Homeowners stuck with shoddy new-builds

A group of people who bought houses from Bovis Homes plans to take legal action against the housebuilder for selling poor-quality homes, says Julia Kollewe in The Guardian. This comes just a year after the housebuilder issued a profit warning and was accused of paying thousands of pounds in cash incentives to get buyers to move into unfinished homes.

Yet stories about the poor quality of many new-build homes have been somewhat overshadowed in the past year or so by the media coverage of onerous leasehold clauses which stuck homeowners with rapidly increasing ground rent charges. And Bovis Homes isn't the only housebuilder to be criticised for the quality of its properties this seems to be another widespread problem facing those who have bought new-build homes (the only type of purchase available for those using the government's help-to-buy equity loan scheme).

Just over half of new-home owners have experienced major problems with their properties, including issues with construction, unfinished fittings and faults with utilities, according to a survey carried out by YouGov for the charity Shelter. And in the 2017 "national new home customer satisfaction survey", carried out by the National House-Building Council (NHBC), although 84% of respondents said they were satisfied with the overall quality of their new homes, a pretty staggering 98% said that they had reported problems with their home to their builder since moving in.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Problems experienced by homeowners range from holes in walls where windows should be and gas systems in breach of gas safety regulations, to blocked drains and maggot infestations, all quoted in The Guardian over the past year.

But as well as the quality problem in new-build houses, homeowners have often struggled to get issues fixed within a reasonable timeframe, sometimes having to delay moving into the property, or having to live in the house while problems are being fixed. There seems to be confusion about the standards that housebuilders have to adhere to, and who is then responsible for ensuring that those standards are enforced.

At the moment, new-build houses must comply with the Building Regulations these set minimum standards for the design, construction and energy consumption of buildings. But although compliance with these regulations is "necessary", it's not "sufficient. to ensure good quality", warned the 2007 Calcutt Review of Housebuilding Delivery. Most new-build properties are sold with a ten-year warranty, such as the NHBC Buildmark. For the first two years after completion, it is up to the builder to sort out defects, and after that, warranties provide insurance cover for any failures to meet building regulations.

Unfortunately, these warranties often cover "far less than consumers assume", points out a 2016 report from an All Party Parliamentary Group inquiry into housebuilding in England, while few people realise that warranties only cover structural matters after the initial two-year period.

In response, the APPG's report recommended improving the systems in place to check quality and workmanship, the establishment of a New Homes Ombudsman, and a review of the warranty system. The government is expected to consult on the matter of new-build homes in 2018.

Hopefully this consultation, along with continued media coverage, will bring with it plans to improve both the quality of homes and the redress procedure. Yet as the APPG report concludes, a "chronic undersupply of homes means that, as things stand, normal market forces do not come into play and the balance between buyer and seller is strongly weighted in favour of the seller". It's difficult to see that dynamic changing in the near future.