Answering your questions about new build homes and developments

In this episode of "This Shared Ownership Thing" Podcast, Cheryl Gibbens (Marketing Officer) is joined by Ed, Head of new business and delivery at Aster Group.

Ed will be answering some of our most asked questions about new builds and new developments, such as why developments experience delays, how the Aster handover process works and all about snags, plus much more.

The conversation surrounding shares being purchased between 25-75% is based on the current shared ownership model and our shared ownership homes under the existing scheme. You may have heard that there are some changes to the Shared Ownership model on the way. Whilst this doesn’t impact on our current shared ownership homes for sale we will be updating our website with more details around the new model soon. If you have any questions about this in the meantime please do get in touch with us or visit the Government’s website to find out more.

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Transcript

Cheryl (00:07):

Hello and welcome to episode nine of This Shared Ownership Thing podcast, where we bring on different guests to talk about all things home, including useful advice around home buying, selling, or staircasing, why shared ownership could be an option for you and sharing our amazing customer stories. For the benefit of any new listeners, shared ownership is when you buy a share of a home and you pay rent on the share that you don't yet own. If you're able to do so, you can go on to purchase more shares of the home. This is referred to as staircasing, until if able to, you can purchase the whole hundred percent of the home. With shared ownership, deposits can be as low as 5% of the share that you purchase and this makes it a more affordable option for many people. I'm Cheryl, a marketing officer at Aster Sales, and today I'm joined by Ed Till head of New business and delivery at Aster Group.

(00:58):

In today's episode, Ed will be answering some of our most asked questions about new builds and new developments, and he'll cover why developments experience delays, how the Aster handover process works, and all about snags. Now, before we get into the nitty gritty questions, let's get to know Ed a little bit better. It's time for a quick fire question round. Welcome, Ed.

Ed (01:19):

Hello.

Cheryl (01:21):

Are you ready for your questions?

Ed (01:23):

Yeah, go for it.

Cheryl (01:25):

Okay. Number one, as a child, what did you want to be when you grew up?

Ed (01:30):

So, as a child, I think I most wanted to own my own surf shop, to be honest and I realized that-

Cheryl (01:37):

Oh, do you surf?

Ed (01:42):

No, but I used to love going to the beaches in Cornwall. So, as I grew up, I always wanted to work in a surf shop, and own one, and then I worked at a snowboard shop in my early late teens and so, that fulfilled my ambition. So, that was that really.

Cheryl (01:53):

Oh, so once you'd done that, you didn't want to do it anymore?

Ed (01:58):

Yeah, it burst the bubble because it was quite boring day to day. Well, we only used to get one or two customers so you could literally go eight hours without seeing anybody unless someone come and bought some stickers or something.

Cheryl (02:11):

Are you a dog or a cat person?

Ed (02:14):

Definitely a dog person. We've got a-

Cheryl (02:17):

What is the dog you have?

Ed (02:18):

Sausage dog called Josie, he's eight months old. We've got a cat in the house as well, but she's not really my friend.

Cheryl (02:26):

she doesn't like you?

Ed (02:29):

Yeah, no, I think it's mutual. We just steer clear, we've got a two meter boundary, we don't encroach on.

Cheryl (02:36):

Do you feed her or does your partner feed her?

Ed (02:39):

No, I don't feed her, no.

Cheryl (02:40):

Oh, okay. What is your favorite ever TV series or film?

Ed (02:47):

So, my favorite ever film is Point Break, but the original, not the remake because the remake just makes you feel sad it's so terrible. But yeah, the original Patrick Swayze and Keanu Reeves, definitely my all-time favorite film.

Cheryl (03:00):

Never heard of this film.

Ed (03:02):

Really? Great, that makes me feel young. Thank you.

Cheryl (03:05):

Bless you. Do you prefer a film over a series?

Ed (03:12):

Pretty much. With the boys at the minute, we're watching a lot of films, which is enjoyable. So, we're just going through the Austin Powers trilogy at the moment with them.

Cheryl (03:21):

Oh, love that. That's hilarious.

Ed (03:23):

They're not quite getting all the innuendos, which is helpful, but ...

Cheryl (03:27):

That's great. If you were stuck on a desert island and could only have one thing with you, what would you take?

Ed (03:33):

It's quite tough, isn't it? I don't know-

Cheryl (03:35):

Really tough.

