09 March 2020
Protection and redress for purchasers of New Builds
Unfortunately, issues relating to the quality and redress around new-build homes are not new. There are often ‘horror’ stories highlighted in the media about issues and faults with new build properties that have arisen and the cost to the new home-owner. You therefore need to know where to go to for help if things don’t always go to plan and to know that any problems will be put right.
Currently, the position for purchasers is not always clear which is why the Government has announced the introduction of a New Homes Ombudsman.
As it stands, there is no regulatory complaints framework for new build homes. There are numerous industry-led voluntary Consumer Codes of Conduct and in order for developers to obtain the NHBC 10-year warranty, the warranty provider should require them to register with the Consumer Code that they belong to.
The problems have occurred because Consumer Codes differ in accessibility, the amount of compensation and types of decisions that can be made. There are overlaps between responsibilities that means purchasers are not sure where to seek help. The current Codes therefore lack the power needed to ensure issues are rectified by developers. Purchasers are therefore left facing long waits and costly court cases to sort out issues with their new home.
Proposals for the future
Following a consultation in 2019, the Government has announced that it will bring forward legislation to underpin a New Homes Ombudsman. This legislation will ensure that there is a statutory obligation for developers of new build homes to belong to the Ombudsman. The purpose the Ombudsman will be to adjudicate on complaints and uphold standards as set out in a new Code of Practice.
It is likely that all organisations and developers who commission or build new homes and sell them on will be obliged to sign up to the Ombudsman. The Ombudsman will have powers to make awards for compensation to the purchaser, expel developers, make recommendations and resolve disputes and set timescales for rectifying disputes.
There are also plans to approve a Code of Practice which will set out guidance on what consumers can expect of a developer. The Code will cover the whole of a developer’s building and selling processes and will reflect best practice.
The Government will also work with warranty providers to ensure purchasers receive information about what is and isn’t covered under a warranty in a clear and easily understandable format.
The New Homes Ombudsman will be independent from industry and will be free for customers to access. It is likely that the period within which a purchaser can approach it with a dispute, will be within the period of two years following the initial purchaser’s completion date. This aligns with the current time period for builder’s liability for the majority of warranties and will not prevent further recourse after this time.
It is hoped that the New Homes Ombudsman, with its power to hold developers to account will provide new build purchasers with much greater rights of protection and adequately address complaints regarding delays and defects.
If you are, or are thinking about purchasing a new build property and would like to discuss the process for purchasing a new build property, then please contact our property team on email@example.com or call 01753 279064.