Local Government and Communities Committee. Building Regulations in Scotland. Supplementary Written Submission from NHBC Scotland

Transcription

1 Local Government and Communities Committee Building Regulations in Scotland Supplementary Written Submission from NHBC Scotland Dear Jason I understand that the Committee will continue taking evidence on Building Control but with a focus on consumer protection and I wish to place the enclosed record on file to outline the extent of consumer protection provided by NHBC. Some of this is directly linked to Building Control but it is all interlinked as the majority of our Building Control activity is undertaken on homes where we also provide warranty and insurance protection. I would welcome meeting with the committee should further clarification on the content of the enclosed be required Regards Malcolm MacLeod NHBC Director Scotland 1

2 NHBC Consumer Protection About NHBC NHBC was established in 1936 to assist the Government address concerns it had about the quality of new homes being constructed at that time. Since it was established NHBC s defined purpose which continues to this day has been to raise the construction standards of new homes and to provide consumer protection to home owners in the private and or social housing sector. NHBC is structured to be non-profit distributing and is a self- underwriting Insurance Company providing a risk management service to the house building and wider construction industry. Around 80% of all new homes in the UK are registered with NHBC and we provide our ten-year cover through our Buildmark Insurance Policy which presently provides protection to about 1.6 million homes. As NHBC is non-profit distributing it redistributes its profit to ensure its core purpose of raising house building standards is met by supporting the house building industry through the delivery of Management Training, Health and Safety and Energy and Environmental Services. It established the NHBC Foundation to facilitate research on behalf of the industry, was instrumental in setting up the Consumer Code for homebuilders and the Zero Carbon Hub. Consumer Protection Builder Registration NHBC maintains a register of builders and builders apply to become registered with NHBC and when registered they can use our insurance products to assist them in marketing their developments whilst benefiting from the comprehensive risk management processes that go with being an NHBC Registered builder. Before accepting a builder onto the NHBC Register, NHBC assess the governance and history of that organisation in addition to their competency to build. - NHBC prohibits newly registered builders from building complex structures such as basements until such time as they have built up expertise in this area. - NHBC set conditions of Registration for example limiting the type of housing that the builder can register with NHBC ( Multi storey / low rise) and on the annual volume of homes that can be registered (capacity) - NHBC will not accept builders onto its register if that builder was previously registered with NHBC and left NHBC with a debt arising out of NHBC having to make good homes that the builder failed to properly construct. - NHBC will not accept a newly formed company for registration which has shareholders or Directors from companies that has left NHBC with a debt 2

3 - New builders are assessed in terms of their construction competency and are required to demonstrate to our inspectors that they have the capability to build a complete home before they can be considered for Registration - All new NHBC registered builders are assessed on their Health & Safety systems and compliance methods - All new NHBC Registered builders must take and pass an online test - Once registered there is continuous monitoring of technical performance and of their financial status e.g. poor credit checks will result in NHBC preventing a builder from registering new homes Before builder become NHBC Registered it can be seen that processes are put in place to ensure the builder has a degree of competency and is financially robust NHBC Standards NHBC has developed its own Building Standards that its Inspectors use to benchmark quality of construction on building site, these standards are constantly reviewed and republished annually. These Standards are formed on the basis that the structure of the home shall unless specifically agreed otherwise in writing with NHBC have a life of at least 60 years. Individual components and assemblies, not integral to the structure may have a lesser durability and need planned maintenance repair or replacement during that period NHBC Building Standards if followed should provide at least a 60 year life to the structure of the building and this provides comfort to the lending institutions who offer mortgage products whilst also protecting the investment made by the purchaser. Inspection NHBC physically inspects every home that it provides cover for at key stages of construction and last year NHBC carried out 798,000 inspections to manage the risk associated with building new homes and contributed to improving the quality of construction standards. Additionally NHBC carries out bespoke inspections in buildings of multi occupancy to ensure fire separation is properly constructed, it carries out bespoke inspections of basement construction and it sets benchmark construction standards on roofing construction. Over the last 2 years NHBC has developed and is delivering a comprehensive inspection service to the home building industry where for some of the major builders operating across the UK it has carried out detailed inspections on every home under construction on their developments and identified good and bad working practises in 3