Ed (03:36):

Teleportation device, but I think ideally, I'd probably have to take a tarpaulin, just because tarpaulins are massively versatile, because you can sleep underneath a tarp, you can have a picnic on a tarp, you can gather up wood and carry it as a bag. So yeah, definitely a tarpaulin and that would ... I think my wife would be surprised if I didn't have a tarpaulin because that's what we always have our picnics on.

Cheryl (04:00):

I feel like you put a lot of thought into that.

Ed (04:03):

Yeah, oh I had to give it ... because I was sitting there panicking thinking, "Well, would you take a knife or would you take a ... " But actually, a tarpaulin.

Cheryl (04:12):

Love that. Okay, so now we've got to know Ed a little bit better, we're going to go into the proper questions now. So, are you ready for us to start with those?

Ed (04:27):

Yeah, fire away.

Cheryl (04:29):

So, one of our most commonly asked questions is why do we not label our house types the same as developers? We have a lot of people contact us and ask if we're going to have this house type for example, say like a Persimmon Hanbury available. But we tend to go more just off plot numbers. Do you know why this is?

Ed (04:48):

Yeah, so it's generally speaking, if we're working on developer-led products, where we're buying say, 40 or 50 homes out of their wider development of a hundred homes, they will usually provide a marketing name for their own house types. But for the affordable house types that are on that plot, they're usually defined by a reference number, such as AH for affordable home and then the number for what it is, a two bed, four person, or whatever. So, they don't populate a marketing name for us. There are exceptions, I think Redrow Homes will have within their affordable housing products, they have units with various names like Tavy, trying to think of another one, but they definitely name them. So, that could follow through to our marketing. But I think with developer-led products, because they don't populate a name for us, it's ultimately we then disseminate that information to the wider team and to the marketing team and that's all that we have. We don't have something which we could readily label unless we were making the names up ourselves, which could potentially cause problems because we may end up duplicating what's on another site or with another developer.

Cheryl (05:58):

Okay, that makes sense. How soon into the build is the kitchen and bathroom spec decided on with shared ownership homes? As obviously with the open market, when you buy a new build home, if it's pre-roof stage you can choose the spec but you can't usually do that on shared ownership.

Ed (06:15):

No. So, to think about how we generally contract with ... on my side of the business, which is with the big house builders, is we will enter into contract with them and in so doing, we need to stipulate what we're buying from them. So, we're buying the house and we're also buying the bathrooms at a certain specification and the kitchens at a certain specification, which includes vinyl flooring, et cetera, et cetera. So, the standard of kitchen that we are buying for the shared ownership homes is predefined right at the beginning of the contract. And that could be some years before the development's even started because we do enter into contract before they've got planning consent for example.

(06:53):

But even if they are soon to start on site, we've stipulated what type of kitchen we like and then early on in the construction stage, normally even prior to First fix, they're wanting to know what color selections we would like and they need to do that at scale. If you think we're buying 50 to 80 homes, we're not in a position unfortunately, to be able to stipulate a different finish for each house type. We need to think, "Right okay, what works for a three bedroom house, and what works for a two bedroom house, or a flat with an open plan kitchen?" And so it's purely driven by the early timing, which is they need to cool those off to build into their program of a six to nine month build, but also our need to have certainty over what we're getting and to make sure it works.

(07:41):

And we have, I think in the recent past, we considered ... we had a scheme which was custom build, where the developer was keen to see choice brought into the affordable homes in the same way that they were offering choice to the private customers. And because of the timings, actually we were quite open to doing that. But because of the timings of when they needed that information, we hadn't even started marketing the properties, let alone having any certainty over who might be the eventual purchaser and what their color choices may or may not be. So, it is primarily down to the fact that they need it early on, especially with supply chains being what they are, to have certainty in the build program and hopefully meet completion targets for the houses.

Cheryl (08:25):

Do you think that will always be that way, or do you think there may be a time come where people are given more choice with affordable housing, or do you just not think it would work?

Ed (08:36):

I struggle to see where ... because of the timing, I think it's always going to be that direction that we're being asked to specify too early on to be able to bring customer choice into that element of it, unfortunately.

Cheryl (08:52):

Yeah, no, that makes sense. What is the difference between a land-led development and a section 106 development?

