Unfinished Housing Developments: Consumer Protection

Jim Shannon Excerpts

Tuesday 18th October 2022 Commons Chamber

[Helen Morgan (North Shropshire) (LD)]

I thank the Minister for his attendance and response this evening. I secured this debate following a number of instances in my constituency in which the buyers of new homes have been left to pick up the pieces when critical infrastructure is not completed by the developer.

Let me tell the House first about The Brambles in Whitchurch. That is a development of 14 houses, built by developer Sherwood Homes Ltd in 2016 on land that had already been granted planning permission for development by Shropshire Council. It was a condition of the planning permission that the road, footpath and drainage should all be complete before the occupation of any houses occurred. However, despite those things never happening, building completion certificates were issued for all the properties and they were subsequently sold and inhabited. Unfortunately for the residents, the drainage system failed, leading on some days to raw sewage backing up in their gardens. Sherwood Homes Ltd had not taken out the section 104 agreement required in the planning permission, and not only was the arrangement dysfunctional, but the connection to the Welsh Water sewerage network was illegal, and neither were the road, lighting and footpath completed to an acceptable standard.

In October 2019, a creditor of Sherwood Homes Ltd, which appears to have shared some of the same directors, petitioned for it to be wound up and an order for insolvency was made by the court in December 2019. As a result, Shropshire Council could not take planning enforcement action against Sherwood Homes Ltd, and the residents of The Brambles, who are the successors in title to the private company established to manage the development, have been the subject of the enforcement process. They have been required to accept five-figure charges on their properties in order to rectify the issue of connecting the drainage to Welsh Water’s network. Indeed, the saga has also cost the rest of Shropshire’s taxpayers a considerable amount of time, as council officers have expended time and effort to attempt to rectify the situation.

Shropshire Council believes that the developer’s failure to complete the necessary works before the first house was occupied should have been established by conveyancing solicitors, and the lessons to be learned from this episode are, “buyer beware.” It may be right, but few residents have been able to establish that principle with their solicitors and would not have the resources to begin legal proceedings against them. I believe that some of the home buyers took up the offer of conveyancing services facilitated by the very developer who left them high and dry, raising serious concerns over a potential conflict of interest.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Lady for securing the debate. Back home in Northern Ireland—I say this to inform the Minister as well—we have a very clear system whereby each developer must put a bond on the property. Therefore, should there be any difficulty in relation to the footpaths and roads not being finished, or if the streetlights are not done and the sewerage fails, that bond can be used for those repairs. Does the hon. Lady feel that the methodology used in Northern Ireland may settle the problems that she refers to, and that the Government and the Minister should look at that option?

[Helen Morgan]

I thank the hon. Gentleman for that sensible intervention; I will make a very similar suggestion in my speech.

The leader of the council declined my request to undertake a case review of the sequence of events that led to the situation at The Brambles to understand whether the council could have prevented the situation at any point as it evolved. As the law stands, it would appear that she is right. The Building Safety Act 2022 does not cover issues relating beyond the house itself, and the Local Government and Social Care Ombudsman declined to consider the case, arguing that:

“Caselaw has established that where a council issues a completion certificate and the work is later found to be substandard, liability for any defects rests with those who commissioned the work and those who carried it out. We cannot therefore hold the Council responsible for substandard work by the developer and we could not achieve any worthwhile outcome for”—

my constituent by investigating the complaint.

This is a very serious case—the most serious case I have seen in North Shropshire—but there are numerous instances in which roads have not been completed to a standard suitable for adoption, streetlights are not installed, shared areas are not landscaped as per planning permission and, in some cases, even the plot sizes vary from the original plan.

I can provide further examples. A development at Isherwoods Way in Wem has been without streetlights and a surfaced road for 10 years; although the situation is about to be resolved, it is not quite there yet. On the west side of my constituency, a site that I cannot name because legal proceedings are under way features an unadopted sewerage system that has not been completed to the required standard. A development in Ellesmere was left without an adopted road and open space when the developing company collapsed. The situation is only being resolved now that the development has been purchased by a major national house builder. The developer of another site in Wem has applied for insolvency despite the road being unadopted, the open spaces not having been landscaped and concerns having been expressed by residents about the water drainage system.

