New Homes Ombudsman: factsheet
Updated 5 April 2022
© Crown copyright 2022
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/building-safety-bill-factsheets/new-homes-ombudsman-factsheet
What are we going to do?
The New Homes Ombudsman scheme will provide dispute resolution for, and determine complaints by, buyers of new build homes against developers.
Once the arrangements for the ombudsman scheme have been made, developers will be required to become and remain members of the scheme.
Where the ombudsman determines a dispute in favour of the complainant, they may order redress such as paying compensation, and where this is not complied with, the scheme may expel the member as a last resort.
How are we going to do it?
Provisions in the Building Safety Bill will require the Secretary of State to make arrangements for there to be a New Homes Ombudsman scheme to resolve complaints from homebuyers about developers, this could be with a third party, by appointment or the government could establish the scheme itself.
The New Homes Quality Board is bringing forward proposals for a voluntary ombudsman scheme which, if it is suitable, could become the New Homes Ombudsman scheme once legislation is passed. The government is supportive of the Board’s work to improve redress. However, the Board is not government-led.
The legislation sets out that a relevant owner of a new build home can complain to the ombudsman about the scheme’s members.
Complaints can be made about the scheme’s members within two years of the first acquisition of a new-build home from the person who developed it. This could include complaints about the conduct and the quality of work of the developer.
The scheme will be able to set out other persons who will also be able to complain about its members.
The category of ‘developer’ is defined to include both those who create new homes by constructing new buildings, and those who create new homes within existing ones. This means that, where existing buildings are converted to create new homes, buyers will have better protection, just as they will if their building is brand new.
The government will have the power to add further descriptions of a developer through secondary legislation, including for example connected persons, if it is necessary. The devolved administrations will have the same power in relation to homes in Wales, Northern Ireland or Scotland.
The legislation includes a power to require developers to become and remain members of the New Homes Ombudsman scheme for a period specified in secondary legislation.
Where a developer breaches the requirement to be a member of the scheme, the provisions create powers for an enforcement framework to be set out in regulations, including about investigations and the imposition of civil sanctions for such a breach. There must be a right of appeal against any such civil sanction. To ensure that developers know what is expected of them and homebuyers know what to expect, the Secretary of State may issue or approve a developers’ code of practice about the standards of conduct and standards of quality of work expected of the scheme’s members.
The New Homes Ombudsman scheme must meet minimum requirements. The minimum requirements include, but are not limited to, the need for the scheme to make provision about the following matters:
- how to become a member of the scheme (such as any requirement for membership fees)
- the procedure for complaints and which matters complaints may be made about
- the enforcement of the ombudsman’s determinations (which may include possible expulsion from the scheme)
- the redress members may be required to provide to homebuyers
Background
Building inspectors check to ensure that building regulations requirements are met on new homes, but it is the developer’s responsibility to ensure new homes are built to the right standards.
Most new-build homes are issued with a 10-year new-build warranty. As a condition of obtaining a warranty, a developer will have to join an industry-led ‘Consumer Code’ that their warranty provider belongs to and which currently provide dispute resolution for new build homebuyers and sets standards expected of developers from the pre-sale process through to the first two years. The New Homes Ombudsman scheme will replace these consumer codes in future.
Generally, during the first two years from completion of building work it remains the responsibility of the person who carried out the work to put right any damage or defects. This is generally known as the ‘defect liability period’, Warranty providers may complete this work on the builder’s behalf, depending on the terms of the warranty.
Where a problem occurs from three to ten years after completion of the building work, the warranty provides insurance cover against the cost of repairing defined sorts of defects. However, it is often specific about what it does and does not cover.
If a home is covered by a warranty, the warranty provider may be contacted to see to see if there is anything they can do to help facilitate resolving the problems with the property. Some warranty providers use independent Alternative Dispute Resolution services to resolve disputes.
Warranty Providers are outside the scope of a New Homes Ombudsman. If a consumer is unhappy with the warranty provider’s response, they may complain to the Financial Ombudsman Service.
Why do the New Homes Ombudsman provisions apply only to England?
Housing is a devolved matter and within the competency of the devolved legislatures. The New Homes Ombudsman provisions are for new homes built in England.
We are in discussions with the devolved administrations about the New Homes Ombudsman provisions, and they are considering how this policy might be taken forward in their territories.
Will the voluntary New Homes Ombudsman scheme be the scheme provider?
The Secretary of State will have the flexibility to make arrangements to ensure that a New Homes Ombudsman scheme is in place, this could be with a third party to establish and maintain the scheme.
The voluntary scheme, if it is suitable, may be the scheme that the Secretary of State makes those arrangements with.
The government is supportive of the work of the New Homes Quality Board and will liaise with the Board on its proposals.
What teeth will the New Homes Ombudsman have?
Developers will be required to become and remain members of the New Homes Ombudsman scheme.
The New Homes Ombudsman scheme must make provision about the investigation and determination of complaints, including a requirement for the New Homes Ombudsman to require information from scheme members and to provide complainants whose complaints are determined to be well-founded with a form of redress as set out in the legislation.
The New Homes Ombudsman scheme must include provision about the enforcement of its determinations, which may include provision for the expulsion of a member from the scheme.