Ed (09:07):

So, within affordable homes, the terms are bandied around quite loosely, aren't they? That, "Oh that's land-led, or that's 106." And essentially, even our teams are divided into two parts and I'm the developer-led or the section 106 side of the business. And so, to be brief on it, section 106 refers to a developer's obligation to build affordable homes on their site. And so, if a developer is coming forward with a hundred houses, then the planning authority will oblige them to have a certain percentage of that site, possibly 30% or 40% to be affordable homes. And that is secured through a section 106 agreement between the landowner who gets the planning consent and the local authority. And so, that's why, when we contract with a developer and we're buying those 30%, 40% of their development, they're termed section 106 homes. We do on occasions by more of their homes than just the section 106 homes but that's more the exception rather than the norm.

(10:16):

The land-led side is actually ... does what it says, is essentially where Aster is going out securing a land opportunity and then working up the planning consent ourselves and delivering the homes. And that could be a mixture of tenure for rent, for private sale and for shared ownership. So, it's land-led by the nature of the fact that we are out to secure the land, whereas the section 106 team, or section 106 developments, we're out to secure homes which primarily already have planning consent off another developer and buying a part of their site.

Cheryl (10:59):

How does the handover process work? So, we have a lot of people ask why they can't view the home that they've reserved before it's handed over. How does that all work?

Ed (11:11):

So, we have a lot of quality checks throughout the construction process and our team of project managers and our surveyors and our clerk of works who inspect specifically the construction, are out on site between them, every week checking what's being done on our properties, checking progress and the quality of the build. But as you approach handover, we have ... Typically our contracts require an eight week notice and a four week notice and they're predicated on the stage of completeness of the homes. Once we get those notices, we then need to inspect the properties for finishes and make sure all the items that we've collected and identified up until then, are being closed down and issue any reports that we have of any concerns. That's the developer for them to close down.

(12:05):

So, within those plots, because of the targets that developers are working to meet their own deadlines, they can be a hive of activity and there can be a lot going on, a lot of finishing, painting, touching up, repainting, replacing bits that have got damaged, unfortunately in construction. And so, it can be quite fraught on site.

(12:25):

To articulate the process, once they've done that and confirmed to us they've closed them all down, we will then reinspect, hopefully confirm that the vast majority, if not all of the items that have been reported have been closed down, and then go through all the paperwork to ensure it's correct before taking handover. The reason why primarily can't do viewings before Aster's actually taken handover is because contractually we're not in possession of the home. The developer is and whilst we might own the land, they're under license to do the construction and the property, until we've taken handover, is part of a live construction site. And so there's all sorts of safety implications that may be involved with having members of the public visit those homes or even with us guiding them around. And really, if you think often on the developer-led sites, it's usually the externals that are catching up. The homes are pretty much complete but actually outside the home, is still laying roads, et cetera, et cetera and getting it to a finished state. So, it's really about safety and the fact that we're not in possession of the unit, so aren't insured to have members of the public walking around what isn't our site, it's the developer's site.

Cheryl (13:42):

Yeah, no, that makes sense. Can you give some more information on the NHBC certificate and what are the main things that it covers?

Ed (13:56):

So essentially, each home comes with a warranty. It's often provided by the NHBC, but there are other warranty providers we use. The second one which is most common at the moment, is Premier Guarantee. So, all the new home owners who purchase property will have either an NHBC or a Premier warranty, essentially. Both warranty providers, what they essentially do, is they also inspect properties throughout the construction and they are ... In doing so, they're seeking to ensure that the developer is building the homes to their required standards, as well as to building control compliance. And once they're satisfied, and only once they're satisfied, they issue a completion statement which confirms they are now putting the property under warranty and they're satisfied with the build quality.

(14:44):

The warranty essentially provides loosely, they do vary between the different providers, but they provide a period of protection against all defects. So, in the first instance, if a defect arises in the first two years with NHBC, it should be reported through to the developer to address. If they fail to do so, then those defects can be pursued through the NHBC warranty and they can compel the developer to attend to them. And if they don't, then equally, they can over commission the work, or compensate the customer under the insurance warranty. But the longer term protection the NHBC warranty gives, is usually between 10 and 12 years after completion, it provides a structural warranty of quality. So, there shouldn't be any issues that arise because they've been inspecting the properties throughout. But in the unfortunate instance, if there was a structural issue, such as a roof leak, or issues with foundation design, then the warranty protects the customer essentially, and us as the asset holder for rented properties, against those defects and we can pursue a claim with the NHBC to get appropriate compensation to remedy the defect.