The cost to residents of these sites is not only financial. Untold distress and emotional strain have been caused and an enormous amount of precious time has been spent on resolving the situation. At a recent constituency surgery, one resident told me, “I’m a truck driver. I don’t have time to become an expert on planning control.” His neighbour, a construction worker, described the strain of worrying about everything that could go wrong with the drainage system, and about the cost involved in digging up the road to rectify the faults.

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[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Lee Rowley)]

I congratulate the hon. Member for North Shropshire (Helen Morgan) on securing the debate, on making her case so cogently and, in particular, on talking about the constituents on whose individual circumstances, as she outlined, this issue has had such an impact.

I thank the hon. Member for Strangford (Jim Shannon) for his contribution, as ever, to an Adjournment debate, and for highlighting the elements of the Northern Ireland approach, which is something for us all to consider. I also thank the right hon. Member for Warley (John Spellar) for the information that he provided. He has written to the Department as well; I am looking at that correspondence and will get back to him as soon as I am able to do so.

As has been clear tonight, the hon. Lady speaks for many Members on both sides of the House in arguing for better protection for people in unfinished housing developments. I cannot comment on individual cases because I do not have all the details in front of me, and obviously there are two sides to every story and different circumstances in each case. However, I would say to people who have been adversely affected by inappropriate practices, whether in North Shropshire or elsewhere, that that is not acceptable; I am sorry they have had that experience, and I hope they can seek redress and correction in any way that is available to them.

I think everyone in the House would agree that we need more homes, but we need them in the right places and we need them when they are constructed. That is often a controversial and difficult process, but when they are constructed, we need them to be of a standard that enables people to live in them. They have to work, and they have to work within the local community that those people are seeking to join. The debate is timely in enabling us to highlight the latter point, because in a minority of instances that might not be the case.

For too many people, at least initially, the dream of home ownership does not live up to their hopes, because they are forced into resolving faults in their new build homes that are not of their making. The delays in getting those issues resolved often leave homeowners out of pocket, in financial stress or, as the hon. Lady suggested, having to engage in lengthy battles with developers to put things right—if the developer concerned is still in place. As a constituency MP, I have had some experience of that in North East Derbyshire, albeit with a developer who did in the end put things right—but it took a while for that to be done, which caused many residents in a number of villages, but one in particular, a significant amount of stress. So on a personal level, from a constituency perspective, I understand the point that the hon. Lady has made.

The Government are unequivocal in stating that all new housing developments should be finished on time and to a standard that buyers expect. If things go wrong, as they sometimes do—we all know that processes are not perfect; the developer sometimes has problems and challenges and we should be reasonable in expecting that—the buyer should be treated fairly and promptly. I would like to say a little bit about the action we are taking to make sure that this is the norm in all new housing developments, wherever they are in the country. This breaks roughly into three different elements. The first is the length of time that it can often take for houses to be developed in the first place. The second involves the infrastructure commitments that the hon. Lady has highlighted, and the third relates to the quality of work in the developments when they are concluded and people begin to live in them. There are often concerns about the quality at that point.

[Jim Shannon]

I thank the Minister for his helpful response, and again I want to use it to be constructive. Back home there are many developers who sign up to the Master Builders Association agreement. As members of that organisation, they are accountable for the finish of the houses. If at the end the houses are not finished to the standard they should be, the owner has the right to take a complaint to the Master Builders Association, which will ensure that the work is completed to standard. I ask in a constructive way: is that something that could be done here?

[Lee Rowley]

The hon. Gentleman makes an important point, and I would be interested in hearing more. He will appreciate that I am seven weeks into post and I am still learning, but I would be genuinely interested in understanding the Northern Irish approach, given the information that he has highlighted this evening. Where there are things that are done well, we should be willing as a Government to look at those to see where we can take best practice and apply it on a broader level. I want to understand in more detail what is happening in Northern Ireland, and I will be happy to do that separately with him and his colleagues, if that would be helpful. I would be keen to understand the particular difference that he thinks comes from the Northern Irish approach, and I am always happy to find out more about particular instances and whether they would work on a broader scale, should that be helpful.