New Civic Housebuilding: More evidence that consumers are paying more and getting less from new build

New Civic Housebuilding: More evidence that consumers are paying more and getting less from new build

On Wednesday evening, the HBF and NHBC published their annual customer satisfaction survey for new home buyers across the country. The HBF in their release claim that the “overwhelming majority of buyers are happy with their new build home”. However, in publishing these results on a Wednesday evening, when the news focus was squarely on Brexit the question springs to mind of whether all is really as positive as it seems. In fact, if we look behind the headline and examine the results of the survey what we see is that satisfaction with new homes is actually falling.

Staggeringly, the HBF survey found that 98% of buyers have reported a snag or defect with their new home to their builder:

With the average new build home in England costing £255,000[1] it should be a surprise that overwhelming majority of new home buyers are then experiencing problems.

Also shocking are the numbers of home buyers who have reported multiple problems to their builder, including 25% reporting 16 or more:

For us at Shelter these results are not news. Earlier this year, we asked new home buyers about their experiences, and over half reported major problems as a direct result of the construction of their home. While the NHBC’s survey does not break down reported problems by severity, it’s clear to see that new build homes aren’t up to scratch – not just in a handful of isolated cases, but across the country.

Looking back over the results of previous years’ surveys underlines that things are getting worse: Since 2012, for example, the number of respondents that are satisfied with the condition of their new build home has fallen by 10%. At the same time the numbers of respondents experiencing more than 6 problems with their home has increased by 13%.

Year of publication Reference year of completions Returned Surveys Satisfied with Condition Satisfied with Quality Experienced More problems than expected Experienced More than 6 problems
2017 Completions Oct 15 to Sep 16 52,290 78% 84% 38% 69%
2016 Completions Oct 14 to Sep 15 45,342 78% 86% 36% 66%
2015 Completions Oct 13 to Sep 14 38074 80% 86% 27% 64%
2014 Completions Oct 12 to Sep 13 32,317 85% 90% 30% 58%
2013 Completions Oct 11 to Sep 12  29330 89% 91% 29% 53%
2012 Completions Oct 10 to Sep 11 20313 88% 90% 27% 56%
Change on 2012 -10% -6% +11% +13%

These results further demonstrate that the speculative housebuilding model is failing us. Not only is it not providing enough homes, and particularly enough affordable homes, the homes that are being provided all too often aren’t good enough. Despite this new build homes remain unaffordable for ordinary people and Shelter’s analysis has shown that eight out of ten working, private renting families cannot afford a new build home in their area. What we have is a market that produces an expensive yet flawed product.

The falling levels of satisfaction with new build homes should be a cause for concern, and in most industries a clear fall in customer satisfaction would warrant immediate action. However, as we can see by the continuing decline, immediate action hasn’t been taken. In fact, on the face of these results, rather than addressing the problem housebuilders are allowing it to get worse.

So why is this the case? Why is it that so many of the new homes we build aren’t good enough?

We believe it’s down to the business model we rely on in England to build our homes: speculative housebuilding. Under the speculative system, housebuilders compete at the point of buying land to build on. They calculate what they can afford to pay for land based on what they think they can build on it, and how much that can be sold for. The developer who makes the most aggressive assumptions of how low their costs will be and how much they will be able to sell homes for can offer the most for the land, and generally wins.

This means that things like affordability and quality are reduced because the developer has to make sure they meet their profit margin. In essence the system is rigged against ordinary families, with even those who can afford to buy a new home often experiencing problems.

We need to change this, and with New Civic Housebuilding Shelter have set out our vision for how to do this. We have shown that by bringing land into development at a fair price we can ensure that those core elements of affordability, appropriate infrastructure and quality of homes can be improved.

The failure of the last five years that is evidenced by this week’s results serves to demonstrate that the current system isn’t capable of addressing the problem. Without a shift away from speculative housebuilding we can’t expect satisfaction or quality to improve.

Our New Civic Housebuilding model draws on examples from the past, including Edinburgh New Town, Bath, the Garden Cities and the post-War New Towns. These are places that remain popular and serve to demonstrate that a better model of development is possible – and the results of the HBF survey then underline that a better model is needed.

[1] Source, Shelter calculations based on ONS HPSSA median new build prices, average regional first-time buyer deposits (or 5% for Help to Buy) and loan-to-income ratios from CML and households incomes (excluding income related benefits) from the Family Resources Survey. An overview of the methodology can be found in ‘Forgotten Renters: Who Do Ownership Products Risk Leaving Behind?’ (Shelter, 2016)

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