Why my Toaster will Last Longer than Your House
In the eyes of their manufacturers, there is more confidence in the lifespan of my toaster than in the average new build house in the UK. How can we have confidence in these homes, if their manufacturers do not?
Despite claims on the websites of volume house builders that they build ‘homes with a long and happy future in mind,’ according to the housing charity Shelter, just over half (51%) of new home owners have reported serious defects in the structure, utilities and fixtures of their new properties. This figure does not include unreported defects. In fact Bovis Homes, one of Britain’s biggest housebuilders, set aside £7m to repair poorly built new homes sold to customers in 2017 alone.
We are seeing a worrying trend in the decline of quality in new build properties, leaving thousands of new home owners out of pocket and having to put up with the shortcomings of speculative volume housebuilders.
According to the Local Government Association, in the UK we spend almost as much per year on the repair and maintenance of existing homes as we do on the construction of new ones. Just let that sink in for a minute…
One of the main reasons lots of homeowners buy new build homes is because of a desire to avoid the worry of faulty property which comes about with the purchase of older housing stock. However, the way the system is currently set up is that we are relying on these new owners to have an in-depth knowledge of construction, in order to identify and report serious technical defects. Defects which, by their design, often occur in building elements which are hidden from view, such as insulation, services and structure.
The way the system works in the UK is that any defects discovered in the first two years after construction which do not comply with technical standards are the responsibility of the builder to fix. These properties are not inspected by qualified surveyors unless they are covered by insurance from the NHBC. Around 80% of homes are covered for a further eight years by insurance from the NHBC, who paid out £84.8m in claims between 2016–17.
There are, however, increasing concerns about the independence of the NHBC, who create their own conflict of interest through their profit sharing with volume housebuilders. It has long been a contentious issue that housebuilders pay a membership fee to the NHBC, meaning the NHBC are essentially funded by them. But the recent discovery that their profits are split amongst these builders is a worrying sign of their ineffectiveness as a champion of the homeowner.
Fundamentally, the factor leading to the construction of poor quality homes is one of liability. The two year period in which the housebuilder is liable for the repair of any defects is worryingly short, especially in the context of a national housing deficit which puts pressure on homes to perform for long periods of time. From a purely financial perspective (as is the case), why would a housebuilder spend a penny extra on materials or products which will last more than two years, if they are no longer liable after this point? The question of quality, and occasionally of safety, is essentially reduced to one of risk allocation.
Just by shifting your mindset into this short term way of looking at houses, you can begin to see how easy it is to favour extremely poor quality (and therefore cheap) materials over the longer lasting alternative. This is the mindset with which 80% of the new build houses in the UK are built, and goes some way to explaining the drastic reduction in the quality of these homes.
The Local Government Association predicts that homes will need to have a lifetime of approximately 2,000 years if the slow rate of house building continues, to keep up with a national housing deficit.
This is where we see a real tension between priorities. The shortsighted business model which produces these houses is creating ticking time bombs of insufficient build quality; time bombs which we will need to deal with in the not too distant future.
The priority of short term profit outweighs the long term requirements of building high-standard housing, fit for purpose at the time of construction (maybe), but far from being so, sometimes after only ten years.
The time frames of liability which these houses are built to likens them more to kitchen appliances than lifetime homes. In fact, my toaster comes with a warranty two and a half times longer than the average new build house, and I don’t have to pay extra to a national toaster quality regulator for it. Granted, its a very nice toaster, but in the eyes of their manufacturers, it will outlive your Barrett home.
Speculative volume housebuilders work within the framework which they are set; a framework defined by the annual profit and loss account and short-term investment goals. The housing sector is so saturated with demand, and consequently with incentives to make gains and ‘get out quick’, that the consumer is losing its agency to demand the highest quality.
We run the risk of becoming complacent in our acceptance of these standards of construction, which, believe me and many others who have seen them first hand, are well below what should be expected. What leaves an even more sour taste for the new owners of these homes is the ever-increasing price demanded to be paid for them, all whilst quality decreases.
So what can we do?
What if volume housebuilders shouldered a ten year warranty on their homes? After all, if claims are made on the builder’s websites that these homes will last a lifetime, then this shouldn’t be a problem, surely? What this would immediately do is change the mindset with which these houses are built, and financially incentivise the installation of higher quality materials and fixtures. Fundamentally, if you claim your homes are built to a high quality, then put your money where you mouth is!
As a side note, a longer-term outlook on build quality would not only be better for the new home owners, but for the environment as well.
It is naive to assume, and sad to realise, that volume housebuilders cannot be persuaded to take on longer terms of liability through arguments of morals and ethics, because to do so would be asking them to sacrifice a large chunk of their profit margins.
Government legislation calling for longer terms of liability for housebuilders is therefore one of the only tools capably of effectively driving change in this way. Housebuilders will be adverse to any lengthening of their terms of liability for two financial reasons. The first is the obvious reduction in profitability as more money is paid out to deal with repairs. The second is that they will no longer require the NHBC, which despite the comparably small membership fee, generates millions of pounds in revenue for them.
What then becomes of the NHBC? Well, they could remain as an insurer, but freed of the financial burden of this initial ten year period they could cut their financial ties which create their conflict of interest. Financial separation and government backing is the only way the NHBC can truly claim to be an impartial regulator of build quality.
The potential solution of government legislation brings with it a host of other problems associated with the government’s inability to take action against volume house builders, a topic which I spoke briefly about in Building Tall is Building Less, and warrants much more extensive coverage. Akin to the current effect of the Tenant Fees Act 2019 which capped landlord and letting agent fees for assured short-hold tenancies in England and Wales, similar regulation for the construction industry could also simply drive prices up as the cost of longer liability periods is passed straight on to the buyers.
Putting legislation aside, quality standards are fundamentally dictated by market demand, so without market forces calling for higher standards, things will carry on as they currently are, and damp will be so ubiquitous that it becomes fashionable.
The first and most important step therefore is raising an awareness with the buyers of these homes, that the current standards are not acceptable. Without such knowledge, we run the risk of becoming complacent and allowing those who build for profit to determine what constitutes good quality. The under-supply of housing in the UK makes it difficult for buyers to have powerful agency to refuse to purchase these homes, but at least a population-wide awareness of what is an acceptable standard of build quality will help put consumer pressure on those who construct them.
Government legislation and consumer awareness, and therefore pressure, are the two most important factors in the fight for higher quality homes that will actually last a lifetime; though ideally much longer.
It has become normal for us to assume that our kitchen appliances come with at least ten years of life in them, however it is not uncommon for many of them come with lifetime warranties. Given what is at stake when we think of our homes as compared to our washing machines and blenders; surely in the twentieth century it should be expected that the manufacturers of our homes would be confident enough to guarantee them for at least the same length of time? Shouldn’t it?
Previously - Building Tall is Building Less
