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Response to Consultation Government Delay with New Homes Ombudsman

Response to consultation and government delay in creating the Statutory New Homes Ombudsman

Another consultation? On 1st October 2018, now ten months ago, the then Housing Secretary James Brokenshire announced the government would create a statutory new homes ombudsman which in his words:

 will champion homebuyers, protect their interests and hold developers to account. And give confidence that when you get the keys to a new home you get the quality build you expect and the finish you’ve paid for.” 

It is hugely disappointing that this has yet to take place, meaning tens of thousands of new homebuyers have no available recourse to seek unequivocal, 100% independent redress and meaningful compensation awards for the often nightmare new homes they now own and the indifferent service received from errant housebuilders and inadequate warranty policies.  

As the one person that suggested the statutory new homes ombudsman at the APPG EBE Inquiry on 23rd November 2015, I had no idea at that time, it would take this government over 4 years to implement. Many thousands of new homebuyers are aware of the government’s failure to listen to their concerns, hear their pleas and start a long process of change, beginning with the creation of a statutory new homes ombudsman. The government should be aware that the lack of urgency and constant prevarication will lose votes, from homebuyers, their families and friends, whatever their political persuasion.

Will Robert Jenrick create the statutory new homes ombudsmanIt is my hope that following this somewhat unnecessary Consultation (closing on 22 August 2019), the statutory new homes ombudsman will become fully operational and not be further delayed by Brexit fallout, political grandstanding and become yet another one of those classic wishy-washy government promises that take a decade to materialise if at all.

When 99% of new homebuyers report defects to their housebuilder, 43% reporting more than 10 defects* within the first few weeks of moving in and many new homes not even built in full compliance with existing building regulations, clearly government must act.

It has come to my attention that the MHCLG has been giving advice to the Consumer Code for Home Builders (CCHB). The cynic in me is concerned that the CCHB could be being tasked by government, to come up with a watered-down set of rules and requirements agreeable to plc housebuilders and warranty providers, with a view to setting up an industry-led “Ombudsman” perhaps a temporary ‘beta’ version of the new homes ombudsman, ahead of legislation “at the earliest opportunity” “when parliamentary time allows” which will be operated on a voluntary membership basis. Could this even be the “Shadow form” the MHCLG has outlined?

The time for debates, announcements and consultations with stakeholders has passed. It is now time to deliver on the promise made on 1st October 2018 and create a statutory new homes ombudsman.

Too many new homebuyers are suffering, many are physically drained as a result of engagement with indifferent housebuilders when trying to get their new homes brought up to warranty standards and statutory regulations. For some buyers, the mental anguish has become almost unbearable, with some contacting me for help even mentioning thoughts of suicide, such is their hopelessness! Like Yvette Davis and her contaminated uninhabitable Linden new home in Sarisbury Green

New Home Expert’s Consultation responses:

Having completed the online version and answer all the specific questions I also sent in expanded comments some aspects. 

Q4      Who should be covered by the new homes ombudsman
To avoid housebuilders wriggling out of compliance with the statutory new homes ombudsman and depriving new homebuyers of effective redress, it should also encompass anyone who is involved in the selling of new homes or what are effectively new homes as ‘second-hand’. 

Q5      Should a New Homes Ombudsman only cover complaints where redress cannot be sought elsewhere?
NO! Clearly the New Homes Ombudsman should cover ALL complaints from new homebuyers regardless of the nature or existence of alternative Ombudsman or redress. The “limited in its scope” Consumer Code for Homebuilders has clearly failed new home buyers over its ten-year existence.
It should also include warranty providers as the Financial Ombudsman Services NHBC complaint decision in Appendix A demonstrates, this despite 71% of complaints against the NHBC being upheld in new homebuyers favour * originally shown here  now deleted because, according to Which, The NHBC is a “warranty supplier and not a home insurer” and the data was therefore “not correct.” 

Q6      Anyone else able to seek redress through the New Homes Ombudsman?
YES! Anyone who buys a new home from the original buyer within the 10-year warranty period.  

Q7      Should anything be excluded from the new homes ombudsman remit?
NO! It should include anything and everything including complaints about new home warranty providers.

FREE – FAIR – FOR EVERYTHING

Q8      Awareness of requirement to belong to the New Homes Ombudsman
The requirement should be a condition of planning and building regulation approval. Building control inspectors and warranty providers should be legally required to seek proof of membership before carrying out inspections.  

Q9      Should there only be a single New Homes Ombudsman
YES! It should be single Statutory New Homes Ombudsman administered by a PUBLIC BODY in a way not dissimilar to the Financial Ombudsman Services.

There should not be any form of “voluntary” New Homes Ombudsman, “shadow form” New Homes Ombudsman or any “Ombudsman” scheme or services, created by any of the housebuilding industry’s stakeholders. 

Q10b Additional circumstances a purchaser can access the New Homes Ombudsman

  • When a sale did not go through and housebuilder is withholding money, such as reservation fees and other payments such as for optional extras.
  • It should also cover breaches of written agreements regarding carrying out remedial works to defects.
  • When a purchaser of a new home is given a non-disclosure agreement to sign as a condition of carrying out remedial works to defects. 

Q12    Should the New Homes Ombudsman be delivered by a public sector body?
YES! Anything less, would be a sell-out to the housebuilding industry and a betrayal of trust to every new-build buyer. On no account whatsoever, should any private sector organisation, either existing or newly created, be allowed to deliver the New Homes Ombudsman. Already the industry’s own Consumer Code for Home Builders (CCHB) is attempting to manoeuvre and reinvent itself as an ‘Ombudsman’ with advice from the MHCLG! The New Homes Ombudsman must be unquestionably, 100% independent of the house building industry and its stakeholders (various Codes and warranty providers) and be clearly seen to be. The only way to ensure and guarantee independence is a New Homes Ombudsman service delivered by the PUBLIC SECTOR.

The MHCLG should take note of the abject failure of deregulation of Building Control function with the use of “approved inspectors” with the now many documented, poor quality standards and examples of non-compliance in “completed” “inspected” and “signed off” new homes. 

Q16    Should access to the New Homes Ombudsman be free for purchasers of new build homes?
YES! Any charge to access redress will deter consumers making complaints and questioning their validity. It has been previously announced by government that the New Homes Ombudsman would be free and on Page 41 of the 24 January 2019 response to the last Housing Redress Consultation it stated it would be free. Even on page 17 (3.19) of this consultation it states “we want to see better redress faster so that consumers can benefit from FREE, FAIR and EFFECTIVE redress as soon as possible”  

Until this year, the CCHB charged new homebuyers seeking redress £120 (including vat!) as a registration fee. Just 357 complaints were received in 8 years with many no doubt being put off by the fee and the bias of adjudication.  

It would be idiotic to have the opinion that a free service would be subject to misuse giving rise to vexatious complaints, as any new homebuyers that angry and frustrated, would in all probability have genuine, justified grounds for making a complaint.  

Q17    Funding the New Homes Ombudsman
A simple levy for each and every house built. I am suggesting £100 per home built giving around £20 million on 200,000 homes a year completed. In addition, for each complaint the housebuilder concerned should also pay £750 towards the cost of investigating the complaint and also any additional amounts to cover the cost any independent external specialist’s inspections, assessments and testing. 

Q20    Sanctions for New Homes Ombudsman
All of the above. In addition, when considering sanctions, expulsion or suspension, this should apply to all companies and regional companies within a plc housebuilder’s group. It should also apply to the directors of those companies. This is to prevent any plc corporation simply using another company within its Group, acquiring another housebuilder or setting up a new company to carry on trading and avoid the Ombudsman sanctions. 

Q21    Powers of the New Homes Ombudsman
It is essential that the New Homes Ombudsman has the power to force housebuilders to buy back (‘reverse the purchase’) defective new homes at full market value. This should be offered to the buyers of any new home where defects are serious or extensive enough to require the new home owners to move into temporary accommodation for more than 28 days.  

In addition, the New Homes Ombudsman should have the powers to stop work on any development where serious defects are reported, such as weak mix mortar, missing fire barriers and structural issues. In all such serious instances, the New Homes Ombudsman should INFORM all other home owners on any particular development, that their home may have a serious defect(s). This will nullify the use of non-disclosure agreements by both plc housebuilders and warranty providers to cover up their shortcomings and limit their financial liabilities. 

The purpose of a New Homes Ombudsman is to make meaningful, justifiable levels of compensation awards to new homeowners, taking into full account the impact on their family life. It should not just exist to enforce the rectification of defects and ensure any financial loss is reimbursed. This should ensure that housebuilders are suitably encouraged to improve quality and service. Each case should be judged fairly on its merits, in most cases compensation awards of less than £2,000 will be insufficient, as it will be cheaper for plc housebuilders to write-off the Ombudsman’s award for the few buyers that take their complaint to the New Homes Ombudsman against the cost of improving quality for every new home built.  

Q22    Maximum award by New Homes Ombudsman
This should be up to £200,000, in line with the Financial Ombudsman Service upper limit. A home is the most expensive purchase anyone makes in their lifetime; indeed, it can take a lifetime to pay off the loan. The upper limit must therefore properly reflect the investment, thus the likely cost of a total demolish and rebuild, to properly cover those new homebuyers who do not wish to take advantage of the buy-back option. 

Statutory New Homes OmbudsmanBy implying that taking legal action is an option for larger claims would dismiss its impossibility for most new homebuyers. For even those with legal expenses insurance, this is a lengthy and costly process with no guarantee of a successful and just outcome. Indeed, housebuilders have deep pockets and vigorously defend every attempt by the very few new homebuyers who take this course of action, in the full and certain knowledge that it will cost less to defend the small number of claims that could potentially end up in court, than routinely pay justifiable compensation to homebuyers. Even if an agreement is reached ahead of a court hearing, this is normally subject to a non-disclosure agreement clause, (“gagging order”) to avoid any precedent being established and to reduce likelihood of action being taken by others, often with identical issues.  

Taking legal action against a plc housebuilder is a serious barrier to access to justice, in terms of cost, risk and time. As I said on national television, “Buyers who go to court will run out of money long before the housebuilders ever will.” Most having just bought a new home at a premium price, perhaps using help to buy, cannot simply afford long and protracted legal battles with plc housebuilders and their bullying ‘Rottweiler’ litigation mitigation solicitors.

