4 to 1 in favour of the ombudsman
Telephone interviews with more than 250 developers and house builders conducted between November 2019 and January 2020 showed that 39% were in support of an ombudsman compared to 11% that were not in favour of the scheme’s introduction.
An even greater number of respondents (65%) were supportive of government-led minimum warranty standards, with just 9% against the idea. Such an approach could standardise the industry and build confidence for buyers, according to comments made.
However, government has decided against legislating on warranty standards. Instead, new laws will require all developers to belong to the New Homes Ombudsman scheme, which will uphold a new code of practice for developers and enforce requirements. Self-builders not intending to sell on their home will be exempt.
What powers will the New Homes Ombudsman have?
The ombudsman will uphold a new code of practice which will have “higher standards that developers need to meet in their services for sales, marketing and build.”
The scheme will seek to provide a clear route for buyers of new-build homes to complain should things go wrong and provide resolutions with the aim of avoiding court. The dispute period will likely be for two years following the purchaser’s completion date and will have an award limit of £50,000.
The ombudsman will have powers to:
- Make awards for compensation to the homebuyer
- Request developers to carry out or stop work
- Direct developers to improve their service
- Publish details and reasons for a developer being expelled from the scheme
- Make recommendations to resolve disputes and set timescales for closure
- Request apologies and explanations from developers
Developers will pay for the New Homes Ombudsman, though the government expects fees to reflect the size of the developer’s business. A pay-per-unit and per-upheld-complaint model has been suggested.
What happens next?
Before legislation, the government intends to work with consumer organisations, warranty providers, lenders and industry to bring forward plans to introduce a voluntary scheme. The scheme will be invited to bid for the New Homes Ombudsman role once legislation has been passed.
The government also intends to establish a “New Build Quality and Consumer Experience Monitoring Group” to collect data on consumers’ issues. The group will report findings to the New Homes Ombudsman once established and help formulate a Code of Practice.
The government’s full response to the New Homes Ombudsman consultation can be found here.
- LABC Warranty is a founder member of the Consumer Code for Homebuilders, a group championing quality in new-home construction that also serves to help protect homebuyers.