Jun 26 2018

New Homes Ombudsman could help restore consumer confidence in housebuilders

A cross-party Parliamentary group has set out proposals for a New Homes Ombudsman to help provide better redress for dissatisfied home buyers. Poor experiences with housebuilders are common factor in many people’s perception of the construction industry; promoting better behaviours in the housebuilding sector would therefore contribute to improving the image of construction.

New Homes Ombudsman

Better redress for homebuyersIn its report, published today, the All-Party Parliamentary Group for Excellence in the Built Environment calls on the government to make it mandatory for all housebuilders to belong to an independent ombudsman scheme.

The report, Better redress for homebuyers, says that a New Homes Ombudsman should be independent, free to consumers and provide a quick resolution to disputes.  The report also recommends that government, warranty providers, housebuilders and consumer group’s work together to draw up a code of practice which would be used by the New Homes Ombudsman to adjudicate on disputes.

The report is the result of the Group’s latest Inquiry which investigated how an ombudsman scheme could operate following its earlier report in July 2016 on the quality and workmanship of new housing in England. That report More homes, fewer complaints, called for a New Homes Ombudsman after the Inquiry revealed a high level of frustration and disappointment from buyers of new homes, both in terms of the number of defects that new homes often had on handover, and also the problems they encountered in getting them fixed.

A Housing Ombudsman already exists, covering the rental sector, while The Property Ombudsman covers consumer disputes with estate/property agents. To reduce consumer confusion and help ensure consumer complaints are dealt with efficiently, the report is recommending that there is a single portal – or entry point – for ombudsman services spanning the entire residential sector, which would cover the conduct of estate agents through to social housing. Within this overarching service, there would be either a number of specialist ombudsmen or specialist divisions – one of which would cover new homes.

“The image of construction”

As I have previously written several times (in April 2016, for example, and in January 2018 in relation to Carillion’s collapse), the “image of construction” is a symptom of a more deep-rooted reputation issue. Bluntly, the industry’s reputation is not just the result of what it says and what others say about it, but – importantly – the result of what it does and how it behaves.

The housebuilding sector penetrates just about every community, and yet parts of it personify many of the dysfunctional characteristics of the wider construction industry:

  • overly-complex, fragmented and price-fixated in its procurement approaches
  • adversarial in its supply chain relations
  • poor in its payment practices
  • wasteful in its project execution (often late and over-budget)
  • poor in the quality of its finished products (and then there’s the Grenfell disaster, of course….)
  • dangerous (construction killed 30 people in 2016-17, and reported 64,000 non-fatal injuries – only the agriculture, forestry and fisheries performs worse)
  • conservative in its adoption of new technologies (in Europe, construction ranks bottom in terms of digitisation, according to the McKinsey Global Institute, and my perception is that housebuilders lag behind other construction businesses in their use of tools to streamline information sharing and improve productivity)
  • short-termist and reactive in its approach to human skills development and R&D, and
  • lacking diversity (and too often, ‘macho’ workplace cultures breed sexism, racism and homophobia)

On housebuilding in particular, the sub-sector has been criticised (sometimes, it says, unfairly) for:

  • not building enough homes
  • not building enough affordable homes
  • not building the homes well enough (the APPG has previously noted that 93% of buyers had problems with their builders – 14 % of buyers in 2015 expressed customer dissatisfaction with housebuilders; in December 2017, one of Britain’s biggest housebuilders, Bovis Homes, faced a potential class-action lawsuit from buyers who accused it of selling houses riddled with defects)
  • land-banking, and
  • financial trickery such as spiralling ground rent schemes

Personal experiences of such issues will obviously colour people’s perceptions of the industry. My friend (and vice-chair of the CIPR’s Construction and Property Group) Daniel Gerrella recently attended a Constructing Excellence Generation for Change (G4C) event which debated the image of construction, and highlighted several areas the industry needed to address to improve its reputation (read his post).

However, the sector has generally been resistant to change unless forced by economic circumstances (and even then, once the good times return, many companies revert to type) or by legislation. Strengthening the regulatory framework post-Grenfell may help deliver better, safer buildings, but strengthening and extending the Ombudsman system so that it provides consumers with tools to highlight under-performing or unethical housebuilders could also help deliver sector-wide improvements.

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