Protection for Homebuyers

Danielle Rowley Excerpts

Thursday 13th December 2018 Westminster Hall

[Kate Green]

The hon. Gentleman has raised an important point about the impact on the reputation of the whole industry. Although some of the builders involved are household names, it is important to recognise that, as I have heard, some smaller local builders are implicated in delivering poor-quality build, whereas others meet a very high standard of both build and customer service. However, too often, it is the large developers—whose reputation people will be familiar with, and in which buyers might reasonably feel they could place some trust—that are letting their customers down so badly.

I will put on the record a few of the other major household names that I have heard mentioned, as although I will be talking about my constituents’ experience with Persimmon Homes, Persimmon is far from being the only offender. I have also heard about problems with Bellway Homes, which my hon. Friend the Member for Edinburgh South (Ian Murray) mentioned; Harron Homes; Charles Church, which is an arm of Persimmon; Linden Homes; David Wilson Homes; and Keepmoat Homes. It is entirely possible that colleagues will add to that list in the course of our discussion.

The problems of defects are compounded by the appalling customer service, and sometimes outright bullying, that homebuyers experience when they attempt to have defects remedied. My constituents in Woodsend began complaining about their new homes many months ago. Lisa tells me that she waited a year and a half before Persimmon even gave her a named customer service contact, although the company did find time in that period to pay its then chief executive a £75 million bonus. I wrote to the company on Lisa and her neighbours’ behalf earlier this year and was staggered to be told that it was not Persimmon’s policy to deal with MPs. However, it was not dealing with or responding to the homebuyers either. I think the House will agree that that is truly shoddy and reflects systemic problems that are incumbent on Government to sort out.

Buying a house is the biggest, most important purchase most of us will ever make. People work hard and save up for their dream home, but too often instead they are suffering huge cost, stress and inconvenience.

[Danielle Rowley (Midlothian) (Lab)]

I thank my hon. Friend for bringing such an important debate to the House. I want to add something about the frustration that her constituents feel, especially with Persimmon Homes. A constituent of mine said:

“Unfortunately, we have had nothing but continuous issues since we moved in. What should have been one of the happiest times for us has been plagued by bad workmanship and appalling communication and customer service.”

They expressed to me that it had had such an impact on their life at what should be a happy time. Does she agree that it is a life-changing moment and that bad house builders are causing such distress to constituents?

[Kate Green]

I absolutely agree. In fact, my hon. Friend’s constituents have been posting on Facebook about some of their experiences with Persimmon, which echo those of my constituents. She makes an important point about the impact these things have on people’s emotional wellbeing. Some of the homebuyers who have contacted me in recent weeks have talked about being forced to take time off work because of mental health problems created by the stress they are experiencing.

As my hon. Friend said, buying a new house is a life-changing moment for many people. In and of itself, it is a big, emotional, stressful experience and is often accompanied by other big life changes, such as leaving the family home for the first time or an enlargement to the family. It is important to acknowledge that that stress is significant, often lasts for a protracted period of time and is exacerbated by the reluctance of developers to engage with people’s problems.

Despite all that, house purchase is one of the areas of consumer law that is least protected in consumer legislation. Property is exempt from the Sale and Supply of Goods Act 1994, meaning that if it fails to live up to expectations, there is no right to reject it and demand a refund. The role of building control inspectors is to ensure that technical standards are met. They are not responsible for monitoring build quality.

What is more, the person carrying out the work—in other words, the developer—has the choice of which building control body to use to carry out the inspection. A confusing landscape of codes of practice, warranty schemes and even, as was reported on the “Victoria Derbyshire” programme, attempts to gag buyers from going public leave people at the mercy of the developers and warranty companies. All in all, as the HomeOwners Alliance says, people get less protection when buying a house than they do when buying a toaster.

