. A Westminster Hall debate on 16 October 2017 focused on warranties issued by the National House Building Council (NHBC). Kate Green secured a Westminster Hall debate on Protection for Homebuyers which took place on 13 December 2018. She led a further debate on the same subject on 16 January 2020 during which she referred to her constituents’ experiences.

There have been some high profile examples of blocks facing demolition/major repair work only a short time after completion due to construction defects, for example Solomon’s Passage in Southwark, completed in 2010 and condemned in 2016.

An inquiry by the All-Party Parliamentary Group

In this context, the All-Party Parliamentary Group (APPG) for Excellence in the Built Environment carried out an open inquiry into the quality and workmanship of new housing for sale in England and published its report, More Homes, Fewer Complaints, in July 2016.

The APPG identified a risk around efforts to incentivise house building for homeownership if similar attention is not directed at ensuring consumers are buying “new homes that are fit for purpose, are of enduring quality, perform to the requisite levels of maintenance, cost and energy efficiency and give peace of mind, pride and enjoyment to those who occupy them.”

APPG recommendations

More Homes, Fewer Complaints contained a number of recommendations aimed at:

  • improving the systems in place to check quality and workmanship;
  • developing a new quality culture within the construction industry;
  • improving customers’ means of redress through the establishment of a New Homes Ombudsman and a review of the warranty system; and
  • improving the information customers receive about their new home, including standardised contracts and a right to inspect before completion.

The APPG felt that the recommendations would address the imbalance identified in the bargaining positions of builders and house-buyers.

Previous studies and industry response

The standard of newly built housing has come under scrutiny before. The Callcutt Review of Housebuilding Delivery (2007) noted concerns around caveats included within warranties provided on new homes. It was felt that they might not offer adequate protection for consumers. The Office of Fair Trading’s 2008 study of the homebuilding market also considered the effectiveness of warranties. One response was to recommend the introduction of a code of conduct to address the consumer protection concerns.

The industry responded with a Consumer Code for Homebuilders, now in its fourth edition. However, the APPG concluded that the code “does not appear to give homebuyers the safeguards we think they should expect.”

In June 2017 the Chartered Institute of Building (CIOB) set up a Commission of Past Presidents to consider construction quality standards following the closure of 17 schools in Edinburgh earlier that year. The fire at Grenfell Tower prompted the Commission to launch a call for evidence in October 2017. The Chair of the Commission, Paul Nash, said that the tragic events at Grenfell underlined “the need for an urgent review of the way in which quality is managed in our industry”. Evidence was accepted up to 15 December 2017. 75% of the 200 construction industry respondents to the call for evidence reportedly believed that “the industry’s current management of quality is inadequate”.

Government & industry response on consumer redress

The former Housing Minister, Alok Sharma, responded to a Westminster Hall debate on 16 October 2017 saying “it is clear that home builders need to step up and make quality and design a priority. That includes ensuring that, where something goes wrong, house builders and warranty providers fulfil their obligations to put things right.” He described the following actions which were underway:

  • The Government is “seriously considering” the APPG’s recommendations.
  • The House Builders Federation (HBF) will issue a formal response to the APPG’s report.
  • The HBF has set up a working group and “will take forward action to provide better information to customers, simplify the legal process and create a clearer and simpler process for signing off new homes as complete.”
  • The HBF working group has commissioned an independent report on consumer redress for new homebuyers.
  • The Minister said he would review the independent report “with a view to ensuring that improved redress arrangements are introduced to provide greater protection to consumers on a broad range of issues, with a greater degree of independence from the industry.”
  • On calls for a new housing ombudsman, the Minister said “I am considering that option very seriously indeed.”

Subsequently, on 29 November 2017 Sajid Javid, then Secretary of State at DCLG (now the Ministry of Housing, Communities and Local Government, MHCLG), told a group of housing professionals that it was vital that the quality of new build homes continued to improve. He said that the Government would consult in 2018 and “look at options to explore how the overlap between responsibilities can be improved. This would help to avoid the confusion faced by consumers over where to seek help.” Strengthening consumer redress in the housing market: a consultation ran between 18 February and 16 April 2018. 

The APPG published Better redress for home buyers in June 2018 which focused on how a New Homes Ombudsman could drive up standards and improve consumer redress.

A New Homes Ombudsman

On 1 October 2018, the Government announced an intention to create a New Homes Ombudsman to “champion homebuyers, protect their interests and hold developers to account”. The summary of responses to Strengthening consumer redress in the housing market, together with the Government response, was published in January 2019. There is an intention to create a new Housing Complaints Resolution Service as a single point of access to redress services across all tenures.

June 2019 saw publication of a technical consultation, Redress for Purchasers of New Build Homes and the New Homes Ombudsman. Submissions were invited up to 22 August 2019; the outcome was published in February 2020.

Part 5 of the draft Building Safety Bill published on 20 July 2020, contains provisions that would require the Secretary of State to arrange for a redress scheme to be available for people who are ‘relevant owners’ of new build homes. The Secretary of State would have regulation making powers to require developers of new build homes within scope to join the scheme and remain members for a specified period. The draft Bill is subject to pre-legislative scrutiny by the Housing, Communities and Local Government Select Committee. The Committee is accepting submissions up to 14 September 2020.

 


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