Q23    What information should be published to empower consumers?
There should be a builder league table, revised bi-annually naming house builders and the number of complaints made against them to the New Homes Ombudsman. It should detail the number of complaints upheld, amount of awards and compensation, with statistics divided into categories such as pre purchase, defects and poor quality, non-conformance with building regulations and unfair terms and charges. 

In time, this incorruptible government data, should replace the industry’s own, in-house and highly criticised ‘8-week HBF survey’ designed with the sole intention of “providing data to rebut negativity” and completed by purchasers at a time when the full extent of defects and their housebuilder’s indifference are unknown. Indeed the NHBC have said that the responses to its 9-month survey, which is never made public, show the satisfaction levels are normally 5-10% lower than those in the 8-week survey. 

Q26    Should a New Homes Ombudsman remit be UK-wide
Whilst there is a case for this, given most plc housebuilders have operations in the devolved nations and clearly have the same need, it will inevitably result in further legislative delay. For this reason the Statutory New Homes Ombudsman should apply only to England with devolved nations free to copy or amend their own legislation if they choose to do so. 

The nations were devolved for a reason and have autonomy to change and revise their own building regulations, so why, if they feel a statutory New Homes Ombudsman is required, would they not be able to act and create their own? A requirement for a UK-wide New Homes Ombudsman would only serve to delay implementation. 

Q28    What should be included in a Code of Practice for developers?
Obviously everything listed in the consultation should be included, but any industry collaborated/created Code of Practice will invariably be used to limit or restrict the redress available to new homebuyers and the effectiveness and powers of the New Homes Ombudsman (as is the case with the industry’s own CCHB). This must not be allowed. 

The New Homes Ombudsman must not be confined to decisions from any Code requirement not met. Each and every complaint should be judged in its own individual merits. Whilst the FOS does make reference to the ‘Banking Code’ and the ABI ‘Statement of general Insurance Practice’ it does not appear bound to them implicitly. Neither should the Statutory New Homes Ombudsman be restricted in what it can and cannot rule on. 

FREE – FAIR – FOR EVERYTHING 

It must be said, that the universal practice of housebuilders encouraging, incentivising and in some cases insisting, new homebuyers to use a particular solicitor of the housebuilder’s choice must be banned. Clearly this practice leaves buyers at a distinct disadvantage as there is a clear conflict of interest. This being demonstrated by the harm thousands have suffered as a result of being led into leasehold ownership of houses, without fully understanding the implications and disadvantages of doing so. Housebuilders recommending/suggesting solicitors (because “it will be quicker/easier as they know the development and have already done the searches”) should and must be banned. Until it is, this should be included under the New Homes Ombudsman remit. 

3          Conclusion
The housebuilders and warranty providers operational policy is to bat away buyers’ complaints and warranty claims rather than work in the consumer’s best interests. Despite many years of opportunity, nothing has changed. It is now time, as the previous Consultation recognised, a Statutory New Homes Ombudsman is required to award justifiable and meaningful levels of compensation. It needs creating now, as a government priority, without further and unnecessary delay.

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The Chameleon Consumer Code for Home Builders now plan their own “Ombudsman”

New Homes Ombudsman – Who is running the show?

The zombie Consumer Code for Home Builders just doesn’t realise it’s dead yet.
The Consumer Code for Homebuilders is dead - it just doesn't know yet.Just what is going on?  Who is running the show? Is the housebuilding industry’s tail wagging the government dog?

I have my suspicions that the housebuilding industry is using its party political donations as means of leverage to interfere and delay the creation of the statutory new homes ombudsman and other government policies that could adversely affect their highly profitable business model.

The latest from the Consumer Code for Home Builders (CCHB)  “Spring 2019 Status Report” , (note the CCHB haven’t managed to produce an Annual Report since 2017!) appears to indicate that a government department is advising the housebuilding industry:
“ following advice from [James Brokenshire’s] MHCLG”, they are “working on a number of initiatives“!

The Consumer Code for Home Builders (CCHB) said on Twitter (8 July 2019):
“We’ve been working on a number of initiatives to strengthen the Code following advice from MHCLG and the All Party Parliamentary Group (APPG) on Housing. [sic]”

APPG EBE Inqiury Report July 2016But why only now?  The APPG EBE Inquiry Report was first published as long ago as July 2016!  Let me guess; it’s because the creation of a statutory new homes ombudsman will mean the end of this industry-led, zombie Code which was found by the APPG EBE Inquiry to be “limited in its scope – does not appear to give homebuyers the safeguards we think they should expect and – it does not appear to us objectively to offer consumers a wholly satisfactory form of redress”  This is a Code that has been failing new homebuyers for 10 years, even charging them a fee of £120 (until last month when it was scrapped) to seek redress!

James Brokenshire - busy doing nothingSo why is James Brokenshire and his department bending over backwards to give this corrupt, scandal-ridden industry every opportunity to shape and limit the effectiveness of a new homes ombudsman? An ombudsman that was supposed to be “championing homebuyer’s interests” and “holding developers to account”? But it appears the zombie CCHB has every intention to hold the Ombudsman to account, no doubt to limit financial awards and judgements in favour of new homebuyers and protect the interests of the industry it exists to serve and safeguard.

“The referral of complaints to a new homes Ombudsman: The new Board will commission an Ombudsman by open competition. This will replace the current Independent Dispute Resolution Scheme. Commissioning the Ombudsman in this way will allow the Board to seek best value, ensure operational standards are maintained and give confidence to consumers that the Ombudsman will be held to account”

Is this what James Brokenshire and his MHCLG mean by a “shadow form” “voluntary” new homes ombudsman?  Is this the reason for the shameful suggestion in the Consultation for the New Homes Ombudsman could be delivered by a private sector body? Is government short-changing new homebuyer redress?

This latest missive by a dying Code is full of potential mechanisms for delay, if government allows it. It contains the words “consultation with stakeholders” four times. Thus far, nine months on from Brokenshire’s historic announcement, nothing has been done. In the meantime the CCHB has been publishing nonsense like this as it struggles for its very existence. As The APPG EBE Inquiry report in July 2016 concluded:
A “completely independent [new homes ombudsman] would replace the dispute resolution service offered as part of the Consumer Code for Home Builders.”
The Consumer Code for Home Builders days are numbered
So far, nothing at all has changed since July 2016. Only the government MHCLG is keeping this failing and ineffective form redress alive on life support. It’s time the power was cut and it was put out of new homebuyers’ misery. How much longer will it remain on death row, appealing for clemency?

Recommendation 1: DCLG should initiate steps to set up a New Homes Ombudsman
“The role would include mediating disputes between consumers and their builders or warranty providers to offer a quick resolution procedure paid for by a housebuilders’ levy. We see this is as the key recommendation to provide more effective consumer redress, if things go wrong, and a good way of applying pressure on housebuilders and warranty providers to deliver a better quality service. Our view is that the new service should be funded by a levy on the sector, but it would need to be completely independent and replace the dispute resolution service offered as part of the Consumer Code for Home Builders. Our recommendation picks up on one made by the Office of Fair Trading, in its 2008 market study into the house building industry, which suggested that, if the industry failed to make satisfactory progress, it would recommend further intervention in the form of a statutory redress mechanism for new homebuyers funded by a levy on the industry.

The CCHB response to the Scotland New build buyer protection bill

The Consumer Code for Home Builders is keen to “improve customer protection” UK-wide rather than in isolation. They say they are “working toward” “looking at ways to improve” their Code but have done little in the ten years of its existence to offer better redress for new homebuyers. Indeed revisions to the Code have made it more difficult for buyers to seek justice.  It then tries to promote itself over eleven pages which include its opinionated dismissal of the statutory new homes ombudsman.

The Code is apparently “currently working on its response” to the current MHCLG Consultation on the new homes ombudsman. I think we can conclude what will be in it!

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Is the Government Consultation to delay a Statutory New Homes Ombudsman?

New Homes Ombudsman Consultation

Not another consultation! As the person that first suggested a statutory new homes ombudsman be set up as long ago as 15 November 2015 at the APPG EBE Inquiry, I was delighted, after my many years of campaigning, that at the Conservative party conference on 1st October 2018 some nine months ago, Time for Mr Brokenpromises to deliver the New Homes OmbudsmanHousing Secretary James Brokenshire announced the government would create a statutory new homes ombudsman which in his words:
“will champion homebuyers, protect their interests and hold developers to account. And give confidence that when you get the keys to a new home you get the quality build you expect and the finish you’ve paid for. “

So what has happened since then?
It took the government 284 days after the “Strengthening Redress in the Housing Market” consultation  closed (16 April 2018) before finally publishing the results and its response on 24 January 2019. The 1,209 (355 new homeowners) that responded showed a clear, unequivocal and virtually universal desire that new homebuyers should have access to an ombudsman (91%), with 84% replying it should be statutory.

A year on, we are still awaiting the House Building Federation (HBF) publication of its formal report on the APPG’s New Homes Ombudsman Inquiry findings published on 26 June 2018.  The HBF have also set up a working group to “…simplify the legal process and create a clearer and simpler process for signing off new homes as complete”. They have also commissioned an independent report on consumer redress for new home buyers. But just when are the HBF publishing these? And government isn’t exactly showing any sense of urgency either!

Last week on 27 June 2019, the government published yet another Consultation “Redress for Purchasers of New Build Homes and the New Homes Ombudsman.”  Seeking “views on the detail of the proposed legislation and how a New Homes Ombudsman can be delivered and will run until August 22.”
New homebuyers can respond to the consultation here

But it appears house builders have until 2021 to get their act together and belong to the new homes ombudsman or they will be excluded from Help To Buy. This was previously “announced” so not new and not exactly showing any degree of urgency. “The purpose of the consultation is to gather evidence and seek views on improving redress for purchasers of new build homes. Any policy changes brought forward as a result of the consultation would be subject to appropriate assessment.” Just how long would that take?

No doubt this will end up in can-kicking the eventual legislation, not just further down the road, but into the long grass beyond the next general election. If it takes another 284 days for government to respond to its latest consultation, publication may be as far away as June 2020! So much for “access to redress is a priority for this government”

At least the members of the Committee for Public Accounts in their report “Planning and the Broken Housing Market”  have put a time limit on when the government should say what it is going to do regarding poor quality news homes and compensation for new homebuyers!

