Buyers of new-build homes should be able to hold back 5% of the purchase price until any problems or defects have been fixed.
That’s the verdict of the Social Market Foundation (SMF) think tank in a report which revealed 99% of new homeowners in new build homes reported snags or other problems since they moved in.
It has also called for new rules to fix a ‘broken and uncompetitive’ market for new-build housing which, because of the decline of small housebuilders and consolidation of the bigger firms, has become more concentrated.
The SMF feared this was having a negative impact on buyers because the lack of competition and weak consumer power meant housebuilders could prioritise maximising profit rather than meeting customers’ needs.
Unhappy customers
Indeed, its findings revealed customer satisfaction was down in recent years and the system for redress was complex and difficult to navigate for customers, who were ill informed about their warranty covers.
Many of the buyers in question are likely to be first-time buyers who have bought their properties through the Government’s Help to Buy Equity Loan scheme, which provides financial support for those purchasing new-builds. Figures show the majority of those using the scheme were first-time buyers.
The SMF wants the Government to do more to boost consumer power and back new entrants into the market in order to reintroduce competition for the customers’ benefit.
MP’s backing
James Brokenshire, the secretary of state for housing, is considering the SMF’s policy proposal in which customers would hold back 5% of the purchase price until builders had completed repairs, a scheme is currently available in the Netherlands.
He said: “I’ve made it clear repeatedly that I want the housing market to work in the interests of consumers. This report highlights a number of challenges around quality of build and the approach of certain parts of the market that are, quite frankly unacceptable.
“Where we need to, we will act to protect consumers and ensure the market rewards quality, consistency and customer service. I will consider the recommendations made with interest.”
Improvements
Among the recommendations put forward by SMF was the introduction of detailed information packages for prospective homebuyers to help them make an informed choice as well as performance measures on housebuilders.
The SMF also wants clear information on warranties, more support for small and medium builders and greater support for custom build homes.
As well as the 5% scheme, builders should provide compensation if repairs are delayed.
Salima Ali, the report’s author, said: “Buying a new home is the biggest purchase most people will ever make, but the market doesn’t work well for many consumers. They should have more information about housebuilders and more power to push builders to fix problems with new homes.
“Housebuilders should also face more competition: they’re not under enough pressure to provide the better, cheaper houses that consumers want. It’s too easy for them to sell homes that leave buyers unhappy while making large profits. A better market would push them to work harder and give their customers a better deal.”