What needs to change? The all-party parliamentary group for excellence in the built environment made a series of recommendations—I know the Minister will be familiar with them—in an extremely well researched and comprehensive report in 2016. Earlier this year, the Government undertook a much-needed public consultation on strengthening rights and protections for homebuyers. I welcome those initiatives, and I am glad the Government have indicated their support for the introduction of a new homes ombudsman, but there is no detail as yet or timescale for implementing that.

In the meantime, the multiplicity of codes, warranties and complaints systems makes things very complicated for homebuyers. The Home Builders Federation told me that it is working on a series of industry-wide reforms, including preparing for the introduction of an ombudsman scheme, a standard sales contract, a single code of practice and a minimum set of warranty standards. It hopes to work with mortgage providers so that compliance would be required for a purchaser to obtain a mortgage. That is all well and good, but I just do not think people will be reassured simply by a voluntary, industry-led approach. The Government need to be much more precise and prescriptive.

The HomeOwners Alliance and the all-party group have called for a number of measures that would significantly help to improve the situation for homebuyers. In her response, I hope the Minister will specifically address them. First, they propose a 2.5% snagging retention so that new-build homebuyers retain 2.5% of the cost of the house, which would be held back for six months, until the end of the defects period, where it would be paid over only if the defects have been corrected. That would create a powerful incentive for builders to sort out problems.

The HomeOwners Alliance and the all-party group propose a right for homebuyers to inspect their new home before moving in, without prejudice and with the right to bring their own surveyor or snagger. Builders selling their properties off plan will often refuse to let buyers inspect the property before they take the keys. That practice is unacceptable and should be ended.

Standardised contracts should include the full plan and specification as standard, rather than them being hidden away in an office. The contracts must include standardised terms and have more detailed specification so that builders cannot swap for cheaper materials. Consumer groups should be involved in the development of those contracts, otherwise the fear is that they will continue to be stacked in favour of the developer.

A focus on quality is much needed across the sector through the adoption of International Organisation for Standardisation standards. A review of the inspection and warranty regimes is required to give consumers reassurance that buildings meet standards set by Government and greater clarity about what is covered. Buyers believe their warranties will protect them for up to 10 years, but after the first two years, warranties typically cover only serious structural defects. Again and again in preparing for this debate, I heard reports of warranty companies refusing to take responsibility for sorting problems.

We also need minimum standards for compliance inspections. A single homebuyers code should replace the many different codes, which are so confusing for homeowners. The new ombudsman, funded by the industry—I think that is the Government’s intention—should be the guardian of the code. It should cover after-sales service as well as the quality of the building work.

Developers should not be able to recommend individual solicitors. That point was raised a few moments ago by my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders). Solicitors should be working for the homebuyer, but if they get most of their business via the developer, that naturally creates a conflict of interest.

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[Diana Johnson (Kingston upon Hull North) (Lab)]

It is a pleasure to serve under your chairmanship, Ms Ryan. I congratulate my hon. Friend the Member for Stretford and Urmston (Kate Green) on securing this debate and on the eloquent way in which she set out her case. She and other hon. Members showed that there is a major problem, and I hope the Minister will address it in her remarks.

When my hon. Friend said that she was seeking a debate on this issue, I immediately said, “I would love to be part of that debate,” because for the past eight or nine years I have been having problems with house builders in my constituency. I have been most struck by the fact that, of all the casework I deal with, they are the most difficult group to get a response from.

My hon. Friend said that Persimmon has a policy of not dealing with Members of Parliament, and that is certainly my experience. Despite numerous letters and telephone calls, it was only when I sent it a message saying that I was about to stand up in Parliament and make very derogatory remarks about its failure to respond that I even got the courtesy of a letter. It then took many months to get a meeting—I got one after, I think, five years of trying. That part of the house building community really needs to sort itself out.

We have heard a lot about the leasehold scandal. We have heard about snagging with new properties, and homeowners’ problems in getting that sorted out. I want to talk about two issues that have been a problem for me in my constituency. As a background, I should say that Hull is one of the most successful Help to Buy areas of the country. Lots of my constituents have scrimped and saved to get together the money to buy their home, and they are really proud that they have been able to do that. They are then faced with developers who, once the house has been sold, seemingly wash their hands and think they have no responsibility for sorting out the problems they have left behind. My constituents are left high and dry.

