New Homes Quality Board case study: Pressure to complete purchase

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We review the latest New Homes Quality Board (NHQB) case study which saw a complaint upheld in part after a customer felt pressured to complete on the purchase and snagging issues took longer than expected to resolve.

It is often the case that property transactions do not complete when expected, especially if there are chains connected to the sale and purchase transactions. Applying pressure to customers to meet a certain deadline or face the property being remarketed can levy criticism from the NHQB as demonstrated in a recent case study. When combined with the fact that the customer then experienced issues with snagging defects not being addressed promptly, the customer ended up receiving an award of compensation. This serves as a lesson for developers on how to manage situations such as this, particularly where there is no longer a site team present on the development.

How can developers balance the need to complete sales with compliance with the New Homes Quality Code (the NHQC)?

In this recent case study, the customer had three complaints.

  1. The customer had reserved a property and, due to a chain, delays were experienced in proceeding to completion. As a reservation agreement has a limited time period of exclusivity, the developer indicated that the property would be remarketed at the end of the month. This led to the first complaint, namely that this deadline had caused pressure, undue stress and ultimately dissatisfaction.
  2. The second complaint related to the fact that the new homes demonstration was scheduled for the day of completion.
  3. The third complaint related to the fact that, following completion, the customer reported a number of snagging defects at the property which took longer than expected to resolve.

The developer tried to resolve the transaction issues with the customer and submitted that it had not breached the terms of the NHQC in its actions. The developer also explained how it was not possible to schedule the home demonstration until the day of completion. Finally, the issues relating to the snagging defects were experienced because the developer no longer had a site team present at the development and, whilst most of them were addressed, the resolution of two issues was delayed due to poor weather. In this regard, the developer was up front with the NHQB and admitted their after-sales service was substandard, apologised, and acknowledged the need to improve their process for handling after-sales issues on developments without a site presence.

Key takeaways

To be compliant with the NHQC, developers do not need to continually extend the deadlines for completion in the reservation agreement and are entitled to refuse any further extensions. However, appreciation should be given for the undue stress that this decision can cause and, therefore, remarketing the new home should remain a last resort. This case emphasises the need for developers to provide customers with clear communication from the beginning of the process, including setting out the timelines involved in a sale and clarifying the implications of deadlines so that customers do not feel unduly pressurised.

The NHQB acknowledged that sometimes it is not possible to schedule a home demonstration until the day of completion and developers will not be criticised if this is the only day it is possible to organise this. However, attempts should be made to schedule the home demonstration prior to the day of completion. Failure to do so is likely to herald criticism.

The case also demonstrates the need for clear communication post-completion as complaints should be handled with empathy and pro-active support from the aftercare team to seek to avoid a situation where the customer is required to chase for updates. Failing this, the NHQB has demonstrated that customers will be awarded for their inconvenience. The lack of a site team being present at a development is no justification for delays in resolving defects with the property. Developers should remain committed to remedying snagging defects within the 30-day time period prescribed by the NHQC (paragraph 3.3), and the property should be treated as if the site was still an active development. It was considered unacceptable that the customer in this case had to repeatedly follow-up for updates and this meant the developer had to acknowledge that the after-sales service was substandard.

This article was co-authored by Megan Mitchell.

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