“By October 2019, the Department should set out how it will work with local authorities, developers, and other agencies on how they will prevent, penalise and compensate for poor residential build quality.”

But the MHCLG statement in this paper says it all! “21.  In terms of new builds, the Department acknowledged that it did not have a specific programme to address concerns about the quality of new builds……” 

We find the same old rhetoric from the “ministry of cut & paste” [MHCLG]: “we will” – “we Intend” – “when parliamentary time allows” But when will these work-shy wasters actually get on with setting up the badly-needed statutory new homes ombudsman?

In stark contrast, there is considerable momentum in Scotland where MSP Graham Simpson has submitted a private members Bill “Proposed New-Build Homes (Buyer Protection) (Scotland) Bill” Not one Westminster MP has bothered to do this despite many receiving hundreds of letters from their constituents about their defective new homes and indifferent housebuilders.

Perhaps this is the reason that the consultation asks in Q26 whether the new homes ombudsman’s remit should be UK-wide. Whilst this is desirable given that most the large plc house builders also operate and commit the same scandals in Wales and Scotland, “engaging and consulting with devolved administrations to seek agreement on UK-wide legislation” will inevitably lead to even further delay and ministerial procrastination.

Does this Government fully appreciate the urgent need for a new homes ombudsman?

Government has been to an extent, hoodwinked by the industry and its spin-doctoring Home Builders Federation (HBF), into making statements such as:

“The Government knows that on occasion things may go wrong.” On occasion? Around 99% of new homebuyers report defects to their housebuilder within a few weeks of moving in;  42% reporting more than 10 defects. Most experience difficulty in getting their plc housebuilder to come back and deal with these!

“The Government believes that the majority of developers act responsibly when building new homes.”
“The majority of new home purchasers are satisfied with their new homes.” Believes? From the propaganda of the HBF and its highly suspect customer satisfaction survey, which exists purely “to provide data to rebut negativity” which is sent to new homebuyers just 8-weeks after they move.
Wake up at the back and smell the coffee!
Government should stop thinking most new homebuyers are satsifiedThe consultation states: “In March 2004, Dame Kate Barker DBE’s review of Housing Supply made a number of recommendations for the house-building industry to improve service quality and customer satisfaction ratings”
But nothing changed!

“In 2008, the OFT’s review into ‘Home Building in the UK’ identified problems for consumers when buying a new home, such as delays in moving in, faults in new homes and potentially unfair terms in contracts. If the industry failed to deliver a solution to these issues…….the review recommended that a statutory redress mechanism should be implemented with the ability to award homebuyers compensation”

Since then, 11 years later, the house building industry and our government has failed to deliver a solution!

Voluntary Code of Practice for new homes

No! “Voluntary” doesn’t work in the housebuilding industry. The failed “limited in its scope” Consumer Code for Home Builders (CCHB) being a prime example. CCHB Graphic

Legislation and regulation is what is required yet this government intends to “..work with industry and consumer groups to establish a voluntary code of practice for new homes ahead of legislation” Thus far I have not been contacted to take part, despite the thousands of new home buyers that have over the last 10 years, contacted me for help and advice. Q28 suggests what the Code of Practice might contain, but any finite Code of Practice means the powers of the new homes ombudsman, will be restricted and limited. Apparently “Good progress has been made towards a unified code of practice” says government.

Warranty schemes excluded from the new homes ombudsman

The Financial Ombudsman Service upholds an average of one in three complaints in favour of the consumer. The NHBC has the highest percentage of complaints found in the customer’s favour at 71%. This shows that clearly the NHBC are not dealing with warranty claims and customer complaints fairly and as it claims “Protecting Homeowners” . However, many disputes with the warranty companies are of a highly technical nature and would be better addressed by the new homes ombudsman.

It is also planned that the scope of new homes ombudsman will be limited to the “first two years, when the majority of problems occur.” But this means latent defects, often of a very serious structural nature such as weak mortar, would be excluded.

Different consultation – same questions!

Struggling to fill 51 pages with needless questions, this latest consultation is asking some of exactly the same questions as the previous redress consultation (question in brackets).

  • Q10a  Time frame – How long before buyers can use NHO (Q14)]
  • Q20   Sanctions (Q16)
  • Q22   Amount of award (Q16)
  • Q23   Complaints awards data published (Q13)
Do we want the new homes ombudsman delivered by the private sector?

The consultation has added a sneaky move where the government is trying to devolve who administers the new homes ombudsman to the private sector. Respondents have an opportunity to indicate it should delivered by a public sector body in Q12. Especially given the abject failure of building regulation compliance since private sector companies were able to carry out the building control function as approved inspectors. It is also not inconceivable that the house building industry could create a company, specifically to tender for the role of new homes ombudsman.

Q16 Should access to a new homes ombudsman be free for new homebuyers? Strange as it is stated earlier in the consultation notes (page 17) that the government expressed its desire and intention “that consumers can benefit from free and fair and effective redress as soon as possible”

Q17 How should new homes ombudsman  funded – By far the most fair and effective way to fund the new homes ombudsman is by a levy for each new home each housebuilder sells. This can (and perhaps should) be collected at the planning stage. Alternatively, it could be collected on legal completion. I have suggested £100 per home completed meaning the larger plc housebuilder pay more than SME housebuilders building 20 homes a year. In addition each housebuilder should be required to pay £500 towards the cost of investigating each complaint made, this should encourage housebuilders to settle small disputes with their customers.

Q21 New homes ombudsman – additional powers
Yes! in the most serious complaints the new homes ombudsman should be able to require the housebuilder to re purchase the home at a fair (non-defective) market rate, adding an extra award to compensate and cover the costs of moving home, stamp duty, carpets, legal fees removals etc.

“Shadow form” new homes ombudsman!

Quite frankly, I hope James Brokenshire is watching this programme and seeing the anguish of these poor people, who don’t deserve to be treated like this by plc companies.”On 11 April 2019, I was asked by Victoria Derbyshire what is the latest on the New Homes Ombudsman?  All I could say at the time was that James Brokenshire had announced it would possibly be in shadow form until parliamentary time allows for legislation for the statutory new homes ombudsman. At that time as now, are no further details of what shadow form means or when it would be operational. On 27 June 2019 Brokenshire said: “we are also exploring the options to appoint a New Homes Ombudsman in shadow form – someone to work closely with industry, consumer groups and government to ensure improvements and standards are delivered quickly and help shape the future scheme”

It would seem the ‘shadow form’ could even be an industry-led, voluntary new homes ombudsman, shackled to a new Code of Practice drawn up by the industry itself and limiting its scope and overall effectiveness!

What exacxtly is a shadow form new homes ombudsman?As James Brokenshire said in his “ministerial foreward“There can be no excuses for half measures when it comes to quality, safety or standards” It is a pity he does not appear to do as he says. Since his announcement, we have had half measures from him and his MHCLG such as the ‘shadow form’ new homes ombudsman! “We are committed to taking bold action to reform the sector and will be pressing ahead as soon as parliamentary time allows” You cannot claim to be “committed” but only when “parliamentary times allows” a phrase used as an excuse for delay over the last 9 months. In the meantime new home buyers like Yvette Davis are being driven to the brink of suicide from the stress and despair they are suffering at the hands of this indifferent, failing industry. New homebuyers deserve better than a plastic ‘shadow form’ new homes ombudsman in name only.

At the Chartered Institute of Housing (CIH) conference on 27 June 2019 in Manchester, Brokenshire said: “I’m mindful these aren’t quick wins. These are decisions taken today to help tomorrow.” He also acknowledged the government was currently undergoing change, even foreseeing his own demise as housing secretary: “There may even be a new housing secretary. But our approach to housing won’t change. We’ll continue to approach all of this in a serious way.”

In May 2019, Brokenshire told The Sunday Times that he is frustrated by the slow pace of change. “There is a real pressure on legislative slots going through parliament right now — something that prolongs the two years it usually takes for new laws to take effect. “You sort of think, Oh, for goodness sake!”

Yes you do, but an MP’s private members bill to outlaw upskirting on 6 March 2018 gained Royal Assent and became law on 12 April 2019,  shows can be done!

It’s time James Brokenshire stepped up, or stepped down, so someone more capable could start doing, rather than announcing, re announcing, dilly-dally-delaying and making silly videos showing his ‘support’ for minority groups. Unfortunately, “Mr Brokenpromises” time and that of his government’s is fast running out. As Boris says “Get it Done”

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HBF Satisfaction Survey shows number of buyers reporting defects as high as ever

HBF New Home Customer Satisfaction Survey Results 2019

So the latest 2019 new home customer satisfaction survey results have finally been published by the Home Builders Federation (HBF) – six months after the survey year ended on 30 September 2018. All HBF housebuilder members having known their current star rating and individual survey scores as they come in throughout the year via the NHBC portal.  Taylor Wimpey and Bovis even crowed about their “achievement” in their annual reports last month. Persimmon has (again) pledged to improve its five year run of 3 star ratings, by announcing its 1.5% homebuyer retention last week.

But do the general public take note of the housebuilder star ratings?

Persimmon Homes 3 star rated 5 years running!Apparently not. On the face of it 16,449 still bought a Persimmon new home in 2018 despite its continuously poor star rating, with just 8,234 of these returning the survey! Amazingly, 7,404 buyers bought their new home from Bovis despite the builder being rated an industry low of just 2 stars in both 2016 and 2017.

So why is this survey so important for the industry?

For a start it is the ONLY survey of new home buyers “satisfaction”. Even if this is an in-house survey, controlled by the industry with carefully crafted questions and sent to new homebuyers just 8-weeks after moving in, it is all there is. The HBF and its PR machine goes into overdrive, making crass overstatements with headlines such asHomeowner satisfaction with new build homes increasing” 
more people happy with their new homes than ever” “new homes are built to a higher standard than ever before”  when the reality is, this is a small increase over two years, from an all time low in 2017 (84%) and way below the all time peak of 91% in 2013 – results from the year before Help to Buy was launched!