I want to give two examples. The first involves Harron Homes and Persimmon Homes, which developed a housing estate around Whisperwood Way in my constituency. The estate was completed in about 2007, but it took me and the residents four years of campaigning to get the road surfaced by the developers and adopted by the local authority. Of course, that should have been done before the residents moved in. It was unsafe, it damaged people’s cars and it was dangerous to children and the elderly. There were also problems with Yorkshire Water completing the sewerage works. Harron Homes dragged its feet to get the road surfaced.

It is clear that developers, utilities and, in some cases, local authorities, should have stronger responsibilities placed on them to ensure that issues such as that do not drag on for four years. The residents have to pay their council tax, their water rate bills and everything else, but there is seemingly no mechanism to ensure that the problems they face are dealt with.

While all that was happening, I was approached by some more residents from Whisperwood Way. They came to me because they had moved into properties in Leadhills Way that were built right up to the edge of the Sutton Cross drain. Those families told me that their homes had been built by Persimmon in 2006, and they were having two problems. The first was that the homes were built too close to the drain, which caused their gardens to sink and their fences to collapse into it. The second was that the pathways on the estate were not surfaced to a council standard. A local resident said:

“My children are extremely eager to play on their garden toys but I am reluctant to let them do so because of the fear that the fence and land near to it will simply fall/slip down into the drain if they so much as go near it. Our garden (and I’m sure several of our neighbours’ gardens) are extremely fragile due to erosion caused by the ‘drain’ and the tractors who ‘dredge’ the sides by simply pulling the ground away. I feel like myself and my children are living like prisoners. I appreciate that this sounds extremely dramatic, but this is how this issue is making us feel. It’s especially hard during the school holidays when both of my children are off.”

The key issue in that case is that there was no way for the council to take any enforcement action against Persimmon to compel it to sort out the problem that had developed on the land very close to the drain that it had built houses on.

If residents had someone—an ombudsman, for example—to turn to, backed by real powers to compel developers to put right problems, such matters could be sorted out, without adding to the years of stress and misery, which my constituents are still going through. Although finally, after five years, we got Persimmon to a meeting where we agreed that it would carry out a report into what was happening, proper resolution of the problem at the back of those houses is still lacking.

[Danielle Rowley]

My constituency of Midlothian is the fastest growing in all Scotland, and every town and village has a huge new development. That is the same for a lot of areas throughout the UK, which is why it is such a big issue. With huge new developments, although there are also good developers, a lot of problems come to the fore. Such issues need to be tackled now as we are building on a scale we have not seen in a long time. I hope that the Minister will take note of all the fantastic contributions today, because this is an urgent issue that needs to be dealt with.

[Diana Johnson]

We also want to see more house building, so we need to get this sorted out and to get it right.

My constituents have asked me to say that they feel that the way in which a company such as Persimmon has behaved—with disregard for their problem for so many years—is an utter disgrace. Persimmon should be facing massive fines for its behaviour, not giving out the massive bonuses to which many hon. Members have referred.

As I started by saying, in Hull we have one of the most successful Help to Buy schemes. Persimmon has benefited, as did the former chief executive Jeff Fairburn with much of that £75 million in pay, shares and bonus that he pocketed. He has gone, obviously, but his successor at Persimmon, David Jenkinson, is getting about £40 million from the bonus scheme. That is not acceptable, and I hope that the Minister will comment.

In conclusion, my constituents’ issue has gone on for far too many years. It needs to be resolved. I hope that we see progress on an ombudsman with some real powers on the side of residents who have done their best—they are aspirational and want to buy their own homes—but find themselves in a nightmare scenario in which companies can simply ignore them and their problems.



[Mr Virendra Sharma in the Chair]