Consumer Code for Home Builders

28 Sep

Since the Barker Review in 2004, the industry significantly improved customer satisfaction. It is vital to maintain excellent standards of delivery and ensure a high level of customer satisfaction is being achieved across the board. In particular, it is important that the industry continues to demonstrate its voluntary commitment to these twin objectives. For these reasons, the major industry trade bodies and the Council of Mortgage Lenders joined with NHBC and other warranty providers to develop the Consumer Code for Home Builders.

What is the Code – at a glance
■A set of 19 requirements and principles that will ensure the industry deals effectively with its customers throughout the entire home-buying process;
■The Code requirements come into effect on the 1st April 2010 and apply to all new private home-buyer Reservations from that date;
■Where there are disputes about whether a builder has complied with the Code and the home buyer is out of pocket as a result, there is an independent dispute resolution service;
■From pre to post occupation, the Code will help ensure a consistently high level of customer service is maintained by monitoring customer satisfaction and industry compliance;
■The Code will be enforced by a change in the Rules for NHBC and other co-operating warranty bodies; gross non-compliance of the Code can end up in the ultimate sanction – being removed from both warranty bodies’ registers; ■Customer satisfaction and industry compliance with the Code will be measured and data on performance reported back to the industry, Government and consumer interest bodies.

Background In 2004, Kate Barker conducted a review of the house building industry for Government, looking at customer satisfaction amongst other issues. It gave the industry three years in which to improve customer satisfaction and to introduce an Office of Fair Trading (OFT) compliant consumer code – with the threat of a compulsory Code if there was no notable improvement. The industry has since vastly improved its customer care with a national Customer Satisfaction Survey and the now achieved aim of increasing satisfaction levels from 56 per cent to 75 per cent. The Barker Review was overtaken by the Government’s own Callcutt Review and then shortly after by the OFT’s ‘Market Study’ in October 2008 which investigated the state of competition and consumer protection in the house-building industry. Whilst giving the industry a relatively clean bill of health and providing some valuable insights, it concluded that there were still areas needing improvement.

These included the sales process and after-sales service, the adequacy and reliability of information provided to customers and the lack of a redress system for matters not covered by the warranty. The UK house building industry had a choice; either produce a voluntary code, or Government would legislate with a system of dispute resolution to be funded by an industry levy. Industry response Strongly supported by the HBF, FMB, HBA, HfS, CEF(NI) and the HBF Retirement Housing Group, and with the crucial backing of NHBC and other warranty providers, an industry-led Code was developed over an 18 month period . The CLG, to whom the OFT recommendation was handed, has indicated their satisfaction with the development and progress of the Code, indicating a preference for the industry-led Code.

In NHBC’s view, an industry-led Code is the best solution in the circumstances and with the in-depth training that will be made available to house building professionals, the transition for builders to become Code compliant should be a smooth one. The Code is about codifying best practice, but there are some new points of principle that have had to be introduced as a result of the OFT report. What it means For house builders, this will mean that they will need to develop systems and procedures to inform their customers on the provision of delivery dates, rights to terminate contracts, the reimbursement of reservation fees and deposits, and the external redress scheme. Some builders may wish to do this by way of a Customer Charter. House builders may also need to make some changes to Reservation and Contract of Sale documents, to maintain transparency with customers.

This will involve ensuring documents are amended to cover everything from reliance on oral statements, through to clarity in service and management charges. Whilst this will mean changing some documentation and processes for house builders, it is important this Code is implemented sooner rather than later. Not only will it ensure that home owners are as happy as possible with the home-buying process, but it means that the industry can take the lead on its own improvement, rather than being directed by Government. The alternative to an industry-led scheme could have been more complex, harder to implement and more costly to administer, so this is a positive move for both the industry and consumers. How does it work? The Code Scheme will be financed and operated via warranty bodies and led by a Management Board and supported by an Advisory Forum.

The Advisory Forum is the industry-wide representative body that represents, consults and advises on Code content, its practical application and operation, through which changes and improvements will be channelled. Enforcement of the Code for NHBC registered Builders and Developers is by way of the NHBC Rules, amended to refer specifically to the Code. This change will also come into force on 1st April 2010. There is also a set of Consumer Code Scheme Rules; these will be issued to all registered builders and developers in February. These will explain how builders are to comply with the Code, how NHBC will deal with those builders who refuse, and the appeals process for dealing with those who are deleted from the register for no-co-operation with the Code and its adjudication service. When will it be introduced? The Code will be launched by the end of March 2010 and operational from 1st April 2010. It will apply to all home buyers who sign a reservation form on or after 1st April 2010. Where can we get training? To ensure that the industry is ready for the 2010 launch date, NHBC has arranged a series of training seminars on how the Code will affect your company, and how you can best comply with it.

