In his latest monthly Q&A, Property Litigation specialist Will Bartley delves into the rising concerns surrounding new-build housing and the surge in residential building disputes, particularly those involving substandard workmanship and rogue builders.

Unpacking the New-Build Housing Crisis

A recent investigative piece by The Guardian sheds light on the declining quality of new-build housing: Cracked tiles, wonky gutters, leaning walls – why are Britain’s new houses so rubbish? | Homes | The Guardian.

It is a fascinating read and truly addresses some of the major concerns coming from the residential property construction industry. Major developers are prioritising profits and quick turnaround builds over quality and purchaser satisfaction. The article explains the seismic profits large-scale housebuilders are raking in, and the difficulties that purchasers of new-build properties are having in getting the issues remedied. Below are some of the key takeaways:

“As quality sinks ever lower, the big housebuilders’ profits continue to soar. A 2021 study by Tom Archer and Ian Cole at Sheffield Hallam University found that, before the 2008 financial crisis, an average home built by one of the nine biggest UK housebuilders netted a pre-tax profit of around £30,000. By 2017, that had doubled to more than £62,000, with shareholder dividends rising from £400m to more than £1.8bn. 

“This was more than just ‘recovery’ after the financial crisis,” Archer says. “It was a catalyst for absolutely gigantic profit-making in the following years, with dividend payments rising to unprecedented levels.” Profit before volume became the mantra of the housebuilders. “They didn’t even have to increase their output,” he adds, “as they were making so much more money on each home.” 

A recent survey of the top 50 builders by Building magazine found turnover increased by an average of more than 25% in 2021, taking revenue well above pre-pandemic levels, while operating profits increased by a third”. 

The issue many people have with such substantial profits being made is that the overall quality of the work being undertaken, and level of problems homeowners are left with is at odds with the amount purchasers are being charged for the purchase price of their properties:

“How did it come to this? Why should it be that buying a brand-new home in Britain, and usually paying a 10% premium for the pleasure, is more likely to result in hidden horrors than would be the case with a house that has been around for decades, or even a century or two? Imagine buying a new car, then having to pay for a professional inspector to check that it had been properly manufactured, before you dared take it out on the road. The car industry would collapse, damned as unfit for purpose. Yet the housebuilders continue to produce substandard products year in year out, penalty-free”.

Mark Farmer, a consultant with 30 years’ experience in the construction sector, diagnosed that the industry faced “inexorable decline”, caused by dysfunctional training, a lack of innovation and collaboration, and non-existent research and development. Farmer believes little has changed since then. He thinks the problems begin with the culture on site, and the atomised, fractured way buildings are made. “Visit an average housebuilding site in this country,” he says, “and you’ll find no one is taking responsibility for the end outcome. Almost half the workforce is made up of hired guns who turn up, do stuff for a day rate, then disappear. That’s not conducive to having pride in your work, or a joined-up approach to producing a quality result. There’s a culture of: ‘If the other guy damages my work, it’s not my problem."

There has been a recent government push to encourage apprenticeships but, once again, there is a lack of oversight to how they operate in practice. John Cooper of NHQC cites the case of a young man he knows who is working as an apprentice carpenter. “It’s basically a training in sloppy shortcuts,” he says. “He tells me what he’s doing, and it’s just techniques to get things done as quickly as possible and move on”.

There are schemes such as the NHBC and NHQB that attempt to assist with complaints – however homeowners have found that disputes can take years to resolve, if at all.

Residential Building Disputes on the Rise

The ‘quality-of-work’ crisis is not limited to new-build properties. Enquiries regarding shoddy workmanship and small-scale residential construction disputes are on the up, largely in respect of the quality of work undertaken on extensions or home-improvements by tradesmen and constructions companies.

Given the economic climate, homeowners are unlikely to have spare cash lying around to pay for remedial costs for shoddy and unfit building works. Litigation, arbitration and adjudication are therefore on the rise as a way of resolving matters.

The difficulty homeowners face however in bringing these disputes is in respect of the delay and costs in getting matters resolved. If you have undertaken extension works or loft conversion works for example, a dispute with your contractor half-way through is less than ideal, given the complications that can occur by such large-scale works being half-finished, especially in the winter when exposed to the elements.

I am considering having building work done at my property – what should I look out for before proceeding?

In respect of residential building disputes, I would advise that documentation and early intervention are crucial to obtaining a favourable outcome. Having a proper contract from the outset and a full correspondence history, along with photos and supporting evidence, is vital should a dispute arise.

I would therefore advise that homeowners should not enter into building works until they have the following (at a minimum!):

1. A written contract with their contractor setting out the full works to be undertaken, including a dispute resolution clause to be followed (such as arbitration, Court proceedings, mediation etc);
2. The cost of those works and payment timescales (including written estimates and invoices);
3. The materials to be used and who will actually be undertaking the works (a number of disputes centre around sub-contractors who the homeowners have never met doing works when this was not explained or expected at the time of instruction);
4. Details of the contractors’ insurance cover, previous reviews and company information such as their Companies House profile and website.

I am a homeowner and I am unhappy with my contractor – the works they have undertaken are not to the expected standard – what can I do?

Discuss this with the contractor as soon as possible. Do not allow works to progress if you are unhappy with the quality of work provided in the hope that matters will resolve as the build progresses. Early intervention is key, and addressing minor issues at the outset of residential construction works is far more favourable than a fully contested dispute more than half-way through.

Should the contractor not be cooperative in respect of resolving the remedial works, or there is a disagreement in respect of the quality of their work, you may wish to seek legal advice at that stage. This may also include the instruction of a suitably qualified chartered surveyor who can attend your property to independently assess the quality of the works. You can then instruct your current contractor to remedy the issues, or alternatively if appropriate (seek legal advice as this stage) instruct alternative contractors to remedy the works should you lose faith in your current contractor or should they be unwilling to return to site.

I have tried resolving matters with my contractor, but they are not answering the phone and won’t fix the issues I have discovered. I have paid them and now they don’t want to know – what can I do?

If attempts to resolve matters have failed or stalled, seek legal advice without delay. A letter before action (LBA) may be needed to formalise your claim against them, followed potentially by Court proceedings to obtain a judgment to compensate you for the faulty works or remedial costs.

Are construction disputes expensive?

Unfortunately yes, they typically tend to be. The reason for this is that disputes of this nature are often highly technical in respect of the materials used, construction method/practices, witness evidence and chronology needed to explain the series of events. Typically expert fees will be needed to evidence a claim, as well as Barrister representation at Hearings. However, in the event of a successful claim, Claimants typically recover a large proportion of their costs from the offending party. Merits of a claim, prospects of success and likely costs will all be discussed with you before a Court claim is commenced. If you are a homeowner in a building dispute, we recommend that you seek legal advice at the earliest opportunity.

Specialist Property Advice

Porter Dodson have a dedicated Property Disputes team who specialise in property litigation. We will be able to provide you with clear and practical advice on the appropriate way of proceeding.