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          New houses - a sound investment

          Houses are an essential part of our very existence. They provide a spatial envelope in which we and our belongings are protected from the external elements and without which we could not otherwise survive.

          Date: 10/04/2018

          A house is made up of the materials we are able to source or manufacture, with the form of a building having changed during the course of history to reflect our improved understanding of structural and materials performance, increasing expectations of a comfortable environment and changing social structure.

          However, not all houses are equal.  The majority of houses which have survived from before 1900 are generally those which were originally built to high standards and which have warranted continued maintenance.

          Social and industrial changes around 1900 led to significant changes in the nation’s housing stock, particularly in the industrial northern cities.  This was the era when northern cities saw the building of extensive terraced housing for worker occupation.  The houses were generally built to a limited range of designs, on a speculative basis by builders or property owners, for tenant occupation.  The landlord had an interest in the longevity of the building, as building maintenance was not the responsibility of the tenant.

          Those houses have little aesthetic appeal or individuality, but they have the quality of sturdy brick build, their only envelope weakness being the nailed slate roofs.  However, by modern standards, they offer a low level of facility.

          They are in stark contrast with houses built, for example, in the 1970’s, which have relatively modern facilities but, at almost 50 years of age, now commonly display deterioration of envelope materials such as timber weatherboarding, in the absence of considerable maintenance.

          There has subsequently been a major change towards owner-occupancy, thus reducing the interest of the builder or developer in the long term performance of the building.

          Given that house prices form a high multiple of buyers’ incomes, what can a buyer of a newly built home, often on a greenfield site, expect in today’s market?

          A simplified picture of the supply chain involved in house building includes architects and building surveyors, quantity surveyors, structural engineers, M & E engineers, project managers, contractors and sub-contractors, component manufacturers, material suppliers and of course finance and clients/end users of buildings.

          As such, there is probably far more professional expertise involved in the process than ever before.  Furthermore, many new materials have been developed, offering designers and builders more design options.  This would seem to be a positive situation.

          However, despite this expertise and the material options, problems, disputes and failures do arise.  It is the perhaps unfortunate lot of a loss adjuster, to see such problems and to form a less positive view of the situation.

          It is essential for a loss adjuster to determine the cause of a problem, as it is fundamental to clarifying legal liability and, separately, policy coverage.  Given the importance of an appropriate procurement procedure, the high number of design decisions, and the large number of parties either in direct contract, or related through the contractual chains, precise determination of cause can be difficult.  Nevertheless, this is precisely the area in which DWF Loss Adjusting specialises, and there does not seem to be any limit to the causes of problems investigated.

          However, experience indicates there may be recurrent underlying causes and concerns which warrant comment, including the following factors, in isolation or in combination:

          • The incorporation of new materials such as MDF (medium density fibreboard), plasterboard, chipboard and plastic for which long term performance remains to be proven.

             

          • The trend towards large scale speculative development by house builders, where materials selection will be influenced by considerations of profit, and where there is no overall specification, written by independent experts, protecting long term performance (longevity).

             

          • The reducing involvement of the Local Authority Building Control Officer to the benefit of independent Building Control consultants, employed by the builder or developer.

             

          • The growing realisation that in some respects the Building Regulations contain ambiguities and perhaps also, provisions which have not changed with the development of new materials.

             

          • The option under the Building Regulations to deviate from ‘deemed to comply’ designs.

             

          • The financial pressures on young buyers to get on the housing ladder, but without any interest in the longevity of buildings, given the common intention of rapid movement up the housing ladder.

             

          • The lack of long term protection for buyers, with home guarantee schemes and statutory provisions, including limitation, restricting recourse against builders to only 10 years ordinarily.

          These issues, taken in combination, are a cause for concern as to whether the long term performance of houses will be adequate and reflect their high price in real terms.

          Should these concerns prove to be valid, the main investment protection that may arise with a new house might ultimately be the value of the plot, given the transition from greenfield of yesterday to the brownfield site of tomorrow with pre-existing planning consent.