“The improvement in satisfaction levels have been achieved as output has continued to increase.”
That is according to the HBF, who were apparently oblivious to the weak mortar issue in Britain’s crumbling new homes! HBF Steve Turner grilled on national TV about weak mortar The HBF have stated that the primary purpose of this 8-week satisfaction survey is to “provide data to rebut negativity” What other industry at the outset, designs a survey so it can rebut negativity? Surely the sole purpose of any customer survey should be to indicate unknown areas of weakness so these can be demonstrably positively addressed. Not the HBF survey, where the HBF crows: “two thirds of those polled said the number of defects was in line with their expectations” Satisfcation? New homebuyers expect defects!Actually it was 43%, with another 34% indicating more “problems” than they expected. Again, in what other industry do consumers buy a product in the full and certain knowledge and expectation that it will be faulty?

The latest government figures show “output”, despite the twice extended, government subsidy for the industry, Help to Buy and the HBF’s spun  “78% increase in housing supply in the last 5 years”, is still below the peak of March 2007 12 years ago! Actual government figures for the last survey year to 30 September 2018 (2017/18) show private sale completions at 126,970 (116,350) with a total homes completed of 155,250 (142,870) (previous year in brackets)

HBF satisfaction survey - 99% of new homes have defectsOne survey response the HBF never care to highlight, one that cannot be easily influenced, is the indisputable fact that virtually all new homes have defects, with 99% of buyers surveyed reporting defects to their builder within a few weeks of moving in, and an increase this year to 42% reporting more than 10 defects! The HBF spins it “new homes are complex bespoke products and the number of problems (snags, usually minor such as paint drips, cupboard doors out of line etc) was in line with buyer’s [low] expectations” and “58% having less than 11 issues with their new home” Cigars all round, break out the champagne!

Well not quite. The Government has announced it is proposing to get tough on housebuilders that fail to deliver good quality and service. James Brokenshire - talk but no actionBut whether James Brokenshire who spoke at the HBF Annual Conference and would do well to distance himself from this broken industry, is daft enough to use the industry’s star rating as his yardstick remains to be seen! Government need to take a much tougher stance against the industry wolves dressed in Granny’s nighties (covering up everything) and avoid being taken in like Little Red Riding Hood, by their meaningless pledges, promises and plastic PR spin.

New cars are also “complex bespoke products”, some models have around 1,000 different customer options yet they are routinely, delivered to the customer defect-free having been inspected many times, both during and after manufacture. Those collecting the keys of a new car would be horrified to discover “misaligned doors and paint drips” defects which the HBF attempts to state as “usually minor” but nevertheless, are not inspected, checked or eliminated, being left for the customer to discover by the profit-driven industry the HBF serves and promotes.

So its congratulations to Russell Armer Homes awarded a 5-star rating, this from only 20 of their customer’s survey responses! No doubt contributing to:  “This year’s further improvement is a clear demonstration that the intense focus within the industry on build quality..” so spins the HBF. It is interesting to note the percentage “sample size” of buyers returning the survey/answering Q1 for the main plc housebuilder has fallen dramatically this year to an average of around 44% of total homes built. The stated ‘sample size’ for each housebuilder totals 48,001, this despite 60,955 surveys being returned. Perhaps many of those dissatisfied buyers, badgered and threatened by housebuidler’s to complete the survey form favourably, believed they would hurt the housebuilder more by not doing so, rather than completing to survey to reflect their discontent.
Some new homebuyers do not even get the survey. SM said on the Unhappy New Homebuyers Facebook Group
“I never got a questionnaire for a survey. Wonder how they were selected. I did have great fun completing my 2nd NHBC survey about Persimmon though!” “Intense focus on build quality” HBF?
For those that do get notification codes from the NHBC, the survey can be completed online here But many new homeowners find out after they move in that broadband is painfully slow or in some cases, non-existent.

In 2016 I asked the HBF why the total number of surveys “sampled” for the Star Rating was less than the number of surveys returned?  This year it was 78% of the total. It would seem that more and more surveys are being sampled out! Why there is a need to sample at all? Surely all the surveys responses can be counted?
The HBF responded:

“The industry scores are based on every single valid response NHBC (who operate the survey) get to what is an industry-wide survey. Valid simply means completed by an owner occupier within the 20 week response window. Not one single valid survey was ‘not used’. So all the industry scores shown in the charts on the website in the results we released are based on every single (45,342) valid response we got this year.  Whilst the ‘industry survey’ covers more than HBF members, the Star Rating part of it is just for HBF members. Hence adding up the sample sizes for the Star Rated builders will not get you to the total 45,342 responses as other non-HBF members are sampled as we want to get as full a picture as possible.”

In 2011, I asked the HBF why it did not publish individual builder results for every question?
John Stewart HBF Director of Economic Affairs told me back in 2011:
“From a personal perspective, I think publishing more detailed company results would not have had any more impact on raising customer satisfaction among new home buyers. But it would most certainly have provided food for those who are prejudiced against the industry and simply seek to criticise. I see no value in this.”

No surprise there! The industry also keep the results of the NHBC 9-month survey under wraps too, no doubt for similar reasons. The NHBC told the an APPG Inquiry in 2015: “The NHBC 9-month customer satisfaction survey scores generally 5-10% LOWER than the HBF 8-week survey”   Taylor Wimpey - 3 star rated in reality?This year Taylor Wimpey indicated that its overall satisfaction star rating score at nine months was 76% – 3 star territory, 2 stars and 15% below their official 5-star rating.

The survey, and in particular the all important housebuilder star rating question, can be manipulated by housebuilders.  Often buyers tell me they were told their faults would not be fixed if they answered “No” to question 1 – “Would you recommend a friend?”

In the halcyon years of “customer satisfaction” 90% in 2012 and 91% in 2013 with the number of surveys returned were 23,778 and 29,330 respectively. The financial crisis was in 2008 and housebuilders reduced their production between 2009 and 2012. This was ramped up in 2013 when the taxpayer-funded Help to Buy gravy train was launched and plc housebuilders had pound signs in their eyes.

HBF chief Stewart Baseley who by his own admission is apparently  “a great believer in transparency” says:

“Achieving such high levels of customer satisfaction, whilst delivering the steepest increase in the rate of house building we have seen for 40 years, is a considerable achievement.”
“The survey proves conclusively that the people who buy and live in new build homes are overwhelmingly happy with their purchase. There has been a huge focus on quality and service across the industry and this is reflected by successive annual improvements across all question areas.
“The intense focus on quality and service, allied to a huge recruitment and training campaign has enabled builders to further raise standards whilst increasing output. New build buyers already have far more protection than second hand buyers with the security of a consumer code and ten year warranty.
“The vast majority of customers are already happy with the service and quality of their home, but the industry is determined to deliver even higher levels in the years to come. The industry is committed to further increases in protection and redress and is working with a range of stakeholders on how an ombudsman can be introduced.”

Quite how the likes of Mr Baseley sleep at night after saying those statements I don’t know! His HBF even have the nerve to use the creation of the statutory new homes ombudsman, (that I campaigned 5 years for) as a marketing tool “further enhance build quality and consumer protections for new home buyers.”  Build quality is at best poor and those buying a new home have no “consumer protections” at all as many thousands have discovered to their cost! This is precisely Why a statutory new homes ombudsman is being set up! The HBF must not be allowed any opportunity to weaken the new homes ombudsman powers and effectiveness.

The HBF has recently announced it is teaming up with charities to provide support and highlight mental health amongst construction workers, with 400 taking their own lives last year. A construction worker is now 10 times more likely to die through suicide than a fall from height! Many mental health issues originate from bullying and the unrealistic production demands by site managers, contracts managers and regional construction and managing directors, who in turn face similar from the main board directors in their pursuit of every increasing completion numbers and record profits for their dividend hungry shareholders. Those affected will no doubt be delighted by the Building Mental Health Framework and the £100,000 the whole housebuilding industry has donated to the charity and the 24/7 helpline! But the irony is, a great many new homebuyers suffer mental illness too, becoming drained as a result of engagement with indifferent housebuilders which for some, the mental anguish is unbearable as they try to cope with the daily frustration and dealing with plc housebuilders and their broken promises.

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Redress? When will New Homes Ombudsman be operational?

James Brokenshire re announces the statutory New Homes Ombudsman but when will it be operational?

Whilst housing secretary James Brokenshire has announced an “overhaul of broken housing complaints system” it is evident to me that any redress will not be implemented fast enough. When I first suggested a New Homes Ombudsman to the APPG EBE Inquiry 2nd session I attended way back in November 2015, it was well received and became the number 1 “Key” recommendation in the inquiry report, published 13th July 2016.
New Home Expert at APPG Inquiry evidence sessionSadly since then and until James Brokenshire’s announcement on 1st October 2018, little if anything has been done. Indeed, it can be interpreted from the government response to the Housing Redress Consultation, which took this government 283 days to publish; it is highly likely that legislation supposedly being “brought forward at the earliest possible opportunity to require all new developers to belong to the Ombudsman” will not in fact be the statutory new homes ombudsman so badly needed. It would appear, at least for the time being, that “an interim voluntary service will be established requiring developers of new build homes to participate”  is favoured by government.

James BrokenshireMore worryingly, the government has indicated that “developers will also have to belong to the new body by 2021 if they wish to participate in the government’s Help to Buy scheme”. This suggests the non-mandatory ‘voluntary’ new homes ombudsman will still be in place in April 2021, indicating that legislation for the statutory new homes ombudsman may not be on the statute until after the next general election, currently due on 5th May 2022! Hardly “the earliest opportunity” Mr Brokenshire! Could this be a cynical ploy to delay legally mandated, effective redress for new homebuyers, so that the industry’s political party donations keep flowing in to fight the next election?

The government has said that it is to create a ‘Redress Reform Working Group’ with redress schemes, which will work with industry and consumers on developing the new service and the other options set out. Why is government even contemplating working with those responsible for the existing failures of an industry fraught with scandals and controversy? Will government be prepared to work with me, on behalf of UK new homebuyers, to ensure that the new homes ombudsman is created as the government good intention “to champion the interests of new homebuyers and hold developers to account” or is it going to facilitate ‘big housebuilding’ to mould and manipulate any new homes ombudsman to protect the interests of all those incestuously connected with this dirty industry, to limit its effectiveness, stifle justice for new homebuyers and maintain their current balance of power?

