Lord Best: Time to introduce a mandatory New Homes Ombudsman scheme

Posted On: 
26th June 2018

Against a backdrop of an industry dominated by major providers whose performances leave so much to be desired, a New Homes Ombudsman could provide housebuyers with the consumer protection they have lacked for too long, says Lord Best.

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Dominic Raab, the Housing Minister, said this week that “the vice-like grip” of the major housebuilders must be broken.

One way to achieve major change for this industry is for government to introduce a mandatory New Homes Ombudsman scheme, as advocated in 2016 by the All-Party Parliamentary Group on Excellence in the Built Environment, in its report “More Homes, Fewer Complaints”.

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The Ombudsman idea was subsequently taken up by Sajid Javid. Now a new report from the APPG, “Better Redress for Home Buyers”, with the Construction Industry Council providing the Secretariat, puts flesh on the bones.

But is the creation of a New Homes Ombudsman really necessary?

It is good news that politicians of all persuasions are agreed on the need to build around 300,000 homes each year. But not so good if the new homes are rubbish. The big housebuilders are accused of failing consumers on every score: soulless designs; the smallest properties in Europe; excessive prices inflated by government Help to Buy subsidies; leasehold rip-offs; use of a planning loophole to avoid building affordable homes; land hoarding; poor governance and bad behaviour, as demonstrated by the Carillion collapse and the ludicrous £110m bonus to Persimmon’s Chief Executive; abject lack of innovation; disastrous neglect of investment in skills training.

The list goes on. And it is the consumer who pays – through the nose – for a product that, far too often, is inadequate from day one. Thanks to poor workmanship, lack of supervision, corner-cutting, a large proportion of all new homes come with defects, “snagging” problems, work that has to be redone.

The APPG heard how affected homebuyers were exasperated not just by the defects but by the builders’ failure to put them right. We heard about the confusing plethora of warranties, housebuilding codes and complaints procedures, with people having to wrestle with an almost Kafkaesque system seemingly designed to be unhelpful.

Our report spells out the details of how a New Homes Ombudsman could operate. We concluded that what was needed was an independent service, free to consumers, with a clear remit, tough sanctions – enabling the Ombudsman to make awards to consumers of up to £50,000, with these reported annually – and an industry wide Code of Practice, with a tight timetable for action. The New Homes Ombudsman should be funded by a levy on housebuilders, covering the initial two-year period of the housebuilders’ liability for defects; subsequent problems would be down to the warranty providers but part of the Code of Practice for housebuilders would be for use of an approved warranty scheme which we would expect to weed out those that currently represent substandard terms.

Against a backdrop of an industry dominated by major providers whose performances leave so much to be desired, the APPG believes a New Homes Ombudsman could provide housebuyers with the consumer protection they have lacked for too long.

 

Lord Best is Vice-Chair, APPG of Excellence in the Built Environment

 

Chris Blythe OBE, Chief Executive of the CIOB said 'A New Homes Ombudsman will lead to improvements in the quality of any new homes built; whilst prompt and effective rectification is essential after sale, what is more important is that housebuilders adopt a “get it right first time” attitude. We all win'. Read the full response here.