The sector is under pressure to produce more homes as appeal persists – but it cannot cut customer service corners
We are now over a third of the way through the year and the housing and mortgage markets are reacting to the pull-back of the political and economic uncertainty of this country’s extended withdrawal from the EU.
However, like all national markets, there are strong regional variations. This is particularly the case in the new-build sector.
Favoured with the Help to Buy scheme in its various iterations across the UK, with the exception of Northern Ireland, new-build homes still have enormous appeal to prospective buyers. Many specialist new-build firms have been running to keep up with demand, as buyers discover that the scheme in its present form will not be around forever.
However, these are challenging times for Britain’s private housebuilders, having to react and adapt to pressures of being in the national spotlight of the government, the media, and the home-buying consumer.
Many warnings have come from government and conditions for developer participation in the next phase of HTB, the bestselling, best understood housing scheme since the days of Right to Buy in the 1980s.
From the media and some analysts have come intense focus on housebuilders’ business models and practices; and from house buyers have come the active and persistent use of social media to broadcast their concerns regarding snagging issues and unfinished houses from the day they moved in to their dream home.
The pressure to increase the volume of new-build completions in rapid time since 2013 has of course led to some capacity and quality issues for a few developers. It is, however, important not to lose sight of the fact that the majority of Britain’s housebuilders have fully grasped the striking changes in the house-buying dynamic.
The buyer’s expectations of high-quality customer service must be met, for it is core to their own success. After all, more of Britain’s top 10 housebuilders hold the Home Builders Federation’s prestigious five-star rating than not.
One current innovation neatly demonstrates this change of mood, with the recent launch by Persimmon Homes of a home-buyer’s retention scheme.
Under the new initiative, which begins in June, the company’s standard contract will state that 1.5 per cent of the total home value can be withheld by the buyer’s solicitor until any faults identified at the point of key release are resolved. Based on the group’s current selling prices, the average amount withheld will be about £3,600 per home. Could this be the forerunner of a new standard sales contract from all our major housebuilders?
The government is driving the housing agenda and the housing secretary James Brokenshire has been quick to respond to consumer concerns in several ways. First, the Ministry of Housing is consulting on the final preparations for the appointment of a New Homes Ombudsman, underpinned by legislation, whose role will be to protect the interests of home buyers and hold developers to account.
It will be mandatory for all developers of new-build homes, and they will be required to do so by 2021 if they wish to participate in the new version of the HTB scheme in England.
Second, the housing secretary unveiled a new industry ‘pledge’ at the end of March to stop leaseholders becoming trapped in unfair and costly deals.
More than 40 leading property developers and freeholders, including most of the national housebuilders, have already signed the government-backed pledge. It commits them to doing away with onerous ‘doubling clauses’ that can result in ground rents soaring exponentially over a short period of time. The freeholders who have signed have committed to changing the terms of leases for those who are affected.
Through Homes England, the government must also ensure that users of the HTB equity loan scheme see the substance and benefits of their new home purchase. As an existing mortgagor, this is also applicable when reviewing the options to switch the first lender, staircase an equity payment, or redeem the equity loan altogether.
Concomitant with this must be the efficient and speedy servicing of the various loan changes they request. However, this important service is often found wanting, something that has plagued borrowers and their mortgage advisers now for too long.
As the number of borrowers that have passed their five-year interest-free period increases, more than 42,000 this year and in excess of 74,000 next year, the quality of servicing them becomes ever more significant.
James Chidgey is new homes relationship manager at Mortgage Advice Bureau