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“House builders won’t deliver quality unless we hold back cash”

That's what almost 9 in 10 (88%) of new build homeowners and three-quarters (76%) of UK adults are saying according to our latest study to measure support for the introduction of a ‘snagging retention’ system - where buyers withhold funds to house builders until they rectify any faults.

  • Overwhelming public support for ‘snagging retention’
  • 8 in 10 (81%) new build buyers happy with mortgage process, more than 7 in 10 content with sales particulars (73%) and handover (74%) but only half (54%) agree there was a clear explanation of how their warranty worked
  • HomeOwners Alliance spearheads campaign for ‘snagging retention’ so homeowners can hold back a minimum 2.5% of payment until they’re satisfied with their home

The figures are from a national survey conducted by the HomeOwners Alliance and BLP Insurance, polled by YouGov, looking at new build homeowner satisfaction throughout the purchase and ownership experience.

Hold back cash

The poll found wide support for mandatory snagging retention. Almost 9 in 10 (88%) new build homeowners and three-quarters (76%) of UK adults support snagging retention.

Respondents to the survey said that a snagging retention would “Incentivise builders to build right first-time, improving quality standards” and “hold builders to account when problems arise, with builders incentivised to fix problems”

The HomeOwners Alliance are spearheading a campaign calling for Government to clamp down on developers of new build homes who leave buyers with an unacceptable litany of ‘snags’ and defects.

The campaign comes after a report by the New Homes Review that found 91% of new homes had snags and defects and a report by the Home Builders Federation that showed the number of people who say they would not buy from the same builder again doubling in the last year.

It also follows a swathe of complaints about developers who have failed to fix faults with new properties from ineffective insulation to ill-fitted doors and dodgy electrics to poor plumbing.

The HomeOwners Alliance survey also found

  • Just over half of new build homeowners (54%) say they had their warranty properly explained and less than 6 in 10 (57%) agree their warranty provider fulfilled their responsibility to put right any structural problems after the first 2 years and resolved disputes quickly with the builder in the first 2 years
  • 2 in 10 (20%) new build homeowners felt under pressure during the sales process or that they were given time to consider their decision, in order to put down a deposit on a new build home
  • Among new build homeowners, 8 in 10 (81%) are satisfied with the mortgage process and more than 7 in 10 are satisfied with the sales particulars (73%) and handover (74%), but just 6 in 10 (60%) are satisfied with the snagging process

Kim Vernau, Chief Executive, BLP Insurance, says:

“Housebuilders should take careful note of the 88% of new build homeowners who believe that there should be a snagging retention process otherwise they will alienate their core customers.

“Given the widespread publicity of new homes being handed over with significant snagging errors, house builders need to urgently address their quality assurance processes. If the average consumer can draw up a list of errors and problems with their new home, why do qualified professionals fail to spot them? The purchase price of a new home is one of the biggest financial outlays that someone will ever make and they need the reassurance that the final finish is of the highest standard.

“Consumers who are buying a new home should check if their developer is a member of the Consumer Code for New Homes as this will provide much needed reassurance that developers and their sales agents adhere to a high standard of professionalism in relation to the construction and sales process.”

Paula Higgins, Chief Executive, Homeowners Alliance, says:

“More and more buyers of new build homes are being left with an unacceptable litany of ‘snags’ and defects. These can range from poorly secured fixtures and fittings to shoddy tiling to major roof leaks and faulty drainage.

“Our HomeOwners Alliance ‘snagging retention’ campaign will incentivise developers to deliver decent, correctly-finished homes before buyers move in as well as to come back swiftly and deal with any emerging snags or defects. Sadly, money talks – if we want better quality homes, we must let homeowners hold back cash.

“In the Government’s drive to build more homes quality has been compromised in the quest for quantity. Government must encourage developers to offer all buyers of new homes the right to retain a very minimum of 2.5% of their purchase price for six months to give time for snags and defects to be righted. If this is not done, then they must be compensated financially.”

Aren’t some builders offering snagging retention already?

The survey results follow the news that Persimmon Homes will be the first to introduce a ‘snagging retention’ of 1.5%. The HomeOwners Alliance has asked for more details. In the meantime, Paula Higgins, Chief Executive of the HomeOwners Alliance, comments:

“Persimmon have taken a step in the right direction but let’s hope it is not a PR exercise. They have only agreed to put right snags identified the day people move in – not emerging snags. Expecting new build homebuyers to inspect and produce a snagging list the day they move into their home is setting them up to fail. We would be happy to work with them and all other new build home developers to create a fairer snagging retention.”