Code of Practice

The government has set out its desire to see a “single Code of Practice on complaint handling across all tenures.” Hopefully this will stipulate how complaints are to be dealt with and the timescales required. However, the nature of defects in new homes vary and no single timescale will suit rectification of complaints about poor quality, defects and breaches to building regulations and warranty standards.
Redress for newhomebuyers -New Homes OmbudsmanAs I said in my submission to the APPG EBE Inquiry in January 2018 “New Homes Ombudsman – Call for Evidence” a single, separate, stand-alone, statutory new homes ombudsman is required. I am pleased the government has listened and will be legislating for exactly this, albeit eventually, and not one hidden and delayed by a new, ‘one-size-fits-all’ Housing Ombudsman which was, at the time, preferred by government despite it being more problematic, taking longer to create. It would appear that many of the inquiry report recommendations, published in June 2018,  have been taken on by government.

The New Homes Ombudsman must not be restricted to a new single, industry Code of Practice

One recommendation in particular, poses a distinct risk to the potential effectiveness of the statutory new homes ombudsman. Government has stated its intention “in the meantime” to “work with industry, warranty providers and consumers to ensure that the distinct practices for the new build sector are addressed and that these are reflected in an agreed single consumer code of practice which would be used by a New Homes Ombudsman to adjudicate against”

There are apparently currently seven consumer codes regarding new homes! “all different but sharing a general lack of obligations placed on home builders.” The Property Ombudsman said that the Codes “are written in a way to suggest that they exist to contain complaints” which indeed they do, all being set up subsequent to the Consumer Protection Regulations 2008.

But it would appear the worst recommendation of the APPG Inquiry report, the proposal for a new “industry-wide code of practice, with government, warranty providers, housebuilders and consumer groups working together, in consultation, to draw up a code that would be used by the new homes ombudsman (NHO) to adjudicate on disputes”  has been seriously considered and in particular, the industry-led, “limited in its scope”  Consumer Code for Homebuilders (CCHB) appears, unsurprisingly, to be chomping at the bit to be front and centre for drafting the new Code – adding to the “confusion”.

Not only will this give the housebuilding industry an opportunity delay the creation of any new homes ombudsman (voluntary or statutory), it will also provide the industry with a golden opportunity to influence what the new homes ombudsman can and cannot rule on, possibly shackled by the requirements of this single, industry-approved code of practice. I cannot think of any statutory ombudsman, in any sector, that can only adjudicate within the confines of a specific industry code. Statutory ombudsman such as the Financial Ombudsman Service and the Legal Ombudsman have compulsory jurisdiction over certain regulated sectors and their decisions can be enforced by a court. The statutory new homes ombudsman should be no different.

No single code could possibly cover every eventuality for new home consumer redress. It could get even worse with the Homebuilders Federation (HBF) suggesting that “a detailed set of finishing standards for an ombudsman to apply when assessing the merits of complaints and resolving disputes” no doubt along the principles the housebuilder’s existing NHBC ‘Get out of Jail Free’ card – The “Consistent Approach to Finishes” which is used to justify atrocious workmanship standards as permissible, if deemed “within tolerance”.

New home ombudsman to only cover disputes within first two years

Government has indicated: “We will look to strengthen protection for the first two years after purchase when the majority of problems occur and minimise the variance in the levels of protection and schemes that are currently available.”  This is another let off for housebuilders. The other reason given in the APPG report is that it “mirrors the duration for the housebuilders’ liability for defects.”  However, the 2-year timescale does not bring warranty schemes under the new homes ombudsman jurisdiction, despite the APPG committee acknowledging my observation that the “The Financial Ombudsman Service (FOS) is not the best organisation to preside over technical disputes.” Hopefully the government will also look at redress for those who already own a defective new home and allow the New Homes Ombudsman to consider complaints retrospectively for the remaining duration of their 10-year warranty, to ensure that owners that reported issues that were never properly dealt with, can also seek redress.

Builder buy-backs (“reversing the sale”) and levy funding

Builders should be forced to buy back seriously defective new homesThere was no mention of the APPG inquiry report recommendation requiring developers and housebuilders to buy-back new homes, those with serious problems that would require occupants to move out. In addition, whilst all those concerned recognise the need for all housebuilders to contribute via a levy, to fund the new homes ombudsman, there is no detail on this in the government’s response. My suggestion remains a levy of £100 for each new home built each year by every housebuilder and a £500 “case fee” to cover the cost of investigating each claim made against them. The government has confirmed the new homes ombudsman will be “free of charge to buyers of new build homes” unlike the CCHB!

“We propose to bring forward legislation to underpin a New Homes Ombudsman in statute and we will work with industry and consumers prior to legislation so purchasers of new build homes have access to better redress now.“

So “now” by definition is “at the present time or moment” Presumably at the time the government published the response to the consultation on 24 January 2019, better redress or a new homes ombudsman was about to start work, helping beleaguered new homebuyers get justice and their homes fixed? Perhaps this would go some way to explain why the publication of the consultation feedback and government response took 283 days! “Bring forward legislation”   – When was it originally scheduled?  What “now” is the new date?

As the government stated: “it is clear from the responses that more needs to be done to strengthen consumer redress in relation to new build homes, and to drive up standards across the industry. The need for an easy, effective and independent body for consumers to go to is evident, and supported by the industry.  We consider that the fastest way to improve redress is to work with industry and consumers to implement a better redress scheme for purchasers of new build housing as soon as possible
But when exactly? How long will the process take? And note, this is not the new homes ombudsman but potential backsliding, enabling the industry to continue to short-change its own customers on both quality and service, whilst at the same time no doubt, using its in-house “customer satisfaction survey” “to provide data to rebut negativity”.

The government has stated that “as the proposed new homes ombudsman legislation includes devolved matters, we will continue to engage and consult the devolved administrations to seek agreement to introduce UK-wide legislation.” It is to be hoped that the devolved governments do not become a cause or excuse, for delaying legislation to bring in the statutory new homes ombudsman.

Oh no not another consultation!

We will consult on the detail of the proposed legislation to statutorily underpin a New Homes Ombudsman. This will include the approval mechanisms and standards that a New Homes Ombudsman must meet as well as whether a Code of Practice for developers should also be underpinned in legislation.”

Could this mean that a housebuilder that does not comply with the requirements of a Code of Practice will be prosecuted? So now we have a clear indication that a Statutory New Homes Ombudsman has the distinct potential to take years not months to create and legislate.

Redress with a ‘Voluntary’ Ombudsman?

“As we introduce statutory arrangements, we will work closely with industry and consumer groups to establish a voluntary new homes ombudsman ahead of legislation. We expect this ombudsman to be:
•  Free to the consumer and funded by industry;
•  Independent from the organisations the ombudsman will investigate;
•  Fair in dealing with disputes;
• Open and transparent and have public accountability through regular reporting;
•  And have effective powers to hold developers to account.

Not sure how this can come to be if it is “voluntary” (as is the ineffective CCHB) created in conjunction with the housebuilding industry. Indeed, it may even give the industry an opportunity to suggest that legislation is not necessary as it seeks to prove the voluntary new homes ombudsman has been effective.

Of one thing we can be certain, government cannot and must not, allow the housebuilding industry to make the same bodge job with a new homes ombudsman (whether voluntary or statutory) as they do with the defective new homes they build.

As it stands, the current new home redress proposals are just that, well-intentioned but lacking detail and clarity. Government must act and do so quickly. It must ensure the housebuilding industry,  building defective new homes up and down the country and causing untold misery for those that live in them,  is not given any opportunity to water down the potential effectiveness of the new homes ombudsman. Let’s make sure these bold proposals become bold actions. You can be sure I will be watching, commenting and will miss nothing. After five years campaigning, the new homes ombudsman is too close for me to allow the industry to manipulate and interfere, or an ineffective government to delay it.

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Housing Redress Consultation – Government finally publish response

The wait is over the results are in, and the winner is……
the new homebuyer!

Housing redress consultation

After what has seemed an eternity and without any explanation for the nine-month delay, the Government published its response to the ‘Strengthening consumer redress in the housing market’ consultation on 24 January 2019, which had closed 283 days  earlier! As I mentioned in my last article about government dragging its heels on housing reform, uploaded 10 days before this consultation response was made public, MHCLG minister Heather Wheeler stated in a letter to my MP on 1st October 2018, “access to redress is a priority for this government.” 

Whilst the government consultation response relates to redress in all housing sectors, I will restrict my comment and subsequent observations to the government’s reiterated commitment to establishing a New Homes Ombudsman which will champion home buyers, protect their interests and hold developers to account.” as previously announced by James Brokenshire on 1st October 2018.

Disappointingly, just 1,209 responses were received for this consultation, only 355 (34%) from those having bought a new home and 385 (37%) from leaseholders. ‘Industry and organisations’ returned 172 (14%) responses. The consultation “Overcoming the barriers to longer tenancies in the private rented sector” which closed on 26 August 2018, received over 8,700 responses! Are new homebuyers uninterested in having someone fight their corner?  “holding developers to account”  Nevertheless, I would like to acknowledge and thank the few who did participate on behalf of many thousands of new homebuyers with defective new homes and thank Katie Kendrick of the National Leasehold Campaign who encouraged members of her group to also respond.

Consultation response - Redress in housing In the government housing redress consultation, just 12 people (7%) indicated that had made a complaint using the Consumer Code for Home Builders (CCHB) IDRS in the last FIVE YEARS! Some respondents said their complaints had been considered as ‘out of scope’ – a common phrase used in the CCHB Case Summaries!  A Government inquiry report in July 2016 also concluded the CCHB was “limited in its scope”.

Out of the 167 individuals who rated the service they received from a redress scheme in Q7, 40% were made by those who recently bought a new home and 35% from leaseholders. These two categories made up the majority (79%) of those who said they had received a ‘very poor’ service. In addition, 42% of purchasers of new homes said “yes, they had encountered gaps in current redress schemes.”

The majority of respondents (84%) who replied to Q20, stated that an ombudsman scheme for new homes should be statutory.

Nearly all, 91%, of the new homebuyers that responded said “that a redress scheme should publish decisions and the number of complaints relating to different providers should be made public.”

The response to Q30 regarding a single ombudsman or one for each sector was not disclosed. Nevertheless it is clear that the majority of new homebuyers want a stand-alone, independent statutory new homes ombudsman and this is what the government have pledged to create.

