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Industry attempts to address poorly built new builds ‘insufficient’, says MP

  • 17/01/2020
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Industry attempts to address poorly built new builds ‘insufficient’, says MP
The property sector’s initiatives to protect homebuyers from poorly developed new build homes are “still insufficient”, Labour MP Kate Green has said.


Speaking in the House of Commons on 16 January in the Protection for New Home Buyers debate she tabled, Green said she had seen “shoddy” and “dangerous workmanship” as well as a “lack of redress for homeowners” in relation to new build property developments. 

Green acknowledged efforts including the proposal for a new homes ombudsman, the Royal Institution of Chartered Surveyors’ intention to draft new guidance on the inspection of new builds, and of UK Finance’s disclosure form for new build properties, but said they were not enough. 

She said local authorities lacked resources for inspection and enforcement, leaving “unscrupulous developers” free to continue to build. 

Green also said there were a lack of repercussions for the developers of such properties, as she pointed out company law did not do enough to hinder them from setting up and dissolving companies for each new development. 

“One constituent has found neither Companies House nor the Insolvency Service very willing to act to prevent this from happening, even when the same developer has blatantly and repeatedly breached registration and company law requirements,” she added. 


Insurance complications

Green noted that buyers struggled to make claims on poorly developed properties as buildings warranty cover did not always provide the correct protection. She said as warranty providers carried out the role of inspector, it created a “conflict of interest” meaning insurers had an “incentive to suppress knowledge of defects”. 

She also claimed the National House Building Council (NHBC) liaised with housebuilders regarding which claims to accept without the policyholder’s knowledge so both parties could avoid incurring costs. 

Homeowners who want to challenge the refusal of a claim are unable to as the Financial Ombudsman Service has no jurisdiction to deal with complaints, Green said, resulting in many of them going down the more expensive, legal route. 

NHBC refuted the claims, as a spokesman said: NHBC is wholly independent of housebuilders. We are a non-profit distributing insurance company with no members or shareholders. Our policy and claims decisions are assessed and managed by NHBC alone.

Our stated purpose is to give home owners confidence in the construction quality of new homes, and our independence is essential for us to fulfil this. We have reached out to Kate Green MP directly to offer our support and discuss the issues she has raised.

Green suggested the position of leaseholders needed to be “strengthened” through new legislation which would make it compulsory for management companies and leaseholders to take out 10-year insurance policies which specified minimum levels of cover and the term of the insurance, and giving them third-party rights to claim directly under these policies.


Concerns to be addressed 

Luke Hall, Parliamentary Under Secretary of State at the Ministry of Housing, Communities and Local Government, said the government would be putting “residents at the heart of the new, stronger system of building safety”.  

He also said the introduction of the new homes ombudsman would ensure homebuyers were “treated fairly when things go wrong” and encourage developers to “up their game and get things right from the beginning”. 

Hall said the building safety Bill, which was proposed in the Queen’s Speech in October, would give residents a “stronger voice” and require buildings to go through a process to prove to the regulator that a building is safe and ready for occupation.  

“We are moving forward with legislation to reform the leasehold sector,” he continued.   

“This includes the ban on new leasehold homes, restricting future leases to ground rent of zero financial value and closing legal loopholes to prevent further unfair evictions. 

“The government welcome the action we have already seen from industry, especially the early adopters group, which has spearheaded the building safety charter.” 


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