This has followed the Competition and Markets Authority (CMA) probing and resolving leasehold mis-selling, the introduction of the Leasehold Reform Bill and ongoing action to improve the quality of new-builds.
While regulators and the government work to iron out issues relating to newly built homes and the companies that construct them, maintaining faith in this part of the sector is imperative as it will be the main driver for the delivery of much-needed housing.
So this week, Mortgage Solutions is asking: Why should buyers continue to trust developers and new-build properties in light of recent challenges?
Recent high-profile news including the tragedy at Grenfell and leasehold mis-selling, has raised questions from the government as to if some developers’ prioritise profit before quality and customer service.
The All-Party Parliamentary Group for Excellence in the Built Environment (APPG EBE) has published two reports on quality and redress, both recommend the creation of a New Homes Ombudsman.
In January 2021, the independent New Homes Quality Board (NHQB) was established with the objective of delivering a New Homes Ombudsman and a unified code of practice to replace the plethora of current codes in the market.
The NHQB will shift the balance of power in favour of the buyer while improving standards of finish in new homes. The organisation is now poised to launch the new code and begin registering builders for the ombudsman service.
The Building Safety Bill will give government powers to put the ombudsman and code on a statutory footing.
Government has already intervened to create legislation to address the ground rent issue. A few years ago, some housebuilders unnecessarily created leasehold tenures which caused affordability concerns. The Leasehold Reform (Ground Rent) Bill was introduced which capped ground rents – protecting leaseholders from steep costs. The CMA has successfully worked with builders to address retrospective issues.
Cladding is more complicated.
The challenge is identifying where the blame lies and where redress should come from. While Gove has recently come out to state developers must bear the responsibility and cost of repairs, we are yet to see legislative or fiscal change to support these statements.
For now, housebuilders have been boxed into a corner, and we now wait to see whether they come out fighting or throw in the towel.
There have certainly been some challenging issues in the housing market in recent years.
Cladding is a particularly important and difficult issue and it’s good to see the development of solutions for those leaseholders that have found themselves stuck in their homes through no fault of their own.
Nonetheless, developers will point to the fact that they complied with the prevailing regulations at the time, and this was always going to be a difficult problem to solve. Rapidly escalating ground rent will also have left a bad taste for some of those affected and whose homes were rendered almost impossible to sell.
However, we shouldn’t forget the huge number of success stories for those that have been able to buy their first or move to a new, bigger home. If we want to improve the supply of new homes to the market the new-build sector will clearly be critical to that goal.
If we want to see more property with better energy efficiency to improve the carbon footprint of our properties, developers will rightly point to the benefits of a new home over older, draughtier property.
Inevitably, developers will want to address some of the issues that have detracted from the huge successes that they have had, especially in keeping builds going during a challenging period. The fact that developers have hardly been able to keep up with the demand from buyers suggests that there is still a great deal of trust in the end product and that there’s a real appetite for new properties.
Developers will therefore continue to play a critical role in the market, and I fully expect that buyers will remain happy to buy into the benefits that they bring to the market.
We deal with new-build house buyers every day and the vast majority are over the moon when they secure their home and move into it.
When new developments are built, things like snagging are part and parcel of housing construction while the building naturally settles into its skin. For this reason, developers will work with home buyers to remedy any faults that appear.
It should be noted that with a secondhand property this does not happen. If there are problems, you cannot go back to the previous owner and ask them to sort it out.
All new-build properties are backed up with a 10-year warranty such as the National House Building Council (NHBC) scheme. So even if problems are found 10 years after the purchase of the property, the warranty will pay for any repairs needed.
In addition, the government is in the process of setting up a New Homes Ombudsman scheme, which developers will be required to join. This will give new-build home buyers somewhere to go if they have any issues with their property, whether that is about the quality of the work or the developer’s conduct.
There are many advantages to new-build property which people are willing to pay for.
For example, new-builds are far more energy efficient with most having an EPC rating of B. This means people can take advantage of a green mortgage and get a better interest rate and their utility bills will be lower.
Houses and flats are expensive, no matter whether you buy a new-build or an existing property. New-builds are in high demand and that keen appetite is reflected in the price.