AFTER BUILD. PROFESSIONAL AFTER CARE FOR NEW HOMES

TOPIC: COST
TIME TO READ: 15 MINUTES
 

Never let cost get in the way of a great service

Sounds like common sense! However, the new homes market is not without its fair share of troubles right now. 

​

We appear to have travelled a complicated road with many and varied diversions or roadblocks, all of which have conspired to make building and selling new houses about as difficult as it can be.

​

• Wholly interrupted building programme (2019/COVID)

• Insufficient numbers of trades (2020/Brexit)

• Soaring interest rates (2021/Kwasi Kwarteng’s disastrous mini-Budget)

• Rising material costs and shortages (2022/Ukraine war)

• UK inflation rate hits 10.4% (2023/February)

• UK tax increase/loss of business confidence (2024/Autumn budget)

• Threat of increased defence expenditure (2025/NATO commitment)
   

It’s hard and sometimes difficult to see how we might ever return to a few years of economic stability (but we will). For now, it’s easy to see why so many businesses have pulled their horns in and cut overheads; even those not directly affected have taken precautionary steps to make sure they survive these difficult months.
 

What business owner worth their salt wouldn’t understand that. But sometimes we must look beyond that which is staring us in the face to consider the consequences of such monetary actions. There are things that simply must remain a part of the house building equation – obvious things …

• Land

• Materials

• Contractors

• Customers
   

I know, it’s insultingly obvious, I feel embarrassed to be saying it! But there are aspects that get completely chopped out – pruned back, as a measure to cut ‘unnecessary costs’, and one of those things is ‘service’.

​

When I say service, I am talking about how a developer looks after a customer once they have purchased a new home; not in the lead up to making the buying commitment, but beyond that stage. Do we even need to think about that? How is that really a factor in how a developer runs a business in such troubled times?

​

Well, step back just a moment and let’s look at this from the consumer’s perspective.

It has become significantly harder to get a mortgage than it was a decade ago. Many lenders have tightened up their affordability criteria to reduce the chances of accepting borrowers who may struggle to make mortgage repayments going forward, with steep energy bills and food costs continuing to eat up a significant proportion of our monthly incomes. 

​

When a mortgage application is successful, the new homeowner is already feeling the pressure. And this feeds down through their experience of owning a new home. So it is of small surprise that when something goes awry their response is ‘pre-charged’ with the sense that they have just jumped through flaming hoops of mortgage application, along with often, years of deposit saving, only to find that now, there are problems with their new home.

​

This heightened sentiment is palpable. And as an organisation who provide After Care, we’re very aware that what may have barely registered on the scale of dissatisfaction a decade ago, is now peaking as a source of considerable unhappiness.

​

In short, the extent to which a homeowner needs supporting today following the purchase of their new home, is way above that which more than sufficed before.

​

What does it matter? They’ve made their purchase and paid over their money. Well, it matters a great deal, and this is why increasingly, we’re signing up new clients.

When a consumer has a problem that they perceive a developer is failing to sufficiently acknowledge, let alone resolve, their propensity to change up several gears from the initial reported problem to a full-on complaint, is significant.

Those businesses who ignore the signs (let alone the complaint), can quickly become the object of a personal vendetta to seek disproportionate recompense. By now it’s ugly and the consequences of mishandling what comes next can be very costly.

​

The consumer has a powerful digital friend in the guise of social media. It is the most effective tool at levelling the playing field to secure satisfaction. The fall-out is most often reputational damage for the developer coupled with an adverse impact on future sales. A single unhappy homeowner can quickly enlist support among their neighbours and this with modest organisation will fuel a campaign to hurt you. We have seen this so many times.

​

So, is the ‘cost-saving’ of no After Care worth it? To answer that may first require you to understand what the cost of reliable, professional After Care looks like.

​

Price and affordability are not the same thing

In a market of under supply, new homes are anything but a commoditised product. Different consumer groups have different reasons for buying, but affordability and price are not the same thing.

​

Older buyers who have sold to down-size and are cash-rich and do not require a mortgage are seeking to buy new build not because they perceive it to be cheaper, but because they don’t want the burden of maintenance an older property is likely to present and other factors in their buying decision were location (nearer to family) and local amenities i.e. close to shops, a doctors, dentist, pharmacy etc.

​

Investment purchasers are less influenced by price and more by return on rental income – is the property in an area of rental under-supply and therefore high demand. Can we afford it? Is a question asked by many, but is it the cheapest is not?

