Housebuilders that carry out repairs on new-build homes are asking residents to sign non-disclosure agreements as a condition of the repairs being done.
This is according to Clive Betts, MP for Sheffield South East and chairman of Parliament’s Housing Committee.
He told BBC Radio 4’s Money Box programme that the practice was appalling and would not be acceptable in other industries, and housebuilders needed to be more open about what work had been required as systemic defects might affect other properties too.
“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.
Paula Higgins, CEO of HomeOwners Alliance, a property advice group, said the practice was very prevalent and should be banned.
“It is a form of blackmail to ensure that housebuilders keep their reputations intact,” she said.
She said buyers of new-build properties needed to go into a purchase with their eyes open and do everything they could to know exactly what they were buying.
“New homes can be riskier than old homes because you do not know what you are buying. It is natural that expectations for quality are high with new builds but there can be huge issues that you are stuck with if you complete a purchase,” she said.
She advised prospective buyers to get a snagging survey before making a purchase to spot any defects. If a developer does not allow a snagging survey to be done before completing on a property, buyers should get one as soon as possible after they have moved in, she added.
While some defects can be minor, others can be very serious, such as problems with plumbing and sewerage systems, brickwork, or foundations.
However, the House Builders Federation, a trade association for the home building industry in England and Wales, said the practice was not “not widely used” by housebuilders.
“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.
There were 244,000 new homes built in 2019 to 2020, according to government figures, the highest number of homes built in a year since 1987.
The Telegraph has previously campaigned against allowing gagging orders to protect companies and silence whistleblowers at the expense of the public.
A Telegraph investigation revealed a number of individuals had been paid large sums of money under NDAs by Sir Philip Green to prevent allegations of sexual misconduct and racial abuse from being aired in public