The training by NHBC Training Services will cover how to adopt the Code into your Customer Charter, how to properly train staff to deliver to the requirements of the Code, and how to make sure all information, pre and post contract, is Code compliant. There will also be advice on how to deal with after-sales service and handle complaints More information The Code has been updated following recent feedback, including assessment by the Plain Language Commission. The second edition of the Consumer Code and the Builder Guidance Documents are now available from the Consumer Code web site at www.consumercodeforhomebuilders.com

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Buy-to-let: 10 tips from the experts

28 Sep

We all know the bad news about buy-to-let. That some people made a fortune out of it, while others ended up with overpriced properties, fetching rents far below the hoped-for rate.

Now there comes news that, from April next year, the Government is going to cap the amount it pays to housing-benefit recipients, of whom 1.4 million rent property in the private sector.

This means many landlords are going to be faced with a choice of either lowering the rent for these benefit-receiving tenants, or else kicking them out and trying to find new, more prosperous ones. The third option, of course, is to sell up.

At the height of the BTL boom (1997-2007, RIP), you could choose between some 3,650 buy-to-let mortgage products. Today, the figure is down to 300 and the number of people taking out new buy-to-let mortgages is just 25 per cent of what it was three years ago.

So what’s the good news? Firstly, that last figure is slightly higher than it was for the same three-month period last year (24,900 people, as against 21,600). Secondly, and more importantly, demand for privately rented accommodation has never been stronger. The nation’s biggest rental agency, Countrywide Lettings, reports an unprecedented influx of would-be tenants: 50,000 new applicants in the months from April to June alone. In some parts of the country, there are five potential tenants competing for the same property. In others, there are 23.

Clearly, then, there are people out there banging on the door, with rent money in hand. The question is, what steps do you need to take before you can let yourself buy-to-let? Here are 10 tips from the experts:

1 spread the net

Your buy-to-let property doesn’t have to be in the town where you live. It is more important to identify an area where there is demand for the kind of property you can afford to buy, and where the kind of rent you can charge will make the project financially viable. If you are going to employ a letting agent to do the day-to-day running of the property (collecting rent, organising repairs, see Be Businesslike, below), it doesn’t matter if you live one mile away or 100 miles away.

2 Make Friends

The best research into the buy-to-let market isn’t done with a mouse on the internet, but with your voice on the phone. If you identify a likely buy-to-let area, you should ring around all the local estate agents and lettings agents to establish what kind of properties are in demand and from whom. Some won’t give you the time of day, but some will. “Every so often, you find someone who’s really up for their job and loves talking about it,” says David Coughlin, of HBF Investment Properties (150 flats and houses to his name). “If you click with that person, then stick with them.”

3 Do your college homework

Yes, where there are students, so there’s a steady and ever-replenishing supply of tenants. But that doesn’t make a university town a pushover. There will be plenty of other landlords sniffing around and even if the university is expanding, it may be providing on-campus accommodation. Find the part of town the students like living in. The best way to do this is to talk to the students’ union accommodation officer, who can advise on changing tastes. For example, one minute everyone wants to be in single-bed studios, the next it’s all shared houses.

4 Be prepared to bargain

“Any discount you can negotiate on a property will, in the long run, constitute profit,” says David Coughlin. “The good news is that a lot of places are now priced at 2005 values. Go in hard, particularly if it’s an empty property, and you might get it at 2004 or even 2003 prices.

“Right from the start, you need to make it clear to the estate agents what kind of property you want and the exact location you want it in. You must show them you know your stuff.”

5 Be businesslike

Being a landlord is a job, not a hobby, and it may well be worth your while to employ a lettings agent to do the day-to-day running. They will charge about 10 to 12 per cent. “It’s easy for someone going into buy-to-let for the first time to get things wrong,” says Ian Potter, operations manager at the Association of Residential Letting Agents (www.arla.co.uk) “Have they got a gas-safety certificate, do they have an energy-performance certificate, have they paid the tenants’ deposit into the correct fund, and are there loopholes in the lease? There’s 101 things that can go wrong.”