Other key research findings among new build home owners:

  • 73% of new build home buyers were satisfied with the sales particulars and 74% were satisfied with the handover, with 81% satisfied with the mortgage process
  • 20% felt under pressure to put down a deposit by a sales rep or estate agent
  • Only 54% agree their warranty was clearly explained in terms of what was the homeowner’s responsibility and what faults were covered by the builder/ warranty.
  • Only 57% agree that their warranty provider fulfilled its requirements put right any structural problems after the first 2 years and resolved disputes quickly with the builder in the first 2 years
  • 60% of new build homeowners were satisfied with the process of identifying and getting remedial works done, 19% were not and 16% were on the fence
  • Almost 9 in 10 (88%) new build homeowners and more than 7 in 10 (76%) UK adults overall support the idea of a snagging retention on new build homes

____________________

Methodology – 2019 Homeowner Survey

  1. This is the 7th Annual Homeowner Survey, a state of the nation report on the housing issues and trends affecting homeowners and those aspiring to own.
  2. All figures, unless otherwise stated, are from YouGov Plc. The surveys were carried out online. The figures have been weighted and are representative of all UK adults (aged 18+). In 2019, total sample size was 2,195 UK adults of which 268 were New Build Homeowners. Fieldwork14th-15th March, 2019.
  3. The 2019 Homeowner Survey was made possible through sponsorship by BLP Insurance, leading provider of housing warranty insurance and Resi.co.uk UK’s leading architecture practice for everyday homeowners.
  4. Previous release: Housing Concerns: 32 million homes not fit for purpose

Appendix – Research Data

 

Those that support the idea of a new build snagging retention feel there are current quality issues with new build properties and that the retention would incentivise builders to improve quality standards, fix things in a timely fashion when problems arise and give homebuyers and homeowners greater leverage to get problems sorted.

Verbatim comments suggest key perceived benefits of a snagging retention are:

  • It addresses the issue of quality of new build properties
  • Incentivises builders to build right first-time, improving quality standards
  • Holds builders to account when problems arise, builders incentivised to fix problems
  • Ensures faults dealt with in a timely manner
  • Gives home buyers and owners greater protection/ greater leverage to sort problems

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4 Comments

  1. Absolutely Simon! We ask those questions in this guide https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/leasehold-conveyancing/ and it’s mentioned on guidance for buyers on our site.

    Comment by AKerr — May 13, 2019 @ 11:27 am

  2. What about proper information at Point of sale.
    Especially for leasehold and fleecehold properties.
    Length of lease remaining, ground rent and any
    increasing terms, service or estate charges,
    permission fees, cost to buy the freehold or
    extend a lease. Who owns the freehold now,
    is the developer going to sell it on within 2 years
    if a house ? Home buying should not be shrouded
    in mystery, consumers need this to make an
    informed decision.

    Comment by Simon — May 11, 2019 @ 1:27 pm

  3. Dear Paula

    I’m all for the retention scheme but that’s just part of it. An Ombudsman is also desperately needed for new build properties and the Government needs to change its BUILD MORE policy to BUILD BETTER.

    The retention scheme, which I really hope becomes mandatory for all developers, will be too late to help me.

    Linden Homes forced me out of my uninhabitable house on 19/01/16. Almost 3.5 years later and my house remains uninhabitable and empty whilst I’ve had to find more than £47k in mortgage payments on just sick pay since the shocking behaviour of Linden Homes and the NHBC (warranty that’s not worth the paper it is written on since the NHBC is in bed with the builders) caused me to have a nervous breakdown. I’ve been too ill to work since February 2016 because of the constant bullying by Linden Homes, their lawyers Gateley plc, the NHBC and their lawyers Dentons LLP.

    Comment by Yvette Davis — May 2, 2019 @ 7:43 pm

  4. I completely agree with this proposal. House builders have too much control over the buyers.
    Also how about allowing purchasers who reserve in advance to inspect the house during construction ? At the moment they are too secretive and it is easy to cover up mistakes.

    Comment by Ian Mumford — April 14, 2019 @ 6:31 pm

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