So what was the Government response to this Consultation as far as the New Homes Ombudsman is concerned.  I will endeavour to interpret the ambiguity in my next article:

Following the consultation, James Brokenshire announces overhaul of broken housing complaints systemJames Brokenshire“And to protect the interests of home-owners who buy new build homes, government has also reiterated its commitment to establishing a New Homes Ombudsman which will champion homebuyers, protect their interests and hold developers to account.

 

Legislation will be brought forward at the earliest possible opportunity to require all new developers to belong to the Ombudsman – giving homebuyers the confidence that when they get the keys to a new home they are getting the quality of build they expect.

Developers will also have to belong to the new body by 2021 if they wish to participate in the government’s landmark Help to Buy scheme.

First, I want to help plug the gaps in available redress services so that more people can get their housing disputes resolved without going through the courts. To that end, I am proposing a New Homes Ombudsman, underpinned by legislation following the establishment of an interim voluntary service, and requiring developers of new build homes to participate.

I want to see a single “Code of Practice” on complaint handling across all tenures.”

Consultation – Housing Complaints Resolution Service

Our aim is to provide a single point of access for all the current schemes in housing. We intend to develop this in collaboration with the redress sector, initially on a voluntary basis, but we will keep open the option of legislation to make this mandatory if necessary.

Our ambition ultimately is for the new service to cover all housing consumers including tenants and leaseholders of social and private rented housing as well as purchasers of new build homes and users of all residential property agents.

We propose to establish a Redress Reform Working Group with redress schemes, which will work with industry and consumers on developing the new service and the other options set out in this paper…”

Addressing the gaps “proposing legislation to extend mandatory membership of a redress scheme to:  c. developers of new build homes.

The government announced the proposal to create a New Homes Ombudsman service in October 2018. This response indicates how that service will sit in the wider redress landscape and the next steps of its implementation.

First, I want to help plug the gaps in available redress services so that more people can get their housing disputes resolved without going through the courts. To that end, I am proposing a New Homes Ombudsman, underpinned by legislation following the establishment of an interim voluntary service, and requiring developers of new build homes to participate. I will also bring forward legislation to require all private landlords, including private providers of purpose-built student housing, and park home site operators to belong to a redress scheme.

On 1st October 2018 we announced our commitment for a New Homes Ombudsman to protect the rights of buyers of new build homes. These commitments are part of the Government’s drive to close gaps in existing redress services and ensure that all housing consumers have access to redress when things go wrong. This consultation response provides more detail on the implementation of these measures.

We propose to bring forward legislation to underpin a New Homes Ombudsman in statute and we will work with industry and consumers prior to legislation so purchasers of new build homes have access to better redress now.

In the meantime, we will work with industry, warranty providers and consumers to ensure that the distinct practices for the new build sector are addressed and that these are reflected in an agreed single consumer code of practice which would be used by a New Homes Ombudsman to adjudicate against.

New Homes Ombudsman

99. It is clear from the responses that more needs to be done to strengthen consumer redress in relation to new build homes, and to drive up standards across the industry. The need for an easy, effective and independent body for consumers to go to is evident, and supported by the industry. A significant minority of respondents said that there is no current existing redress scheme which is best placed to deliver an ombudsman scheme for purchasers of new build homes.
100. There was very strong support in favour of purchasers of new build homes having access to an ombudsman scheme, and many respondents were in favour of such an ombudsman being statutory. We consider that the fastest way to improve redress is to work with industry and consumers to implement a better redress scheme for purchasers of new build housing as soon as possible.
101. We have announced proposals to ensure that a New Homes Ombudsman is established, working with industry and others. We will look to strengthen protection for the first two years after purchase when the majority of problems occur and minimise the variance in the levels of protection and schemes that are currently available. To ensure that consumers get the protection they deserve, we will introduce legislation to require developers of new build homes to belong to a New Homes Ombudsman, which will be underpinned in statute.
102. It is proposed that the New Homes Ombudsman would charge developers to ensure that the service is free of charge to buyers of new build homes.
103. Developers work across all nations of the UK. As the proposed legislation includes devolved matters, we will continue to engage and consult the devolved administrations to seek agreement to introduce UK-wide legislation.
104. We will consult on the detail of the proposed legislation to statutorily underpin a New Homes Ombudsman. This will include the approval mechanisms and standards that a New Homes Ombudsman must meet as well as whether a Code of Practice for developers should also be underpinned in legislation.
105. As we introduce statutory arrangements, we will work closely with industry and consumer groups to establish a voluntary New Homes Ombudsman ahead of legislation. We expect this ombudsman to be:
• Free to the consumer and funded by industry;
• Independent from the organisations the ombudsman will investigate;
• Fair in dealing with disputes;
•Open and transparent and have public accountability through regular reporting;
• And have effective powers to hold developers to account.
106. At Budget 2018, we announced that a new Help to Buy Equity Loan scheme will run for 2 years from April 2021 before closing in March 2023. We will establish the condition that housing developers must belong to a New Homes Ombudsman to participate in the new Help to Buy Scheme.
107. Although there are benefits to having competing redress providers as set out in the section on the Private Rented Sector which has an established redress system, it is clear that the number of schemes operating in the new build sector has created an unacceptable variance of standards and, as we have an opportunity to establish a new system without disruption to consumers and there is a need to reform all the existing schemes, we believe a single New Homes Ombudsman could solve these issues without unnecessary disruption. Our consultation will consider whether one or more organisations could provide a quality service to consumers under the principles above.”

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Why is the Conservative government dragging its heels over housing reform?

Why is the Conservative Government dragging its heels over housing reform?

Amongst a great government fanfare, the then DCLG Secretary Sajid Javid published the twice delayed Housing White Paper on 7 February 2017 entitled “fixing our broken housing market” No more talking! Government must now act on new home issuesAt the time this was widely derided as “more of a consultative document than a white paper.” It contained promises to ban the sale of leasehold new houses; reform leasehold; end housebuilder landbanking and even acknowledged the existence of the APPG for Excellence in the Built Environment (2016) “More Homes, fewer complaints” – report from the Commission of Inquiry into the quality and workmanship of new housing in England, confirming it would:
“keep requirements under review, to ensure that they remain fit for purpose and meet future needs. This includes looking at further opportunities for simplification and rationalisation while maintaining standards.”

In December 2016, the then housing minister Gavin Barwell said:
“The Government will be considering the recommendations in the report in developing future policy on new home”

Whilst Javid may have claimed his housing white paper would provide “radical lasting reform” to fix the broken housing market, it would appear that very little, in fact nothing, has actually been done in the last three years.

Since then the “Consultation Party” has announced various consultations, reviews, reports and inquiries but as yet, nothing has changed. For big housebuilding it is very much Keep Calm and Carry On Regardless.

Government action required not just words!

Take leasehold new houses. This was debated as long ago as 20 December 2016 in the House of Commons. Not one MP came out and spoke in favour of selling brand new houses as leasehold. But many called for it to be banned with Sir Peter Bottomley comprehensively exposed the abuses said:
this goes beyond sleaze”
Justin Madders Labour MP for Ellesmere Port and Neston said:
“This is nothing short of a national scandal. It is the PPI of the house building industry”
The then MP and housing minister Gavin Barwell said:
“I cannot think of any good reason for houses to be built on a leasehold basis. If the industry does not put a stop to the practice and help existing homeowners, we will look to see what Government can do”
Even Theresa May stuck her prime ministerial beak into the argument saying on 1st  March 2017:
“we will consult on a range of measures to tackle unfair and unreasonable abuses of leasehold. I do not see why new homes should not be built and sold with the freehold interest at the point of sale.”

So the government consultation “tackling unfair practices in the leasehold market” was launched on 25 July 2017 to 19 September 2017 with the report on 6,075 responses published 91 days later on 21 December 2017. On 2 July 2018, 19 months after the commons debate, the government announced:
“New government funding schemes will no longer be able to use the money for unjustified new leasehold houses, in a continuing push to tackle unfair and abusive practices within the leasehold system”

Quite what would be deemed “unjustified” is unclear except it gives an opportunity for housebuilders to justify, which they could not with a blanket ban
This was first suggested by Justin Madders during the commons debate and implemented in Wales in March 2018 with developers in Wales will now no longer be able to receive Help to Buy funding for new houses sold as leasehold unless they can present a legitimate reason for retaining the freehold.

On 2nd July 2018 current Housing Secretary James Brokenshire announced “funding for leasehold new houses to end” and, in a bid to “create a fairer more transparent system for homebuyers”, the latest MHCLG Consultation “Strengthening consumer redress in housing” gave new homebuyers an opportunity to insist on a fully independent New Homes Ombudsman, closed on 16 April 2017. At the time of writing, some 274 days later, the feedback is apparently still being “analysed”!

Heather Wheeler Government Housing MinisterI wrote to my MP Gillian Keegan as long ago as 31 August 2018 to ask why the government response had not been published? She forwarded a copy of a letter from Housing Minister Heather Wheeler dated 1st October 2018 which stated that “access to redress is a priority for this government” and “we intend to publish our consultation response later this year” [2018]

Obviously that has still yet to happen. It looks like Heather Wheeler would have trouble forecasting six o’clock at half past five!

So why is everything taking so long? I can see any reason whatsoever why new laws cannot be debated, drafted and enacted to a given timetable. Brexit is not an excuse! Even simple improvements for new homebuyers could be set up with relative ease and yet they are not. Has this government a hidden agenda? Is it in league with big housebuilding? Is the “Consultation Party” relying on huge donations for the next election campaign?

Whatever the reason, and there must be one, such a dire performance in both work output and results would not be tolerated in any other form of employment.

It is clear and has been for many years, that plc housebuilders put their profits above anything else; good service to their customers, high quality new homes, value, warranties that really do give peace of mind, not scamming by selling leasehold new houses and homes with fleecehold management charges all are possible and deliverable but nothing has been done.

Make no mistake; the housebuilding industry is rotten to its very core. It will never ever change without a strong government forcing it to.
A lot of things have got to change. Real change has got to come from Parliament, from a strong leadership. Not much chance of that at the moment! It could have been so different. On 1st October 2018  James Brokenshire announced that a New Homes Ombudsman was being created “champion homebuyers, protect their interests and hold developers to account” So what, if anything, has been done to progress this in the last 107 days?