Cheryl (15:57):

Nice. Are more developments fitting electric charging points within their sites?

Ed (16:06):

Yeah. Essentially, yes. In the last couple of years, we've seen more and more come through primarily because there's been a requirement of the planning consent that's been secured. And so, it's bit been a bit hotchpotch as to where they're at. So, in my region for example, we have electric charging points coming through in certain parts of Surrey but maybe not so much in other areas of Hampshire, because the planning authorities haven't required it. But it's now coming in as a building regulation requirement and so, many properties which are registered for building regulation post June this year will actually require some form of electric charging points. So, it won't be instant in terms of our program because a lot of our current program that's onsite was already registered a year or longer ago with building regulations, but you'll start seeing it filtering through fairly rapidly with the new schemes that we are securing through our future program.

Cheryl (17:09):

Oh wow, that's exciting. Do you have any new contracts in any exciting new areas that you are working on? Any upcoming developments in new areas or anything?

Ed (17:25):

I think all of our areas are really exciting, of course, Cheryl.

Cheryl (17:28):

Of course.

Ed (17:29):

So yeah, my patch, I'm responsible for the eastern side of our patch of Hampshire, Sussex, Surrey and Berkshire, primarily, and Dorset, I always forget.

Cheryl (17:36):

Poor Dorset.

Ed (17:37):

I know. So, in recent years, we've been expanding into Sussex, which was a new area for Hampshire and has quite a substantial build program now in West Sussex and specifically around Chichester. This year we've also branched into Wokingham in Berkshire for the first time and have a scheme secured, which is 74 homes, of which 35 will be for shared ownership. And they're all shared ownership, semi-detached, two and three bed houses. So, it's hopefully a really desirable and attractive scheme.

Cheryl (18:15):

Nice.

Ed (18:15):

And exciting because it's always nice, from an ego point of view, to get into a new borough and make something happen, but also to meet the needs of the business and be expanding into those new areas. We often bid in locations of Aster's boundary areas to grow our patch and our location, but we can't pick and choose either because it's a competitive market and so, we bid on a lot of things and win some of it, but we don't win all of it, for sure. And so sometimes, it's not necessarily purely by design as to where we end up.

(18:51):

In a recent example, I say, we've also ... in Hampshire because of various things that have gone on with the planning issues in Hampshire, our program in the recent past, has dropped in terms of numbers and that's quite a ... was a core patch and certainly is a core patch for Aster but I used to have a lot of activity when I was a project manager in that area. But it's now starting to come back again and we're starting to win schemes there once again. So, it's not always the case, as I say, it's not always the case of just building where you want. It's building where the opportunities are and where we can get our noses in front of other registered providers to secure the affordable homes that are on offer.

Cheryl (19:33):

Nice, exciting times ahead. What does the project manager role involve?

Ed (19:52):

Quite a lot, actually, I'd say. So, I always have a colleague that used to say it's not a Jack of all trades but master of none but you need to be generalist in terms of your knowledge area and know a lot about ... or a small amount about a lot of things to do with development, rather than being a very specialist role and an expert in one. But day-to-day, a project manager's role will involve seeking out and working to secure new opportunities, overseeing and managing a program of housing projects, generally around six for a full-time member of staff. And that will be engaging with the site, attending site meetings, inspecting the homes, assessing the program that the developer's giving you, adding comfort to that, feeding that into the wider business to try and give assurance as to when we expect the homes to be delivered, making sure the quality of the product is there, making sure that the specifications being met as well, and coordinating our various members of the product team. So, that might be updating valuations and inputting that through to the business, et cetera, et cetera.

(21:03):

They're also involved in managing parts of the defect process and closing down schemes, and release ... and managing the payments for the development projects and helping secure our charging program, which is where we borrow money against our assets to fund our future program. Sorry, and also engaging with local authorities, representing Aster at that level and meeting with developers to be the front of shop for the business in that guise as well.

Cheryl (21:33):

It's a very varied role then?

Ed (21:35):

Yeah, it is varied and it can be really exciting. And also can be lots of different challenges because there's lots of plates to spin at the same time, to keep all things ticking over. And one of the main challenges that they have, I think, is often being able to give certainty to a development program, an assurance to the wider business when there's so many ... various factors which aren't in our direct control, that can affect when the homes actually are complete and are ready for us to take possession of. And that's a judgment call that the project managers have to take.

