Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Written Evidence

Memorandum by the National House-Building Council (NHBC) (DHB 30)


  NHBC's (the National House-Building Council) primary purpose is to raise standards in the new house-building industry and provide consumer protection for new home-owners. As the leading warranty and insurance provider for new homes in the UK, NHBC was established 65 years ago as a not for profit company.


  NHBC's experience, knowledge and unrivalled understanding of the UK house-building industry, means it is a respected voice and can exert a positive influence to raise standards and protect consumers.

  NHBC is independent of the house-building industry but works closely with it. Our governing Council of 73 includes all the major stakeholders with an interest in raising house-building standards for home buyers. These include the Local Government Association, The Royal Institute of Chartered Surveyors (RICS), The Royal Institute of British Architects (RIBA), and the Consumers Association.


    —  1.6 million homeowners are currently protected by NHBC Buildmark cover

    —  NHBC registers almost 85% of new homes built in the UK

    —  NHBC has 18,000 registered builders who agree to comply with NHBC rules and standards

    —  NHBC is now the single largest single provider of Building Control and inspects half of the new homes built in England and Wales for compliance with Building Regulations

    —  NHBC provides a range of complementary services to the industry and is currently the largest provider of construction management Training, Health and Safety, and Home Energy Rating services in the UK


  NHBC's experience, knowledge and unrivalled understanding of the UK house-building industry, means it is a respected voice and can exert a positive influence to raise standards and protect consumers.

  NHBC has participated with and contributes to a range of government, professional and technical bodies. These include the Housing Forum, Building Regulations Advisory Committee (BRAC), Building Control Performance Standards Advisory Committee (BCPSAC), Urban Task Force, British Urban Regeneration Agency (BURA), Construction Research and Innovation Strategy Panel (CRISP), Contaminated Land Action in the Real Environment (CLAIRE), National Society for Clean Air (NSCA) and the Construction Industry Research and Information Association (CIRIA).

  We are also an international model of best practice as a world class warranty provider for the new house-building industry. Countries from around the world, including Australia Japan, Israel, China, Poland, South Africa and Turkey have consulted NHBC for advice and information.

  NHBC was instrumental in establishing the new warranty organisation in South Africa (NHBRC) without which the South African Government would have been unable to deliver its commitments on mass housing.

  NHBC has an influential voice in Europe and European standards work. We contribute to the European Committee for Standardisation (CEN), European Union of developers and house builders (UEPC) and the European Organisation for Technical Approvals (EOTA).

  We also provide the secretariat for the Association of European Home Warranty Organisations (AEHWO) and actively promote the benefits of home warranty within Europe.


NHBC welcomes the primary purpose of the legislation; to increase consumer protection and improve the home-buying process.

  Whilst we will be making a detailed submission to the Office of the Deputy Prime-Minister on aspects of the proposed legislation and the two consultation papers; "The Contents of the Home Information Pack" and the "The Home Information Pack in Low demand areas", this submission focuses on key elements of the proposals.

  We would welcome the opportunity to discuss before the Committee our response on other aspects of the legislation and on related documents that are not covered in this response.


  a)  NHBC agrees that the concept of a Home Information Pack (HIP) offering a "log-book" model for each home, is a step forward. It creates the potential for improving knowledge about the condition of homes and the information available to both vendors and purchasers.

  NHBC also agrees that the HIP should—"should include copies of any current National House Building Council or Zurich Municipal warranty or equivalent or similar warranty, contract or insurance policy relating to the fabric of the property, the benefit of which will transfer to the new owner".

  In NHBC's opinion this will increase consumer awareness of the role Warranty Schemes play and encourage more accurate and comprehensive dissemination of warranty documentation.

  b)  NHBC agrees that Home Information Packs should contain a Home Condition Report, which should be "an objective report on the condition of the property and its energy efficiency".

  Furthermore, NHBC believes that to administer such a proposal it would be desirable to establish a new body of home inspectors, qualifying under a certification scheme approved by the Secretary of State.

  We approve of the suggestion that this Home Condition Survey should be a—"mid-range survey"—similar to the RICS Homebuyers Survey and that it should not include a valuation.

  c)  NHBC is content with the proposal in the document that where a home is marketed "off-plan"—"the warranty or insurance policy described in chapter 8 should not be required. The pack should instead include evidence that the home is registered with the provider of such a warranty or insurance cover, and include details of the cover a HCR is not required".

  d)  NHBC is content with the proposals regarding sales of new homes prior to marketing—"where a transfer of ownership of a physically completed new home registered under a designated housing warranty scheme is to either a company in the same group of companies as the developer or to another company that is a member of a designated housing warranty scheme, then onward marketing of the home should be exempt from the requirement to include a HCR in the HIP".


  NHBC welcomes the positive remarks in the consultation document regarding Warranty Schemes. We agree that a Designated Warranty Scheme (DWS)—"Would offer home buyers redress if defects or damage arose attributable to the original construction".

  We also agree that "effective housing warranty scheme will involve inspections at the construction stage with view to preventing or correcting defects before completion" and that an "effective warranty scheme will also provide a good measure of redress for the homeowner if defects come to light after completion".

  NHBC also agrees that "a significant advantage for the homeowner is that for matters covered by an effective warranty scheme he or she does not have to take legal action to show negligence on the part of someone involved in the design, construction or inspection processes".

  NHBC also agrees that one important aspect of the Bill is the role it ascribes to Designated Warranty Schemes. We welcome the fact that introduction of this legislation would require the Secretary of State to scrutinise the—"operational effectiveness of scheme and the extent of the cover provided".

  NHBC agrees that the Secretary of State will need to have confidence in the effectiveness of any DWS in protecting consumers and we note that the ODPM intends to consult separately on the criteria for so-designating Warranty Schemes. NHBC welcomes this consultation and would be happy to give evidence to the Committee on the proposed designation criteria for Warranty Schemes.


  Whilst NHBC welcomes the fact that for first sales of new homes being marketed with the benefit of a "designated housing warranty"—"there should be no requirement to include in the Home Information Pack a Home Condition Report", we do have concerns regarding the operational implications of these proposals and in particular the interface between Warranty Schemes and Home Condition Report Inspectors following the first sales of new homes.

  NHBC would welcome the opportunity to set out before the Committee our views on how Designated Warranty Schemes can protect consumers of new homes both at first sale and beyond.


  NHBC welcomes the proposed legislation and the proposals set out in the consultation document on Home Information Packs. We are however aware that the proposals raise important implementation issues and we would welcome the opportunity to discuss these further with the Select committee.

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