6 Do the maths

There was a time when buy-to-let-mortgage providers only wanted a 15 per cent deposit. Now it is more like 25 or 30 per cent. On top of which, they charge two per cent more in interest than for a normal mortgage. The rough rule of thumb is that the rent you receive per month should equal at least 125 per cent of what you pay in terms of mortgage (that is, you get £125 for every £100 you shell out). Before signing up for a mortgage, check for the best deals on comparison websites, such as www.moneyfacts.co.uk or www.residentiallandlord.co.uk

7 Think resale

Buying a cheap house in a rundown area isn’t an efficient long-term investment. Firstly, your tenants may take their lead from the general tone of the area and not look after the place. Secondly, when the time comes, your chances of selling the property aren’t good. Even if you’re buying in an area with lots of students, make sure that local people want to live there, too. Somewhere such as Jesmond, in Newcastle or Clifton, in Bristol.

8 Be aware of benefit cuts

As from April, the maximum weekly housing benefit the State will pay is £250 for a one-bedroom property, £290 for a two-bed, £340 for a three-bed and £400 for a four-bed. “That’s bad news for landlords in areas where higher rents can be commanded,” says property expert David Lawrenson of www.lettingfocus.com, the author of Successful Property Letting. “What’s going to happen is that those tenants on benefits will end up in cheaper, adjoining areas such as Southwark and Lewisham instead of Westminster and Kensington.”

9 Get references for your tenants

And do it thoroughly. “You want to see their bank statements from the last three months, the utility bills from their last property, and you want references from their current employer and previous landlord,” says Paul Shamplina, whose firm Landlord Action runs a landlord helpline (0800 856 7878). The company has evicted 17,000 troublesome tenants over the past decade. “Otherwise, you are storing up problems for yourself.” And he’s seen those problems first hand. Like the three-bedroom house in London that ended up home to 53 immigrant workers. Or the house that got secretly turned into an 18-bunk student hostel, being advertised on Chinese websites at £20 a night.

10 Stay on your toes

“Things can change, and you need to be aware of them,” Shamplina says. “If your tenant loses his job, for example, you need a plan B.” And students are no longer the safe bet they once were, either. “There’s talk of university courses being condensed into two years, instead of three,” warns Chris Town, vice-chairman of the Residential Landlords Association (www.rla.org.uk) “Also, if college fees go up, then numbers will fall. As a landlord, you have to be aware of all these things. You can’t just sit back and switch off.”

How To Build Your Pension Through Property

28 Sep

Are you worried about your pension provision, either because your savings and pension investments are not working out, or because you don’t have a pension at all? You are not alone. According to a recentPrudential pensions survey, 3 in 5 people said they need to continue working after retirement age because their pension wasn’t enough.

Is there another way? There is according to Rod Thomas at Axis Property Investment, who has developed a new workshop and guide entitled How To Build Your Pension Through Property. Rod’s latest book, The Freedom Plan, includes both the pension through property system and the SystemZERO philosophy of investing and is due for publication early 2011.

Rod says: “The secret of all success lies in making the right decisions and taking the right actions. Ignoring the issue does not make it go away. First we need to educate ourselves and assess our options. Then we act. In my view, the best option is to invest in property. That’s why I have developed How To Build Your Pension Through Property.”

How To Build Your Pension Through Property covers a number of crucial areas, including:

  • Why existing pensions are doomed.
  • How backing your future pension with share investments is a high risk strategy, with no guarantee to deliver what you need.
  • Why even with allowing for tax relief on pension contributions you are still not doing the best with your money.
  • Why investment in property can deliver an outstanding return that dwarfs the growth in your traditional pension capital value.
  • How property can deliver true financial security – even if you have little money and little time.
  • The three life stages of an investor and how they relate to property and pensions.
  • The five key issues you must deal with to make the right property decisions.
  • The three critical elements of leverage, velocity and making ‘front end’ profit that are essential to the success of your property pension strategy.

Rod’s first dedicated How To Build Your Pension Through Property workshop will be held at the exclusive Eight Club, London, on 28th October 2010.

Rod explains: “Investment has to be a careful strategy that will meet a number of important considerations. You can work with existing assets, either cash or property. You should take into account the years to retirement – the more the better. Ensure a low risk approach if investing later in life. Consider the balance between capital growth now and income flow later.”

He concludes: “My workshop and guide will help you understand all of these issues and Axis is here to assist you in taking action. We have strategies with the potential to deliver exceptional returns in a period from less than one year, up to twenty years.”

The podcast and presentation slides from Rod’s How To Build Your Pension Through Property talk at the Landlord and Letting show can be found here:

http://www.axispropertyinvestment.com/podcast-pension-through-property.html

Details of Rod’s How To Build Your Pension Through Property workshop may be found here:

http://www.axispropertyinvestment.com/pension-property-workshop-booking.html

The full How To Build Your Pension Through Property article may be found here:

http://www.axispropertyinvestment.com/blog-wealth-through-pensions.html