​

Value (or perceived value) is important, and this is where new build wins again. Not only the promise of low/no maintenance, but the upside of latest technology and construction processes which lead to better energy performance and lower heating bills (a feature which has become considerably more attractive in recent years as the cost of gas and electricity soars).

​

Is buying a new house analogous to buying a new car?

Very much so. Many purchasers will believe they are paying a premium to own new but accept that there are benefits that more than out weight this possibility.
 

1. [CAR] Latest technology / [HOUSE] Latest build processes

2. [CAR] Optimum fuel efficiency / [HOUSE] Lower energy bills

3. [CAR] Lower maintenance costs / [HOUSE] Modern materials

4. [CAR] Greater reliability / [HOUSE] Constructed to latest standards

5. [CAR] 12-months to 7-years warranty / [HOUSE] 10-years warranty

6. [CAR] After sales service and support / [HOUSE] After sales service and support

One of the greatest benefits a developer can offer a purchaser is peace of mind. That includes service and support following the sale. It’s a key element to the purchase process and its importance to the buyer is often identified through questions a purchaser will ask a sales agent, such as … “What happens if something goes wrong…?” and “If we have a problem with such and such, what do we do…?”  The response to which in every instance is a quick and reassuring … “Oh, not a problem, we have an After Care service …!” or “Don’t worry, the warranty will cover that!”.

​

Is the lack of After Care hugely short sighted?

Sadly, and in too many cases, service is the first casualty of cost-saving! And that’s a great pity and immensely short sighted, because it is far easier to provide great service than it is to build a great property. It takes an average of 30 weeks to construct a new home, with a construction cost of [say] £180,000 per plot. Whereas it can take a few hours to organise After Care at a typical cost of £350 per plot for 2 years cover (less than 0.2% of the cost of construction).

​

Yet the consequences of this are far reaching and reputationally damaging.

Is it the thought that by containing After Care costs you are making a rational contribution to the better management of your business, that leads to decisions like this?

​

Yet every day, site issues add unnecessary cost to a build, that substantially exceed the cost of After Care. For example, the carelessness of a construction worker who catches a smart new front door and puts a sizeable ding in the factory painted aluminium skin. Ruined – new front door ordered (no one owns up - £850). Or a careless window cleaner who puts deep scratches in glazing from a gritty chamois (no one owns up - £1,500 for replacement glazed units in several frames).

These are all typical every-day occurrences which more often than not erode the bottom line, yet in an instance where ‘service’ is so crucially important to a consumer, a developer would be willing to take the gamble that they can save some money and hope to dodge the backlash when the absence of After Care becomes the basis for complaint and protracted aggravation.  Frankly, that doesn’t make much commercial sense.

Would you accept a 0.2% discount to secure a sale?

Or would you say ‘no thanks’ and leave it on the market (for goodness knows how much longer) to achieve the additional value?

​

Most developers would accept the reduction, happily. So, how about this for an idea? Instead of a meagre discount which probably wouldn’t excite anyone, spend £350* to provide 2 years After Care for each customer and, fulfil your warranty obligations into the bargain (it’s also a nice ‘value add’ for your sales team when looking to enhance the overall proposition). Isn’t it a bit of a ‘no brainer’?

​

Failure to organise After Care will invariably cost your business more! How? Because unhappy customers ALWAYS generate complaints which in turn place more pressure on the organisation.

 

This manifests itself in several ways:

1. Irrespective of the reason why a customer is complaining, someone must take the call and respond to it. (This is a resource cost).

2. Where the complaint is justified, someone must organise a programme of work to address the issue. (Another resource cost).

3. When a complaint is either ignored, or where the response is too late, many complainants will turn to social media to voice their dissatisfaction.

4. Social media is instantaneous and permanent. And the damage to a business’s reputation is of unquantifiable cost; poor reviews and search engine results that present a poor picture of the business hang around for many years to come. (Reputational damage cost).

5. All too often, the extreme of complaints will involve senior officers of a company as they are quickly escalated internally. This is now a costly management distraction. (Highest level of resource cost).

6. To pacify unhappy homeowners some form of compensation is often applied (re-painting a room at no expense or the addition of a chargeable feature for free. (Intangible cost). It just isn’t worth it! No After Care does not save an organisation money, but rather it heightens the risk profile and without question costs more, over not just a given development but, over that business’s future trading.
    

Here's a money saving idea – don’t provide a front door!

What – ‘no’, you wouldn’t dream of it? Of course, you wouldn’t!

What purchaser would happily buy a new property if it had no front door, it’s a bonkers idea?

