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Major UK housebuilder to pay out £7m in compensation for defective homes

It has just been announced that Bovis Homes Group Plc has set aside £7m to compensate homebuyers for defects in their homes.

In its press release announcing its final results for 2016, the major UK developer stated that weaknesses in its production process and a high level of customer service issues had led to the one-off customer care provision.

The Guardian reported that customers have been left with issues such as faulty plumbing, no guttering, and half-finished tiling. A Facebook group has been formed in protest at Bovis, while apparently other buyers have posted videos on YouTube showing the state of their properties.

Claiming for building defects in your home

The problems that consumers face when trying to bring a claim in respect of building defects in their homes can be extensive. Section 1 of the Defective Premises Act 1972 imposes a duty on those ‘taking on work for or in connection with the provision of a dwelling… to see that the work which he takes on is done in a workmanlike or, as the case may be, professional manner, with proper materials and so that as regards that work the dwelling will be fit for habitation when completed.’

Notwithstanding this, many customers have been left out of pocket by poor workmanship. An example of the difficulties that those proceeding under the 1972 Act is Rendlesham Estates plc and others v Barr Ltd [2014] EWHC 3968 (TCC). The claimants were the owners of 120 apartments in a development of two blocks built by Barr in Leeds. After the claimants moved in to the apartments, problems became apparent including with poor finishes to the common parts, the intercom system and flooding to the covered walkways in heavy rain. Although the claimants were ultimately successful, at least in part, there were considerable arguments about what constituted a ‘dwelling’ when considering the common parts, and when a dwelling ceased to be ‘habitable’. Furthermore, coordinating and then compensating such a large group (who did not comprise all of the affected owners) was also a complicating factor for the litigation.

What if a builder goes bust?

If a contractor is no longer worth proceeding against because of insolvency, it can be extremely difficult to bring a claim against certifiers or other construction professionals even if they inspected and approved the work. One such decision highlighting the weak position of the buyer purchasing off-plan is Hunt and others v Optima (Cambridge) Ltd [2014] EWCA Civ 714; [2015] WLR 1346.

The contractor, which built two blocks of flats in Peterborough, engaged a firm to provide ‘Architects’ Certificates’ for the purchasers and their lenders. The building works were carried out badly and the inspections were carried out negligently. The contractor subsequently went into administration. There were no collateral contracts between the purchasers or their lenders and the firm providing the certificates. The Court of Appeal rejected the purchasers’ arguments that the firm owed to them a duty of care for negligent misstatement, leaving them without remedy. Permission to appeal from this decision was refused by the Supreme Court.

Fixing the roof while the sun shines? Skill shortages and Brexit…

Although news about the compensation for purchasers has dominated the headlines, other figures are rosier for the Kent-based housebuilders. Revenues rose 11% while the average home selling price increased by 10 per cent to £254,900 (figures quoted by Bovis).

Interestingly, Bovis has also warned that it has struggled to find skilled workers.

The company chairman, Ian Tyler, stated that, ‘The current shortage of skilled construction labour in the industry remains an operational challenge for the industry as a whole. This constraint has continued to impact our business during 2016. We are working hard to bring new people into the sector and we continue to invest in developing our own construction teams and support our subcontractors through apprenticeship schemes.’

This is understood to be a problem across the construction sector as a whole, as contractors struggle to engage tier two subcontractors for forthcoming projects against the backdrop of a likely restriction on movement of workers into the UK from the EU following the Brexit vote.

David Sawtell (2005) is a barrister at Lamb Chambers specialising in property, construction and commercial litigation. He is frequently instructed in cases involving the development and use of land, buildings and property. He also has extensive experience of advising and drafting in professional negligence related proceedings in areas related to his core practice. He is currently reading for the MSc in Construction Law and Dispute Resolution at King’s College, London.

David Sawtell / 21st Feb 2017


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