As Hugh Fearnley Whittington eloquently put it:
“if there’s one thing we know about those in the Government, it’s that anything that costs money, anything that pits government against big business, even if everyone knows it is the right thing to do, appear to make it harder and slower for them to get on and do it. There is one thing that can make a huge difference and that is YOU, US, THE PEOPLE”

So I call on everyone, let us make 2019 the year of #PeoplePower. It is time to force those government announcements into actions.

On 5th October 2016 Prime Minister Theresa May told the Conservative Party Conference that she was about:
“Righting wrongs: Challenging vested interests : Taking big decisions : Doing what we believe to be right : Getting the job done : That’s the good that Government can do and that’s what I’m in this for : Standing up for the weak, standing up to the strong.”
Perhaps she might like to tell the electorate exactly WHEN she is planning to start!

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Consumer Code for Homebuilders – Causing the Confusion!

So much for “Clearing the confusion” the Consumer Code for Home Builders (CCHB) appears to be creating it with its latest webpage purporting to “answer” consumer’s questions following the government announcement last month that a statutory new homes ombudsman was being created.

It would seem that the conclusions in the APPG Report published in July 2015 “More homes Fewer Complaints” appear to be lost on the Consumer Code for Home Builders as it ramps up rhetoric in a battle for its very survival now government has announced the creation of a statutory new homes ombudsman.

Under the headline “Clearing up the confusion”  the CCHB allegedly answers questions from consumers:

 

“Will the proposed New Homes Ombudsman replace the need for the Consumer Code?

Consumer Code for Home BuildersYes it would. The APPG Inquiry Report number 1 “Key recommendation” that a New Homes Ombudsman be set up saying “it would need to be completely independent and replace the dispute resolution service offered as part of the Consumer Code for Home Builders. This same Inquiry reported that the Consumer Code for Homebuilders:

  • “does not appear to give homebuyers the safeguards we think they should expect”
  • “it does not appear to us objectively to offer consumers a wholly satisfactory form of redress”
  • “is limited in its scope”

Yet the Consumer Code for Homebuilders ‘clears the confusion’ saying:

“The spotlight is on proposals for a new homes ombudsman once again, and we are actively working with government to understand how the new proposals will work in practice and what rights consumers would have under the scheme. In the meantime, however, there has been some confusion about the role of an ombudsman.

There are clear rules about what an ombudsman can and can’t do. While they can award a remedy (including money) to rectify a problem, they don’t have jurisdiction to fine organisations or apply standards. So introducing a new homes ombudsman may help with dealing with the complaints about existing problems, but it won’t prevent future problems arising.”

Wrong! An Ombudsman can award substantial justifiable compensation to consumers which would amount to a fine in all but name. All adjudication decisions would be publicly available in full with housebuilders named and shamed. By its very existence it would, as the APPG Inquiry Report alluded to, “put pressure on housebuilders to up their game in the first place and spur them on to improve workmanship and increase levels of customer service”

“We want service standards in home building to improve. Training and compliance checks are needed which is one of the areas we focus on.”
[The training being of housebuilders’ sales staff and estate agents – The CCHB specifically does not cover defects, poor quality or warranty issues]
“Furthermore, under the Consumer Code, builders can and have been held to account for not complying with an adjudicator’s decision.”
Really? Where is the evidence? James Brokenshire said the new homes ombudsman would go further and “champion homebuyers, protect their interests and hold developers to account”

This is an industry-led and industry funded Code that would never bite the hand that feeds it.

“Our Advisory Forum advises the Code on policy and action. We also have a fully independent disciplinary and sanctions panel which considers what action should be taken against those builders that breach the Code requirements. For example, one builder was suspended from building any new homes until all staff had been trained on the Code to prevent further breaches of the Code.”
But presumably not many, if any, have had their registration cancelled by the warranty providers. We don’t know because it has never been published!

Does the Consumer Code offer any more rights than existing legislation?

“Unfortunately, the Consumer Rights Act 2015 does not cover purchases of new homes.”   That’s why the protection provided by the Consumer Code is so important – the Code gives buyers of new homes protection if they change their mind or find sales literature misleading or inaccurate.”
Wrong! It does as far as ‘services’ are concerned. However, no consumer legislation at all specifically covers property. The CCHB does not give consumers any “Protection” it is merely a set of requirements that plc housebuilders appear to pay little more than lip service to at best.

“The Consumer Protection from Unfair Trading Regulations 2008 offers some protection.”
Wrong again! Not “some protection” – it covers every area regarding selling property. The CCHB was set up by the industry to prevent housebuilders being reported to Trading Standards and ending up in court.

“However, it requires Trading Standards to take enforcement action or consumers to bring their own action, which can be complex and costly.”
That is specifically why the Statutory New Homes Ombudsman is being created.

“Where issues are identified under the Consumer Code, home buyers can use the Code’s Independent Dispute Resolution Scheme rather than take lengthy and costly legal action through the courts. We’re raising awareness of the Code  because we want more home buyers to make use of this scheme to seek redress where a breach of the Code has been identified.”
The CCHB has existed for over 8 years yet apparently raising awareness is still necessary? A statutory new homes ombudsman would give consumers a right to redress in any dispute with housebuilders, in the same way the Financial Ombudsman Services does with financial providers. The statutory new homes ombudsman would not and must not be, restricted and shackled by specific Code requirements drawn up in collaboration with the industry and its own vested interests.

Why doesn’t the Code deal with more cases?
Good question!
Because no housebuilder is going to promote the CCHB as it would make complaints more likely! In addition, the CCHB charges consumers an administration fee of £120 to register a complaint, and in some “successful” cases, this fee has not been refunded.
“We are continually raising awareness of the Code”
It hasn’t improved in the last 8 years! In fact I’ve done more to raise awareness of the CCHB and encourage buyers to use it after they sought my advice.
“so that we can encourage more people to access our independent dispute resolution scheme, including lawyers involved in new home purchases.”
The majority of solicitors being those that housebuilders force or coerce buyers to use even though this breaches requirement 2.5 of the CCHB!
“We are also working on removing/reducing any barriers that may exist to raising a complaint as well as investigating options to raise the maximum award limit.”
This is too little too late. Now consumers will hopefully soon be able to use the new statutory new homes ombudsman:  FREE – FAIR- FOR EVERYTHING

“Satisfaction with new homes has increased according to the Home Builders Federation which surveys new home owners.”
Wrong! Satisfaction has not increased. True it is 2% higher than in the previous years survey at 86%, but still way below the 91% in 2013!

“The latest survey response rate was 62% (57,972 responses), in which 90% said they would buy a new build again. Warranty bodies have also seen a drop in claims raised.”
Spin and PR?  An example of this industry never letting an opportunity for a bit of HBF survey spin pass by!
FACT – 99% of new homebuyers reported defects to their housebuilder within weeks of moving in.
FACT – 41% reported more than ten defects!

There is a danger that Government will bow to industry pressure and propaganda like this, placing limits on the effectiveness and powers of the statutory New Homes Ombudsman.

Bearing in mind the government said it “will work with consumers and industry to develop our proposals and publish more details in due course.”  But is this a delaying tactic? Whatever the perceived necessity for “further work”, the housebuilding industry is grasping it as an opportunity to lessen the impact that a statutory new homes ombudsman will undoubtedly have on their businesses.

Any perceived failure, collusion or delay with regard to the creation of the statutory new homes ombudsman will only serve to increase consumers (voters) existing and growing belief that  government is ‘in bed’ with the housebuilding industry, for example some have already questioned the recent extension of  help to buy to 2023, albeit restricted to first time buyers. It is time that for once government ignored the whining of this broken uncaring industry, one that has been running roughshod over new homebuyers for decades ans is ruining lives. This Hansard debate from 22 April 1998 is as relevant today as it was then Why have so many successive governments failed to act? They must do so now.

 

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MPs back plan for New Homes Ombudsman

Housebuilders must belong to New Homes Ombudsman to provide better redress for dissatisfied new homebuyers. 

In its report, published on 26 June 2018, the All-Party Parliamentary Group for Excellence in the Built Environment called on the government to make it mandatory for all housebuilders to belong to an independent ombudsman scheme.

Close but no cigar, that’s my verdict on the All Party Parliamentary Group EBE report from their secret, behind closed doors, inquiry sessions in “February and March”  “looking into the potential and detail for a New Homes Ombudsman.”  The good news is the report acknowledges that: 

“Buying a defective new home can take a massive toll on people’s wellbeing as they wrestle with an almost Kafkaesque system seemingly designed to be unhelpful. We cannot allow this to continue. Consumers desperately need greater leverage to drive a change in this culture in order to ensure that housebuilders put them at the heart of what they do.”

Kafkaesque: bureaucratic delays, a situation that is confusing and frightening, especially one involving complicated official rules and systems that do not seem to make any sense, a nightmarishly complex, bizarre, or illogical quality.

 

Better redress for new homebuyersMuch of this latest APPG EBE inquiry report, (published 27 June 2018), repeats previous recommendations of the 13 July 2016 Inquiry report strangely titled More Homes Fewer Complaints .  Indeed this report could also have been more accurately titled “Better redress for new homebuyers” as it concerns a New Homes Ombudsman. However, the title belies the government’s preferred option of a New Homes Ombudsman within a wider, ‘single portal’, general “Housing Ombudsman” however, due to the technical nature, suggested new homes disputes would need their own separate and bespoke operation” Even the HBF agree with this, but government should be mindful that HBF’s motivation may be an attempt to retain industry control and influence over any stand-alone new homes ombudsman.

The report states : “We have been heartened to hear of efforts to improve performance from the Home Builders Federation (HBF), senior management at many housebuilders are taking steps to address the multiplicity of issues” according to the HBF. It was a great pity that the person that originally proposed the idea of a dedicated new homes ombudsman at the 2015 APPG EBE inquiry, was not even invited to orally rebut this industry-led smokescreen of lies and untruths. On page 20 Box 3, the HBF director of communications did a sterling job using words such as “put schemes in place” “progressing” “developing” “working with” “prepare” yet not one shred of “we have done” in the two years since the first inquiry report was published. He even claimed that the spectacular fall in satisfaction levels over the last five years (over 8%) in the industry’s own survey, “had been arrested” by a blip upwards of just 2% last year. I believe this is more a result of industry manipulation rather than any perceivable genuine increase in overall satisfaction levels. Recommendation 10 of the previous inquiry report was that the HBF annual customer satisfaction survey be more independent. Has the HBF progressed this?  No, there has been not a single change.