Yet, all too often, to save considerably less than the cost of a front door, developers will neglect to provide professional, reliable After Care to protect their customer for the first 2 years following legal completion.

​

Would you allow your customers to struggle through the Builder’s Rectification Period without providing a dedicated, experienced After Care resource, just to save a few hundred pounds?

Cutting out or cutting back, After Care is another way of saying to a purchaser, that they’re not important to you, that their business doesn’t sufficiently count.

​

Maybe it’s not that though – maybe you think you are providing After Care but are just being careful about how you do it, to keep costs to a minimum.  Understood – that’s logical and on the surface makes perfect commercial sense. But the very nature of what After Care represents means that it is all or nothing – you can’t have partial After Care, because that’s very nearly as bad as no After Care … it’s that word ‘Care’.

​

It's the word ‘Care’ that gives you a problem

It is so easy to diminish the concept of After Care, to just after thought! And that’s not a great place to end up when a customer has a complaint, because you need to be in a place of strength when managing a complaint and the only place that can be is, that you CARE. Very often the complaint has arisen in the first place because you patently ‘don’t care’.

​

Problems will arise and things will go wrong. Materials will break and workmanship can fail. But largely, homeowners understand this, and they are not looking for a guarantee against that happening. What they are looking for is a guarantee that if it does happen, there will be a prompt, friendly, professional service in place to take care of things. There’s that word again. ‘Care’.

​

Just to be clear, asking someone who already has a job to also handle After Care …. doesn’t work. If they already have another job, they cannot possibly provide After Care, because nobody knows when a problem will be reported, so how can you possibly be available when it is, to handle it. That’s when the complainant either gets ignored or required to leave a message. Then the message doesn’t get passed on so in time, the complainant, complains again. And in no time, the original reason for reporting a problem get’s eclipsed by a new much bigger problem – they are being ignored.

​

It is a cycle of rapid deterioration we have seen hundreds of times. As soon as the homeowner must complain, you have already lost any perceived cost saving you previously thought you had achieved. From that point onwards, it is more about damage limitation than cost saving.
 

What does it cost to provide After Care?

There’s a formula that can be applied to any business who wishes to organise their own After Care.

​

You need dedicated resource to take calls, and the minimum is two full time people. Why – because one person will need breaks, holidays, will be sick from time-to-time, and you will experience staff turnover. The economics of this really don’t work for very small businesses because the national living wage means you must pay £12.21/hour from April this year (2025) which with new NI rates (15%) and pension contributions (3%) will cost an employer £28,094 – per employee – that’s an annual cost of £56,189.

There are additional costs to factor in (a dedicated technology platform to capture, record and manage data, office space, management line-reporting, phones, transport etc.) But even without building a charge structure around any of that, staff costs alone will mean …
 

A developer completing 10 plots would pay £11,238 per plot to organise their own After Care!

Remember, as developer, your warranty requires that you provide 2 years After Care (the Builder’s Rectification Period), so you will have resource costs of £56,189 X 2 = £112,378 as your start point.

​

After Build would charge £506 per plot (for 2 years) to provide your After Care - that's a massive saving of £107,318!!
 

What are your options?​

Large developers can make the costs work because of the economies of scale. But much under 1,000 plots a year, this doesn’t work. For a SME developer, outsourced After Care makes the most sense. It is affordable and you only need pay for what you need – when you need it.

​

After Build provide fixed price After Care from as little as 30 pence per plot per day. As a potential saving, it’s removal from your budget wouldn’t even buy you a cup of coffee at the end of the week.

 

The difference is staggering. If your options are:
 

1. Provide no After Care.

2. Try and provide your own internal After Care.

3. Outsource After Care.
    

Is it that difficult to see which way the most sensible way is to go?

​

Employer NI rates/NLW increase April 2025

In just a few weeks’ time, employers will be paying an additional 1.2% in National Insurance contributions and, the National Living Wage will rise by 6.7%. What does that mean for developers resourcing their own After Care?
 

The additional NI cost per employee per annum (based on the new National Living Wage) will be £1,994 pa. Double for two people and double again for the two years of After Care a plot requires and that’s an additional employer cost of £7,986. On the basis that the average cost of outsource After Care is £350 per plot, that’s equivalent to providing service for 23 plots!
 

When you next review your development budget, keep in mind that not all cost savings make for a better business.
 

Want to know more? Contact Mark Fawcitt (Director of Sales and Marketing) After Build: markf@afterbuild.com or mobile: 07342 037810.