Housebuilders warned against gagging orders on new home owners
Housebuilders that carry out repairs on new-build homes are forcing residents to sign non-disclosure agreements (NDAs) as a condition of repairs being done, according to the chairman of Parliament’s Housing Committee.
Clive Betts, MP for Sheffield South East, told Radio 4’s Money Box programme that the practice was “appalling” and would not be acceptable in other industries.
“If this kind of thing happens in the car industry for example, car companies have to tell their customers, issue a recall, and get the problem fixed. I don’t see why it should be any different when it comes to buying houses,” he said.
Chris Blythe, former chief executive of the Chartered Institute of Building, said it was “quite common” for housing developers to use them on new residents.
“Unfortunately, because of the nature of the agreement, i.e. non-disclosure, no-one knows very much about it,” he told the BBC. “But it’s done for commercial reasons, because if it became known on a particular development that there are problems [then] other house buyers would be asking the house builder to do remedial work [for them too].
“So they use these to silence people… and it’s a despicable practice,” he added.
Around 250,000 new houses were built in Britain between 2019 and 2020, according to the latest annual figures — the highest number of homes built in a year since 1987.
MPs have warned that many of them are built with major flaws including poor brickwork, faulty foundations, and plumbing and sewerage problems.
Paula Higgins, chief executive of property advice firm Home Owners Alliance said the use of NDAs is widespread within the industry, adding that it should be banned.
“It is a form of blackmail to ensure that housebuilders keep their reputations intact,” she said.
The Home Builders Federation rejected the claims, saying NDAs were “not widely used” by developers.
“Settlement agreements are legal contracts that are used by businesses across all sectors. They are not widely used by housebuilders and when they are it tends to be with regards to details of compensation payments ,sometimes at the request of the customer,” a spokesman said.