The Hidden Dangers in Buying a New Home

Why would you consider buying a new home, is it simply because you want that feeling of owning something new? Perhaps you want cutting edge design and modern standards of thermal comfort with low energy bills, or perhaps you simply feel that buying a new home gives you peace of mind that nothing could possibly go wrong? You may even have reasonable expectations that nothing is perfect and perhaps you may find one or two snags but so what, your constructor will willingly correct defects in the first two years and after that you have NHBC insurance to cover further eventualities. Moreover, even your solicitor has advised you not to bother getting a full survey because its a new property and you’re covered by the construction guarantee and NHBC warranty. Well a qualified solicitor must know what he’s talking about and given the expense in moving home you’re predisposed to taking this advice because you’re trying to manage a budget. Of course your solicitor is absolutely right in principle but in practice he is very very wrong because there are many hidden dangers in buying a new home

I write this blog very conscious of the fact that I’m in a ‘well you would say that wouldn’t you’ position since I’m advising a course of action that I may potentially profit from, but to be frank this information is only going to come from a surveyor dealing with these issues at the sharp end. I’ve carried out many detailed snagging surveys on new build properties and I can not remember ever signing off on a property that only had reasonably minor defects. So what is going wrong?

The Decline in Quality Standards

Firstly there has been a gradual and systematic decline in quality control linked to a number of fundamental issues:

Developers self manage their quality control pprocess. The Site managers primary focus is on managing productivity and site efficiencies and you will rarely see them employ a Clerk of Works anymore to oversee quality control. A mistaken belief that either building control or the NHBC are responsible for managing the quality control process. They aren’t. Big developers deliver the larger portion of their works through a wide range of sub-contractors and often very little of the work is completed by in-house staff. Developers then expect sub-contractors to self manage their own quality control process but they’re under the same commercial pressures as the developer and time is money. The lack of time served tradesmen and their subsequent replacement with multi-skilled, jack of all trade, operatives.

5. British workers are increasingly refusing to carry out works on a price and this has resulted in an influx of Eastern European workers on the large development sites and even fundamental communication problems on site. I often find myself on development sites where I genuinely struggle to encounter staff that speak English.

6. The advent of MMC (Modern Methods of Construction) and ‘Lean’ construction principles has resulted in the development of some truly terrible composite products. For example, there are some really shocking composite I-beams on the market that are both cheap and nasty. This has resulted in a marked increase in the number of floors that are flexing under load, something that was rarely a problem when standard timber floor joists were used. MMC is actually the modern version of non-traditional construction and will have a significantly reduced life span when compared to traditional construction erected during the Georgian or Victorian era. It is being optimistic to expect a 100 year life span from MMC construction and I believe that most will have a significantly shorter lifespan due to poor quality materials and low architectural merit.

7. The move away from traditional skilled building and plumbing techniques. Most central heating is plumbed in on cheap plastic push fit pipework and soldered copper pipes are in decline, you’d be amazed at the number of flooded properties we see due to poor plumbing. Roof leadwork is also being severely de-skilled on new build sites with leadwork sealed in place with mastic rather than being properly installed. Push fit pipework relies on a rubber o-ring to make a seal but how long do you think this o-ring lasts when compared to soldered copper pipework. I’ve always held a view that plastic push fit pipework is OK for Portacabins or other temporary installations but it is now in common use.

8. The lack of a site benchmark test wall. There was a time when a standard test wall was constructed on every site and used to benchmark the site build standard. You rarely see this anymore, though we’d advise that you should use the site show home as your benchmark build standard. They are generally significantly better than anything else constructed on site.

9. New home buyers rarely have a detailed snagging survey carried because why would you need to check build quality on a new home? Possibly even your solicitor informed you that a full survey was not required. This is yet another missed opportunity to challenge the developer on quality control and another factor for increased levels of complacency on site. Incredibly we have even been refused access to site to carry out a quality inspection until the buyer had signed the contract.

10. Many defects are ‘patent’ or immediately obvious, but many are ‘latent’, which means they are hidden. If not picked up during key stages of construction inspection then often they’ll remain hidden until failure occurs. Key construction stages are simply not being checked and signed off as they once were. It has been said that this ‘removal of red tape’ facilitates the construction process but in reality it has meant further erosion of the quality control process, which has facilitated poor quality development.