Cheryl (22:08):

Yeah, absolutely. So delays, can you give a brief overview as to why there can be delays, issues that are out of our control, such as seasonal delays or material shortages. We do get a lot of people contact us asking about why their homes delayed, or can you give an insight into that?

Ed (22:36):

I think, yes, for sure. So when, as I said, having touched upon it with the project manager's role, in feeding the information from the business, we're getting the information about when a property will be ready from a developer. And we're not in control of the actual construction program, they are, but they are also reliant upon subcontractors performing, materials arriving on time, planning obligations being met and discharged. And there's a lot of people involved in different elements to get a property ready and be finished and be signed off by everyone. So, first and foremost, when a developer is telling us of a certain date, we will look at how realistic that is and build a degree of pessimism into it to try and manage expectations within the business. But also, because realistically, often the homes come in slightly later than we've been told.

(23:32):

But added to that, because we drive to try and get the best quality at handovers, when we get notices, often we'll get an eight week notice and we push it back with the developer on a case that we don't think the property's ready and there's are two-way conversation, depends what the contract says, et cetera, et cetera. But as we enter into that eight week cycle, as I mentioned earlier about preparing for handover, at the issue of the eight week notice, the homes aren't in a finished state. They are approaching being finished. And so, a lot can happen between that point and the handover date, where the quality, or our requirements for the state of completeness of the home, needs to be achieved. And if it isn't, then that's when we must make a judgment call. Are we prepared to take a home that's almost there but not where we want it to be? Or actually, is it better to take a stance and push back and wait until the homes are ready, because ultimately we need to deliver a good quality product?

(24:30):

And so, I think there's always a tension between timeliness and 100% quality because there's so many various factors that come to it. I think also, and I've had it in the past, where everyone is acting in good will and working very hard to achieve an outcome, but one thing's being missed and it's a critical thing, and that ultimately means that, I don't know, the building control can't sign the property off, or the NHBC warranty provider isn't happy with it, or we are ultimately not happy with it until it's sorted because it might affect the safety or the long-term enjoyment of the home. And that way you just end up and say, "Well, it has to be sorted before occupation can be made." So yeah, there are a lot of facets to it, notwithstanding planning issues, or the odd piece of paperwork, or the gas certificate having an error on it or something like that, that also causes a delay.

Cheryl (25:25):

That's good to know. I know you briefly touched on it when talking about the handover process, but with snags, what are snags and how does that snagging process work?

Ed (25:47):

So, snags really are items that our surveyors have identified, when they're inspecting the property prior to handover, they're items or small issues that they have identified in their inspections that need to be addressed. And typically, they may be a minor scratch, or a blotch on the paint work, or ... trying to think of something else. There might be an item that's been installed, say a tap, it's been installed and it's not quite the right tap or something. But they really shouldn't, no snag should really affect the beneficial enjoyment of a property. And that's where the judgment call is required from the project managers because we really want to minimize the list of snags we have at handover, because it creates a legacy and a challenge for those to then be closed down once somebody's living there.

(26:39):

But at the same time, you could be waiting for a very long time for a developer to actually manage to close down absolutely everything. And so you have to say, "Okay, well if we've got eight to 10 items and they're all minor items, it's possibly reasonable that we take that home, move someone in, and the developer comes down and sorts those out afterwards." So, it is a subjective thing and it is a judgment call in terms of which developer you're working with, how committed they are to closing down their snags, previous experience and really what the best outcome is for everyone involved and primarily the customer. If we've already experienced delays, for example, it may be that we've got the property as good as we can get it at that juncture, and it's in everyone's interest to actually take the property and then pursue the snags, than it is to say, "We're not taking the property, until it's snag-free." But we do try and get to a situation where we've got no major items at all which would actually ... somebody would move in and be instantly disappointed with what they found. We do try and work very hard to minimize it to be minor items, that shouldn't really affect people's enjoyment of the home.

Cheryl (27:50):

Perfect. That is the end of all of your questions.

Ed (27:55):

Brill, thank you.

Cheryl (27:56):

Thank you so much for coming onto the podcast.

Ed (27:58):

Oh, you're welcome.

Cheryl (28:01):

Thank you for listening and for your support. This Shared Ownership Thing podcast is brought to you by Aster Sales. Visit aster.co.uk/sales for more information.