THE TRUE ECONOMICS OF NEW HOMES AFTER CARE
There is a cost to after care, it isn’t free. Any developer who believes that they can avoid this will be disappointed as the need to achieve Quality Code compliance will require all new homes builders to budget for this crucial cost element.
It is the final part of the overall cost of building a new home and it provides the developer’s customer with peace of mind that, should any aspect of the build require attention in the first two years of ownership, there is a process in place that will deal with it (and thereafter the warranty provider will intervene if required in years 3-10).
Using the house values published for June 2021, we have applied the known fixed costs of a comprehensive after care programme and it ranges from 0.3% to 0.9% of the value of an average plot, dependent on regional differences. To provide …
Quality Assurance Inspection
2 years After Care including Out of Hours Emergency
… is around £1,500 a plot. The only aspect this does not account for are contractors who either let you down or, who are not obligated contractually to attend to build defects.
As the industry conforms to the new code over the next year or two, there is a real value in checking the scope of your ‘defect management’ clause in your standard build agreement to make sure that your contractors support you post build to make good any failing workmanship. In an ideal world this would be back-to-back with your commitment to the Quality Code … 2 years, because any shortfall will only cost you money later when you pay for an alternative contractor to remedy problems.
There are two major reasons why problems arise in new builds:
The build was horribly out of control to begin with allowing snags to proliferate right up to legal completion. So, the new occupant has serious issues from day 1. This usually arises because either the timeline gets compressed and in a desperate endeavour to get properties handed over, work is left incomplete or poorly finished; or there is insufficient quality control on the site and plots do not receive a quality inspection to address snags that go overlooked …. or both.
Contractors fail to return to address poor workmanship which results in further delays for the occupant and additional costs to the developer.
There has been (and still are) an undercurrent of developers who chance their arm and believe that they can save money and get through all of this, financially the better for it. That has never worked in practice, it is a flawed concept that time and again costs a developer more than a well planned after care programme.
The number of developers whose build quality is so exceptional that they genuinely can accommodate a few small issues with just a handful of deeply loyal and highly gifted tradesmen is tiny – probably less than a couple of percent. And good for them that they are that in control of the build programme that they have little to be concerned about after they have handed the property over.
But what about the other 98%? The analogy I would use is this. You’re required to take out
Public liability insurance
Employer’s liability insurance
Product liability insurance
Professional indemnity insurance
Would you risk not doing this to save money on the basis that you’ll almost certainly never have a claim against you so why waste money on premiums? As they say, if you think insurance is expensive, you want to see how much it can cost without it!
Why not approach the (now) highly significant responsibility to provide after care in just the same way? Budget for it. After Build devised a smart schedule of fixed-price services so that clients could understand and budget for after care right from the get-go. It makes sense – aside from the risk your original contractors ‘may’ fail you, the costs are all know and fixed, no matter how many calls from homeowners we may receive. And, if your contractors do let you down, we can help you there too. Our business relationships with contractors nationwide are second to none so we’re always able to source and instruct an alternative contractor when the pressure is on.