4 design, management and construction. The findings are fed back to the industry which is very receptive to this initiative. NHBC Inspectors check for compliance with the Building Regulations as our Building Standards requires the builder to comply with statute. NHBC Inspectors are graded dependent on their qualifications and competency and these grades are used to determine which types of buildings can be allocated to which grade of inspector. Most of our inspectors are professionally qualified and all of our Inspectors require to sit and pass a license to practise test which is run around every 2 years and supports the other regular training they receive. NHBC Inspection is set up to directly focus on key construction areas and ensure that the home when complete is safe and fit for purpose. Building Control NHBC is an Approved Inspector in England and Wales where it has been delivering a complete Building Control service since 1984 and is the single largest Building Control authority in the UK. When we undertake Building Control it enables NHBC to carry out more checks on the design and the construction of new homes which results in inspecting out more defects. NHBC is an internationally recognised expert authority on Building Control and the majority of its staff are professionally qualified and whilst its functions are specific to ensuring health and safety it is also governed by NHBC s purpose to protect consumers and improve construction standards. NHBC Insurance Products NHBC is an Insurance company and the only self under writing warranty organisation operating in the UK. As it is an insurance company it is regulated by the Financial Conduct Authority and approved by the Prudential Regulation Authority. NHBC has a number of insurance products that in general terms offer a ten year protection to consumers who purchase new homes. The cover is split into a number of parts - Section 1 provides protection against loss of deposit and paying more because of builder insolvency before the home is completed. Section 2 is very comprehensive and protects against the builder failing to meet NHBC Requirements which extends to covering virtually everything in a new home. It applies for the first 2 years following completion of the home and initially the homeowner should allow the builder to respond to their concerns. If the builder fails 4

5 to adequately respond NHBC will assume the liability of the builder and resolve. If the builder and the homeowner cannot agree that there is a valid complaint then NHBC offer a free resolution service the outcome of which is binding on the builder NHBC find about 70% of these investigations in favour of the home owner. Section 3 provides protection against physical damage to the home arising from a failure of the builder to meet NHBC Requirements and is in place for the last 8 years of the 10 year cover. For a claim to be valid the following criteria must be met: - There must be physical damage to the home - The cost of making good the damage must exceed the Minimum Claim Value which currently is 1, however it should be noted that this is not an excess - The damage has to affect one or more of the specified areas listed in the policy these generally cover everything in the home with the exception of kitchen and bathroom fitments, internal doors, ironmongery, electrical wiring, plumbing and central heating systems. Section 4 provides insurance for Building Regulations and protects the home owner if there is immediate danger to physical health or safety because the builder failed to meet specific building regulations when building the main structure of the home. As successive Scottish Governments have declined to license NHBC to deliver a Building Control service in Scotland this type of insurance is not available to home owners in Scotland who are therefore suffering consumer detriment. Section 5 provides insurance protection against contaminated land and applies from completion of the home and is activated if the contamination is such that it will lead to service of a statutory notice on the homeowner. The extent of cover provided by NHBC is extensive and in addition to this if the home owner is dissatisfied with how NHBC has managed a complaint the homeowner can refer that to the Financial Ombudsman. The findings of the Financial Ombudsman are binding on NHBC and for clarity are not restricted to financial matters but to policy interpretation which extends into technical matters. Consumer Code for Homebuilders NHBC was instrumental in establishing the Consumer Code for Homebuilders which requires home buyers to be treated fairly by ensuring they are fully aware of the level of service they can expect when buying a home. It also places an obligation on the builder to inform purchasers about their consumer rights before and after moving into their new home. It includes and low cost dispute resolution process and sets levels of compensation. 5