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Some brokers urging new-build caution after client horror stories ‒ analysis

  • 31/08/2021
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Some brokers urging new-build caution after client horror stories ‒ analysis
Intermediaries have blamed time-stretched developers and a lack of quality control for the new build “horror stories” they are hearing from their clients.

New research from property developer StripeHomes has suggested that significant numbers of new-build buyers discover issues with the property soon after getting their hands on the keys.

It found that almost two-thirds reported uncovering an unexpected problem, ranging from the relatively minor such as blocked guttering or poorly fitted doors, to the more significant such as leaking roofs or damaged roof trusses.

What’s more, in the majority of cases it was the buyer themselves who footed the bill for putting things right again.

These horror stories are influencing how brokers advise their clients too, ranging from steering clients away from less reputable developers to urging them to carry out their own due diligence.

Lack of quality control

James Forrestor, managing director of StripeHomes, cautioned that there was something “seriously wrong” with the quality control process at too many housebuilders.

“This is unfortunately the reality of many big housebuilders placing an emphasis on the cost and time of delivering new homes, rather than placing quality and the consumer at the forefront of their operations,” he added.

“Until more is done to give new-build homebuyers more power to fight against below-par output from the industry’s big names, snagging will continue to be a widespread issue across the industry.”

Paul Neal, mortgage specialist at Missing Element Mortgage Services, agreed that the rush to get properties finished in time was a significant factor in the number of issues discovered after completion. 

He noted that a lack of care and attention meant that homebuyers were left with “awful finishes” on properties they have spent many hundreds of thousands of pounds on, with no real support structure in place to help them get the issues rectified, adding “as brokers we hear all of the new build horror stories”. 

A previous study by StripeHomes found that transaction numbers of new build properties have dropped dramatically this year, which it blamed on the “problematic” EWS1 process, though noted prices have still risen by as much as 20 per cent.

I wouldn’t buy a new build

Lewis Shaw, founder of Shaw Financial Services, said that he had had clients who discovered that the plumbing did not work properly, or who were left needing to purchase a new kitchen within 18 months due to the poor efforts of the initial developer.

Shaw added that unless the buyer is purchasing from a developer who he knows has a good reputation for quality homes, he will try to steer them away if he can, stating: “Personally, I wouldn’t buy a new build, but to each their own.”

Carmen Green, mortgage and protection adviser at Xpress Mortgages, said that given the premium homebuyers pay for picking up a new build property, on the understanding that it is in the best possible condition, it’s little wonder that they are left frustrated by the emergence of issues after the purchase has completed.

She noted that she has had cases where solicitors refuse to act on the new-build purchase, unless it is from a developer who is well known and reputable, due to a higher rate of post-completion issues with smaller and less experienced developers.

Green added that she encourages new-build buyers to research the developer’s reputation for high quality builds,  as well as what sort of support is offered post-completion by the developer should issues emerge later on.

James McGregor, director of Mesa Financial, agreed that it was vital for buyers to check the warranty carefully and do their own due diligence on the developers, perhaps even visiting previous properties from their portfolio.

He added that clients were encouraged to have their own survey done, to improve the chances of any flaws being picked up.

Will lenders extend offers?

Scott Taylor-Barr, financial adviser at Carl Summers Financial Services, said that while his clients had not reported any major defects, they were facing issues with delays to build schedules and pushed back completion dates.

He criticised developers for heaping pressure on buyers to reach the exchange stage, only to then delay the deal, sometimes multiple times, and noted that this can cause problems with mortgage offers reaching their expiry date.

He said: “Fortunately, lenders can be quite accommodating around this, so more often than not getting an extension to the offer is a straightforward process. 

“However, I am getting concerned as the delays grow, we may see lenders being less than happy to extend to the timescales some developers now seem to be asking for, which could leave clients in a very difficult situation.”

Shaw added that it is a “mixed bag” from lenders when it comes to dealing with new build cases, with varying requirements in terms of how much they want to know about the warranty and the incentives in place, meaning that “some lenders are better than others” in helping these buyers.

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