Introduction

NHBC brought together a Task Group (see Appendix A) under the leadership of John Callcutt to research how home builders address concerns on quality, service and customer satisfaction with new homes.

This report is one of the outputs of the Task Group, and presents the findings of its research into how home builders manage post-completion repairs.

Findings & Recommendations

Key Findings

The key findings of the research are as follows:

• All large builders budget for post-completion repairs, but only 72% of all home builders surveyed set a budget for those repairs, indicating that smaller firms are less likely to budget for repairs.
• The most common budgeting method for post-completion repairs is to allow a perplot amount.
• Only 51% of respondents record the actual cost of repairs, while 94% claimed to record the nature of the repairs.
• 75% of respondents who record the actual costs and nature of repairs analyse their experience and feed this back into the design, materials buying and construction processes.
• Most home builders (almost 80% of the survey respondents) do not compare their practice and performance in managing repairs with their competitors’ approaches.
• Almost all home builders recover repair costs from their subcontractors where appropriate.

Recommendations

The research has led to the following recommendations:

• A best practice model is recommended for managing post-completion repairs.
• Home builders should improve those aspects of the after-sales process that cause most financial, emotional and time stress for homeowners by:
  
  
  • explaining what the home builder is and is not responsible for repairing
  • explaining what the homeowner is responsible for maintaining
  • providing an effective process for reporting and resolving repairs
  • setting realistic timescales to carry out repairs
  • completing repairs properly, on time and as promised
• Training modules should be developed to improve understanding of the importance of the customer journey and effective handling of post-completion repairs.  The modules should be incorporated into NVQ courses for sales and construction staff.  An NVQ for customer service staff should be considered.
• Benchmarking arrangements should be developed to share and disseminate best practice in managing post-completion repairs.

Quality

No single standard describes or defines the finished quality required of a new home:

• Quality is usually divided into service quality (the experience a homeowner has of a home builder’s service before and after a sale) and technical quality (the “hard” issues such as the quality of materials and workmanship).
• There is a lack of information on quality control procedures operated by home builders; there is no body of knowledge on how they finish and present homes to their buyers, or on what constitutes good customer service.

Snagging

• Because there is no single standard for the finished quality of a new home, the level of finishing defects and snags reported by various researchers varies considerably due to the adoption of different standards and approaches.
• Most defects reported are in finishes (circa 75%) and most of these are due to workmanship (circa 65% – but on a small sample).
• Defects are usually divided into three areas
  
  
  • technical/functional
  • omissions
  • aesthetic/finishes
• Customers’ perception of, and satisfaction with, technical quality is influenced mostly by the aesthetic appearance of their new home.

Legislation

• Consumer protection for people buying a new home was thought to be weaker than most other products, although few consumer purchases apart from homes are made with the benefit of legal advice.  However, whilst the rights of a purchaser are largely contractual, i.e. contained in the purchase agreement rather than legislative, there is a significant quantity of legislation that applies to the home-building industry that is based on consumer protection (for example, Building Regulations, standards and planning acts).  The Consumer Code for Home Builders can also be considered as conferring additional rights (www.consumercodeforhomebuilders.com).
• The Trade Descriptions Act does not apply to new homes.  Some measures suggested by the researched documentation range from the right to delay completion through to independent third party checks and retention of sums from the final account.

Satisfaction

• There is limited recent published information on satisfaction with new homes. There is no information published on how home builders achieve or maintain good ratings, nor is there much guidance on good practice.
• In addition to concerns raised in an Office of Fair Trading (OFT) Market Study into the home-building industry, a number of factors identified by NHBC point to the need for further action by home builders to improve homeowners’ satisfaction. These are as follows:
  
  
  • The NHBC Your New Home customer satisfaction surveys show that homeowners’ satisfaction, although high in the first few weeks of ownership, decreases during the first nine months of ownership.
  • Some factors beyond a builder’s control, such as parking provision, housing mix (both elements of the planning process) and relationships with neighbours, can contribute to the reduced satisfaction.  However, a significant cause of the reduction is an after-sales service that fails to deal promptly with defects in the home when it is handed over and those that occur after occupation.
  • The 2007/08 Home Builders Federation (HBF) customer satisfaction survey showed that customer satisfaction (as measured shortly after handover) had not, on average, seen any improvement on the previous year and that responses to the question “Would you recommend your builder to a friend” had fallen slightly. (More recent HBF customer satisfaction survey results have started to demonstrate an improvement in levels of satisfaction, reflecting the work undertaken by many, including the industry, to make changes.)
  • The number of minor items of defective or incomplete work identified in NHBC’s final inspections during 2007/08 that are not being rectified before a home is occupied.
  • The use of NHBC’s dispute resolution service during 2008/09 and the number of minor items noted at final inspections (and which should have been remedied before occupation) appearing in dispute resolution investigations.
  • The results of commercial snagging companies on a small number of homes selected by them were casting an unfavourable light on the house-building industry.

To consider these “external” and “internal” factors, NHBC brought together a group of key stakeholders and NHBC staff under the leadership of John Callcutt and launched an initiative to investigate and address concerns about quality, service and customer satisfaction with new homes. 

This report is one of the outputs of the Task Group and focuses on gaining a better understanding of how the industry calculates the cost of post-completion repairs and customer service, and how this process is managed.