In 2017 the UK new homes sector will face a £550M bill for DEFECTS

16th December 2016

Based on current trends, it is expected that over 2.3 million defects will be reported by new-home owners in 2017. This is based on a representative sample of 3,540 properties across the UK achieving an average of 0.9 defects per month over the duration of the Builder’s Liability Period (years 1-2 of the 10 year warranty). 78% are recorded in year 1 with the balance in year 2 (calculated on 150,000 completions in 2016 with a flat projection for 2017).

Because many build contracts fail to hold the contractor(s) to the same warranty obligations imposed on the developer (2 years from legal completion) the net effect is that a high proportion only receive the benefit of cover in the first year, having to pay again when seeking trades to remediate defects in the second year – effectively paying twice to resolve issues.

Either way, failure to effectively manage defects is an expensive matter for any size of operation, resulting in the highly disruptive cost of management distraction. Not obviously apparent in a busy company, nonetheless, when a developer has scant dedicated resource the tendency is to involve senior managers when resolving problems. This is the outcome of issues that have been poorly handled in the early stages and spiral out of control resulting in complaints and (far too often) compensation. The latter is a common, yet highly inappropriate stance to make a messy problem go away. It is wrong on so many levels and invariably raises expectations of other occupants to seek financial redress whenever they have an issue that isn’t resolved promptly. It is wise to have a compensation policy because this (contrary to common perception) reduces the likelihood of having to award a payment and, keeps the level of payments far lower in circumstances where such an action is unavoidable.

Predictably, not all new-home buyers will be happy with the service they receive … some will impose significant and unreasonable demands on those handling their problems. All the more reason therefore to organise your customer care resource accordingly. The days when calls could be handled by a part-time receptionist or the Managing Director’s PA are long gone. The process demands a high level of competency and procedure – held together with a system designed specifically for the purpose.

How will you fair? Do you have the system and the trained resource to ensure you don’t become a statistical footnote to this year’s analysis of customer care catastrophes?

After Build are the industry’s leading out-source customer care professionals. Our fixed-price approach guarantees cost control while our highly trained teams ensure your customers receive a friendly, responsive service. Want to know more? Call us now on 0845 4546 4631 or email: markf@afterbuild.com

£550 M defects bill
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