|By Roger Charnock|
|Having been in New Zealand for just over a year the key differences that I have found – apart from earthquakes, volcanoes and the lack of a decent football (soccer) team – is the different attitude mortgage lenders have toward the building industry.|
Due to the level of bad debts within the United Kingdom and the amount of homes in receivership, mortgage lenders have a greater interest in the property (asset), to ensure that if the home is repossessed by the mortgage lender, they are able to recoup this bad debt.
Upon purchasing my own property I was quite shocked to find the mortgage lenders stating that a building survey was not a necessity in order to have a mortgage approved and if I wanted a survey I could arrange for this to be conducted by a friend / colleague, or basically anyone who has the slightest knowledge of building.
Whereas within the United Kingdom, it is a requirement of all mortgages to have a survey of the building prior to purchase and in many cases the mortgage lenders will not lend money on a property which is of poor construction, as they are unlikely to recoup the costs of any possible bad debt.
In the United Kingdom I was employed by the National House Building Council (NHBC), a non-profit organisation set up by the major building contractors after the First World War to improve the standards of the construction industry. 90 years on and NHBC is the major building control provider in United Kingdom worth approximately £1.5-£1.8 billion (NZ$4-5 billion). Their role is to carry out building control of new buildings and refurbishment projects in a similar way to the local council’s role, with key stage inspections to ensure compliance with building regulations.
The key difference is that the NHBC is a warranty provider and is liable for all defects arising from poor design, construction and materials. Hence approximately 95% of mortgage lenders will only lend mortgages on properties covered by a warranty of 10 years.
The key factor in the reduction of claims against the NHBC is that during this 10 year period and as part of the inspection process, all defects during and after construction are recorded centrally and analysed. This allows, for example, if a high number of defects occur within a particular area, then a team is organised to investigate and provide a solution, which then becomes a new standard.
Builders cannot get final handover of their building until all standards are met and these standards are updated on a monthly basis, as building knowledge constantly changes. If this system was introduced within New Zealand then the problems associated with the use of untreated timber would have been identified at a very early stage as claims increased and the use of treated timber would have become a standard after only a few claims, rather than the thousands currently within New Zealand.