So what can be done?

Firstly accept that there is nothing that you can do as a potential purchaser of a new home to deal directly with site related issues. There is a National housing shortage and developers generally sell new homes as quickly as they are being built. New housing is what economists call a highly elastic product with demand often exceeding supply. Despite this, it was reported in December 2015 that Britain’s nine biggest housebuilders have land banked 615,152 housing plots that have not yet been developed – four times the total number of homes built in the past year. The top four firms – Berkeley, Barratt, Persimmon and Taylor Wimpey – also hold £947million of cash, according to an investigation by The Guardian. Developers generally like to see a 25% gross profit on development, which compares very favourably to the wider construction industry. Land banking brings to mind a very interesting fact about the diamond trade… Did you know that diamonds are not actually that rare. In fact the market is carefully controlled by DeBeers who hold a massive stock of diamonds and carefully control their limited release into the market place. If Debeers chose to flood the market with their vast stockpile then diamond prices would collapse. It is to my mind a thought provoking comparison.

We speak from experience when we say that we have formed a firm opinion that buying a new home is a far riskier proposition than buying an old traditionally constructed property. Of course many buyers of older properties would not consider signing off on what could potentially be their biggest ever purchase without investing in the surety that comes with a detailed home buyers survey. Very few new home buyers make that same investment because they have been lulled into a very false sense of security. Despite this, very few want to go through a process of suing their developer for breach of contract when things go badly wrong and why should they? They expect developers to remedy defects in the first two years and the NHBC Guarantee to cover the remaining 8 years. In fact very little is covered by these guarantees and claimants often realise that they are dealing with building guarantee companies with a general predisposition towards claim refusal. I recently enquired about buying a new home from a large National developer and I rang their sales office to discuss my requirements. Hello I said, I’m interested in buying a new home but I have no interest in the NHBC guarantee and in fact I would insist that my contractual arrangement remains with you, the developer. I explained why I had no interest in the NHBC warranty but the sales person was stumped by my enquiry and promised to call me back once they’d looked into the matter. As expected, I never heard from them again. Far too risky for them to assume full responsibility for their own products.

In terms of dealing with what developers call ‘legacy’ issues, some are far better than others and again we speak from pragmatic experience. Some developers do have legacy people who will genuinely try to deal with customer complaints and correct your defects. Then there are some who simply ignore customer complaints and hope the customer goes away and sadly many customers do just that out of sheer frustration.

Be Objective Enough to Walk Away

As new home buyers we have to learn to be far more careful and far more discerning because development standards have been in decline for quite some time. I recently had a potential client who emailed me a number of pictures of his potential new home, which was under construction. He had numerous concerns about the build quality and asked me for my thoughts on correcting the issues. I agreed that it was shocking and my advice was “since you’ve not signed the contract then walk away now.” I never heard from the chap again because I suspect he did not get the answer he wanted; he was committed to buying it no matter what! Sadly the heart often rules the head when buying a new home. If new home buyers consistently appoint a Chartered professional to carry out a detail snagging survey ahead of signing the contract then build quality would increase dramatically but as potential purchasers we also have to be prepared to put head before heart. Once you have signed the contract, all is not necessarily lost because you have up to 12 years to pursue a claim against the developer for breach of contract. Developers may like to think that risk transfers to insurers like NHBC after two years but this is not necessarily the case. If you have notified your developer of a defect within the first two years then you have between 6 or 12 years to pursue a claim from the date of cause of action. The NHBC would simply to refuse to pay out on any claim which had been notified to the developer within the first two years anyway and would likely refer it back to the developer for resolution. Insurers will not insure against pre-existing defects and why should they.

Whatever assumed level of protection you think you have in buying a new home please be forewarned that everything is geared towards providing very little protection. I recently read that you have more consumer rights when buying a tin of baked beans and I have far too many clients for whom we have discovered major defects on their new homes to believe otherwise. If ever there was a case of Caveat Emptor then purchasing a new home is it!