Updated: Oct 18, 2021
Many of you may recall that back in October, the Queen made a point of confirming the announcement of the New Homes Ombudsman in her speech. Not to be outdone, the Home Office and then the NHBC announced the end of the consultation period and the rolling out of the initial plans for a new type of Ombudsman.
The objective … “to provide a better redress for the new-home buyer”.
When it comes to building a new house, our industry is governed and regulated in a myriad ways to the point where these rules have been blamed for stymying the government’s target of 1 million new homes by 2025. Think of ever narrowing planning restrictions, think of environmental lobbies and homes for life and energy efficiency ratings. Think of building regulations and trade laws. It’s tough building new houses.
A quick recap on existing enforcements.
These differ a little from one provider to another but broadly they all allow purchasers to escalate complaints about unresolved legitimate build defects. Most warranties covering the first two years post legal completion stipulate that a developer must resolve legitimate issues of product or workmanship during the Developer’s Liability Period. If they don’t, the warranty provider can step in, bill for the work and ultimately reduce the developer’s insurance rating.
Consumer Code for New Homes
This was set out as a set of trading standards reflecting best practice but recognising that buying a home is not like any other purchase. The code offers a dispute resolution service and mandates that the developer conforms to a set of best practice responsibilities.
Always a final option to seek redress. There’s a new set of regulations in town in the form of a New Homes Ombudsman – indeed you might already be familiar with the Housing Ombudsman, the Property Ombudsman, the Financial Ombudsman; there are many Ombudsmen (who would believe it, even a Furniture Ombudsman).
What or who are Ombudsmen?
The ombudsman service are there to resolve complaints between companies, charities or social bodies and their consumers. They are independent organisations who are free of interest from any party. They have the power to make judgements and awards in the form of
Orders, i.e. do or stop doing something
A mandate for apology or explanation
A financial reward
Actions for the company that won’t directly affect the complainant
Different ombudsmen are regulated in different ways depending on which sector they relate to. For example, the Ombudsman service for Energy is approved by Ofgem. The Ombudsmen are not themselves a regulator.
Ombudsmen are dispute resolvers but they will only step in at the point when a consumer has exhausted the complaints process laid out in the literature of the company they are complaining to. They will also consider an escalation early if a complainant has been denied the ability to make a complaint. They are self-styled as free and easy to use services and handle tens of thousands of cases each year. An Ombudsman will either uphold or not uphold an escalated complaint.
An interesting communication from the Housing Ombudsman in recent years made it clear that the ombudsman doesn’t require your customers to be satisfied or happy. What they require is that organisations have clear policies and procedures based on legislation and best practice and that you follow those procedures in respect of your customers. You may, therefore, refuse to pay your customers copious compensation for minor inconveniences, and your customer may not like this, but the ombudsman is only concerned with whether you followed your compensation policy.
How will it be paid for?
Following the consultation, the recommendations came back advising that smaller developers weren’t penalised for being small and so the idea that they might pay a flat fee to be a member in line with say, a top 20 builder would not be fair. A more likely scenario then is that developers might pay based on the number of plots they produce.
It has been made clear that it will be free to the consumer and paid for by members of the scheme.
Our understanding is that the scheme will be enshrined in law and that developers cannot trade unless they are a member. The ultimate power available to the New Homes Ombudsman will be to expel a member from the scheme. This will likely only apply in the most extreme and prolonged cases of misconduct.
Caught short already?
If you’re already thinking, ‘we don’t have clearly published policies’ or are concerned you don’t have a complaints procedure or worse still, a compensation policy, keep reading – you are not alone!
Right now, and for the foreseeable future, we understand that the policy will be to encourage property developers (on a voluntary basis) to build the framework and to develop a best practice culture.
As an independent service provider in the new-homes sector, After Build are solidly in support of these new industry changes. We firmly believe they will benefit the consumer but also help refine an infrastructure to unify custom and practice.
After Build have met with the Home Office team leading the exercise, principally to ensure alignment with the new way forward but also to share knowledge and experience in all matters relevant to our end of the NHO remit (defect management and post-build issues).
How can After Build help you?
It’s difficult to be specific about when the NHO scheme will start, but we know that there is considerable ambition for it to be introduced in the very near term, given the government’s associated challenges of building 300,000 new homes a year by the mid ‘20s.
After Build are constructing a programme to ensure that the way we interact with developers and through the services we provide, we will be able to support businesses through this change and allow them to positively embrace this new governing body.
In the first instance, we will continue to release information, as soon as we get it in the form of articles, videos, blogs and more. All information will be current, and we welcome any questions from the developer community.
It will be a requirement from any Ombudsman that the complainant has exhausted the company’s complaint procedure or can demonstrate that they have been blocked from doing so. We know through experience that many developers don’t have a comprehensive and well publicised complaints policy or compensation policy, which in light of forthcoming changes could be considered a concern.
After Build is happy to help you to write these documents. We can help you identify gaps in your customer care framework, helping you to plug them to prevent complaints from ever reaching the Ombudsman. We are offering anyone who would benefit a free hour’s video chat with one of our senior management team to consult on existing policies and we’re also introducing a flat fee service to write the policies on your behalf.
We know these policies, particularly compensation, can be alarming but let us be the first to tell you, they help you pay less in compensation!
After Build assist by taking much of this burden out of your hands. We manage customer care for a wide range of developers, reflecting their warranty obligations and now their obligations to the NHO scheme. We’re prepared to take on your customer care and guarantee to work within the new legislative framework to deliver a fully rounded and compliant service to your customer.