Persimmon's gesture is a start, but hardly revolutionary
Housebuilder Persimmon is to allow buyers to hold back 1.5% of the purchase price of their home until problems with their property are resolved. This comes after several years in which Persimmon, along with other major UK housebuilders such as Bovis Homes, have been widely criticised for selling new homes that are riddled with problems or delivered far behind schedule, as well as for the salaries they pay senior staff.
Persimmon is the first UK housebuilder to offer buyers (or, more accurately, their solicitors) the opportunity to hold back some of the purchase price. It says it hopes this move will encourage others in the industry to follow suit. However, given the scale of the problem of quality in new-build housing, they could have done more.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely 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
On average, people will be able to hold back £3,600, which is hardly a huge sum. It's been suggested that 5% would have been a more appropriate amount (this is the case in the Netherlands). As Patrick Hosking notes in The Times, "there's a danger the scheme will descend into countless legal disputes, with buyers' solicitors quickly swallowing up that cash buffer in fees".
Moreover, buyers can only take advantage of this option if they report problems on the day they get their keys. This means people must spend that first day in their home checking thoroughly for snags, even though many problems such as faulty plumbing will not come to light immediately. What would be more sensible was if the buyer had, say, a month in which to report problems. Persimmon customers can submit a one-month inspection form to report early problems, but this is separate from the ability to hold back money.
What to do if your new-build is shoddy
It's important to be aware of what protection you're entitled to as the owner of a new-build home. It's not always as much as you might hope. Nine out of ten new homes built in the UK are protected by one of the main new home warranty bodies. They include the National House Building Council (NHBC), Premier Guarantee and LABC Warranty. Under NHBC Buildmark, builders cover any defects that occur in the first two years of ownership that are not general wear and tear.
After that, NHBC will provide a further eight years of insurance against failure to meet their requirements. Depending on the policy, you may also be covered for failure to comply with UK building regulations. These regulations set minimum standards for the design, construction and energy consumption of buildings, but compliance with these regulations is not necessarily "sufficient...to ensure good quality", warned the 2007 Calcutt Review of Housebuilding Delivery.
Finally, any housebuilder registered with a home warranty body should also adhere to the Consumer Code for Home Builders, which requires them to arrange a system for dealing with customer complaints.
-
Can I shield my ISAs from inheritance tax?Many investors and savers will be wondering if there’s anything they can do to protect their ISAs from inheritance tax, especially as pensions will become liable for the levy from April 2027. We reveal the options available to ISA customers
-
What is the average salary by age – and how do you compare?Are you making more than your peers? We look at the average salary by age to see how much the typical Brit earns at different stages of their life
-
If you'd invested in: Bovis Homes and Crest NicholsonFeatures Regional housebuilder Bovis has seen its shares rise by 40% in the last year, while Crest Nicholson's have slid by 20%.
-
Sharks circle BovisFeatures Bovis’s rivals are trying to make a meal of its assets on the cheap. It should hold out for a better deal, says Ben Judge.
-
Shares in focus: Should you buy Bovis?Features The housebuilder’s profits are booming, but is there anything left still to play for? Phil Oakley investigates.
-
It’s time to sell out of the housebuilding sector – here’s whyFeatures Shares in housebuilders have done very well in the last few years. But it's time to sell. Ed Bowsher explains why, and picks a more attractive sector to buy.
