New Homes Ombudsman for Sellers and Buyers

THE government has published recommendations for dealing with complaints from buyers of new build homes.

A New Homes Ombudsman scheme will be introduced operating across the UK and paid for by developers. The Ombudsman’s job will be to enforce standards to ensure buyers get the quality of newbuild and finish they expect. They will also be responsible for promoting best practice in house building.

The Scheme follows a Consultation government launched in June 2019 on newbuild quality and complaints.

New Homes Code of Practice

Government will publish a Code of Practice for newbuild house sellers to sign up to and set out a process that house buyers can follow when they have a complaint or dispute. House developers will be forced to belong to the scheme through law. Once legislation is in place, it will be unlawful for a person who engages in the development and selling of new build homes not to belong to the New Homes Ombudsman.

The scheme will operate for up to two years after purchase.

Scope of the New Homes Ombudsman

It’s not just house developers that will be part of the Ombudsman Scheme, but all organisations who commission or build new homes for the purpose of selling them, including:

  • Commercial developers;
  • Registered providers of social housing selling freehold homes;
  • Housing corporations;
  • Developers and others who use special purpose vehicles (SPVs) for development;
  • Private developers who build and sell shared ownership homes; and
  • Developers who convert and sell properties, either through changing the use of a premises or creating new dwellings.

Developers will be required to publicise details of a New Homes Ombudsman scheme to purchasers.

The Code of Practice will cover not just the quality of the newbuild itself, but also include complaints involving fuel, energy and broadband performance.

Enforcing the Code will be done by law and the government says it will include sanctions and public expulsion from the scheme. Consumers may also be awarded compensation and demand apologies and explanations following poor quality and service. The scheme will initially be voluntary until legislation has been passed by Parliament.

Industry Responses

Licensing would complete consumer protection picture, says FMB

Brian Berry, Chief Executive of the Federation of Master Builders (FMB)

Brian Berry, Chief Executive of the Federation of Master Builders (FMB) said, “This announcement is a step in the right direction for consumers and house builders alike. As the FMB had demanded, it is correct that the New Homes Ombudsman will be backed up by law. We are pleased that the Government has recognised that the new system must not be burdensome to small and medium-sized (SME) house builders. If we are to meet the Government’s target of building one million homes over the next five years, SME builders must be encouraged to play their part.

“The details of this sensible step are still to be worked out, and the SME building industry must be central in the process as the funding, standards, and delivery model are decided upon. Any new consumer code must also ensure that all new homes are covered by the highest-rated insurance companies.”

Berry concluded, “While welcome, the drive towards ensuring quality for the consumer cannot be fully achieved without an industry-wide adoption of a licensing scheme. So long as any company is legally allowed to undertake construction work in the UK without having to demonstrate a minimum level of competence, homeowners will remain at risk from rogue builders and poor service, leading to the sorts of complaints that the New Homes Ombudsman has been established to address.”

Confusing the Difference between Professional Regulation and Consumer Redress

Hew Edgar, Head of RICS UK Government Relations & City Strategy

Hew Edgar, Head of RICS UK Government Relations & City Strategy, said, “RICS has been liaising with consumers and industry on how to address quality issues in the new build sector, as part of our proposed guidance on the inspection of new residential building works and snagging, and welcomes the new details on the New Homes Ombudsman.

“Its introduction will provide a simpler, more transparent process for those purchasing new homes when it comes to handling any complaints, but this needs to come with proper communication to ensure transparency on how redress can be accessed in our industry.

“We do have concern the Government is confusing the difference between professional regulation and consumer redress – these are very different things and one should not be used to replace the other.”

Rogue Developers Stamped Out

Jerald Solis, Director at Experience Invest

Jerald Solis, Director at Experience Invest said, “This is an important step in the right direction. New-builds are integral in addressing the housing crisis, yet a handful of developers have tainted how the public perceive new-build constructions. Rushed and poorly finished projects are hugely frustrating for homebuyers. And at the moment, any dispute needs to be settled in court which is both a long and expensive exercise.

“A New Homes Ombudsman will ensure the interests of those buying new-builds are legally protected and rogue developers are stamped out of the market. At the same time, it means new-builds are being constructed to the highest professional standard.”

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