Indeed, reading this inquiry report it can be concluded that various interested parties within the industry (HBF, Consumer Code for Home Builders (CCHB), Consumer Code for New Homes, NHBC, LABC, Ombudsman Services, and Housing Ombudsman, all gave oral presentations) have their paw prints all over this report. The report concluding: We were encouraged by a more positive tone from housebuilders, warranty providers and operators of consumer codes of conduct than we encountered in our first report”  Perhaps this only because of the growing likelihood of an independent new homes ombudsman who will making honest rulings on the facts and award justifiable, meaningful compensation. Whilst also making those operating various industry-led consumer codes redundant.

It was however encouraging, that many of the points made in my written submission were included in the inquiry report, including requiring housebuilders to buy-back their most seriously defective new homes.

So what is the good, the bad and the ugly?

The good

Need for a New Homes Ombudsman is recognised

New Homes OmbudsmanOn a positive note the APPG EBE again acknowledges the need for an independent new homes ombudsman, free to consumers and funded by a levy paid for by housebuilders. I suggested £100 per home built. The report suggested £50 per home, raising £8.5m a year (170,000 homes). The HBF accepts their industry should pay. Nevertheless despite to obvious need for a new homes ombudsman, which even the industry itself appears to now accept is inevitably required, the Government has done nothing at all to help new homebuyers, which this report acknowledges are “going through hell”, “fighting redress was taking a toll on their health”. One distraught new homebuyer even told me last week that he was considering killing himself!

Housebuilders forced to buy back defective homes

The report recommends (as I did in my written submission) “that in certain extreme situations, the New Homes Ombudsman should be able to reverse the sale of the property”  The re purchase price should be at current market value to include all associated moving costs, stamp duty, legal fees, carpets and curtains etc.

All New Homes Ombudsman rulings to be made public

This is to “flag up trends in housebuilders’ performance and publish annual reports collating awards made throughout the year.” This would enable future potential new homebuyers to see the worst offenders.

Tough sanctions

“A statutory requirement that any organization building and selling new homes belong to the New Homes Ombudsman to be able to trade.”
“If they are struck off, they lose the ability to operate.” 

Review of warranties

“To see if they are fit for purpose for homebuyers and to establish and easier form of redress with warranty providers as part of a New Homes Ombudsman role.”

The bad

No separate stand-alone new homes ombudsman (NHO)

It remains to be seen if the NHO staff at any housing ombudsman would be sufficiently skilled, with adequate technical knowledge to fully understand and rule on the technical aspects of building defects, warranty standards and building regulations.

No case fees

Case fees would to penalise the worst offenders but the committee thought “the disadvantages would out way the advantages.”  If there are no case fees, there is no financial incentive for housebuilders to attempt a settle a complaint without recourse to the Ombudsman. 

New home ombudsman to only cover disputes within first two years

This is a let off for housebuilders. The only reason given was that it “mirrors the duration for the housebuilders’ liability for defects. However, the 2-year timescale does not bring warranty schemes under the new homes ombudsman jurisdiction, despite the committee acknowledging my observation that the The Financial Ombudsman Service (FOS) is not the best organisation to preside over technical disputes.”  New home warranty providers would not be included in the new homes ombudsman scheme as they are already covered under the FOS. 

Awards made by the new homes ombudsman to consumers would limited to £50,000

Whilst this is better than the pitiful £15,000 maximum of the CCHB, it does not go far enough given the cost and inconvenience to owners with serious defects. Going to court is not an option for new homebuyers. Housebuilders have deep pockets would and do, fight every buyer legal action, settling subject to a non-disclosure agreement for fear of setting a precedent. Amazingly, the report concludes that the NHO should operate along the lines of other ombudsman to ensure “the consumer not be out of pocket and that their financial status is restored to what it was before the complaint.” This clearly isn’t going to work for new homebuyers with many having to stay in temporary accommodation whilst their homes serious defects are remediated. Sadly this demonstrates the lack of understanding by the committee of the overall problem faced by new homebuyers, something which I could have helped with had I been invited to give an oral submission. 

The report recommended that any new homes ombudsman would not be statutory, despite a number of witnesses recommending this to the inquiry committee.

There is little point of asking for expert opinion if when given, it is then ignored. This is being suggested purely in the interests of simplicity and speed “because it can be set up more easily and quickly. Our overriding concern is to see consumers getting better redress as soon as possible.” It has now been over two years since the first inquiry report “Key” number 1 recommendation being the setting up of a new homes ombudsman. Why has government failed to do anything regarding setting up an ombudsman for new homebuyers’ redress, when it is obviously time critical? Indeed the Government’s own consultation  which ended on 16 April 2018, has not even finished “analysing feedback” over 3 months later!

The Ugly

A new “Industry-wide code of practice”

There are apparently seven consumer codes regarding new homes – “all different but sharing a general lack of obligations placed on home builders.” The Property Ombudsman said that the Codes “are written in a way to suggest that they exist to contain complaints” which indeed they do, all being set up following The Consumer Protection for Unfair Trading Regulations 2008.

But the worst part of this report is the proposal for a new “industry-wide code of practice, with government, warranty providers, housebuilders and consumer groups working together, in consultation, to draw up a code that would be used by the new homes ombudsman (NHO) to adjudicate on disputes.”  Not only will this give the industry an opportunity to influence what the new homes ombudsman can and cannot rule on, it will also mean the NHO would be shackled by the requirements of a single, industry-approved code of practice, which many housebuilders will be able to circumnavigate as they currently do with their own CCHB. I cannot think of a single ombudsman, in any sector, that can only adjudicate within the confines of a specific industry code. No single code could possibly cover every eventuality for new home consumer redress. It gets even worse with the HBF suggesting that “a detailed set of finishing standards for an ombudsman to apply when assessing the merits of complaints and resolving disputes” no doubt in their mind the housebuilder’s existing NHBC ‘Get out of Jail Free’ card The Consistent Approach to Finishes which is used to justify atrocious workmanship standards as permissible, if deemed “within tolerance”

It remains to be seen whether this APPG EBE Inquiry Report is given any consideration by government. Clearly, none of recommendations of the previous inquiry have been implemented. In the meantime, every week many thousands of new homebuyers move into homes that have defects, often serious defects, only to discover housebuilders and warranty providers are failing them. It is time the government stood up to ‘big housebuilding’ and set up an independent New Homes Ombudsman without any further unnecessary bureaucratic delay.

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Housebuilding industry attempts to derail the setting up of an independent new homes ombudsman.

As the Consumer Code for Homes Builders (CCHB) fights against its own imminent extinction, an ever growing recognition that a fully independent New Homes Ombudsman is gaining traction and support in government circles. The CCHB starts to “bend and amend” in an vain attempt to head off fully independent consumer redress, which would make the CCHB redundant and take control of buyers’ complaints away from those paid by the industry, to safeguard housebuilders’ vested interests.

The APPG Inquiry in 2015 and the subsequent report published as long ago as July 2016, stated as its number 1 “key recommendation” that a New Homes Ombudsman be set up by government. Indeed it went further saying that the Consumer Code for Home Builders “was limited in its scope” and “did not give a satisfactory form of redress.” The CCHB does not, as it so often claims, “give new homebuyers extra protection”. It is merely the industry’s interpretation of requirements of existing laws such as the Consumer Protection from Unfair Trading Regulations 2008.

So what are Noel Hunter Chairman ‘Consumer Code for Home Builders’ Management Board suggestions to the Consumer redress consultation?

1.2 An Ombudsman will not deal with issues of build quality and customer service which have concerned consumers but would simply address the problems that arise. A more fundamental approach to improving the quality of all new homes is therefore essential, and that is what the Consumer Code for Home Builders (“the Code”) is working to achieve.

"limited in its scope" - The Consumer Code for Home BuildersNot true. A fully independent, government-appointed new homes ombudsman (NHO) would force housebuilders to look at what they do. All complaints to the NHO would be public and through meaningful, justifiable compensation payments housebuilders would be forced to improve the quality of the homes they build. The Consumer Code for Home Builders has been in existence for 8 years and it is a quantifiable fact the overall quality of new homes has fallen over that period. “Working to achieve”? – maybe, but only now a new homes ombudsman is about to make the CCHB redundant.

1.5 We are currently working with the Home Builders Federation, Homes for Scotland and others in the home warranty and home building sector to find an industry-led solution that could more easily be implemented to address concerns in the new home build sector.

“Find an industry-led solution”? The CCHB was industry-led and was found by a government inquiry to “not give a satisfactory form of redress” This profit-driven industry has had the last twenty years to improve quality and customer service when buyers report defects. It has failed all-ends-up to do so. It is not about doing what is “easily implemented” but doing what will be better and most effective for new home buying consumers.

2.5 Whilst we are supportive of the Communities Secretary Sajid Javid’s desire to improve consumer protection within the housing sector, we do not believe that a single Housing Ombudsman will provide the solution given the complexities involved in the construction and sale of new homes and the very different issues within the broader housing sector relating to second-hand homes, the rental market and social housing sectors, by way of example.

On this we can agree. The CIOB also agree that a separate, stand-alone New Home Ombudsman is required their spokesperson told me: “it shouldn’t be about condensing all the work of the various ombudsman but in fact offering something that really meets the needs of the consumer”

2.8 However, on those occasions where there are matters that need to be addressed, an Ombudsman will not be able to deal with any intrinsic systemic and operational issues within a specific home builder company that do concern those consumers, but will simply address the problems that arise. A Consumer Code can work with builders to ensure quality is further raised across the board.

“Can work with builders to ensure quality is further raised”  The quality of new homes has got worse, it has never been raised at all. More and more new homebuyers are contacting me in distress, due to their indifferent housebuilders failing, to not only fix defects in their homes, but even to recognise their own responsibility to do so. There are also increasing instances of buyer’s dissatisfaction with the way NHBC deals with buyers’ warranty claims. How could the CCHB possibly ensure quality is raised, when it hasn’t even managed to get plc housebuilders to abide with the basic 19 requirements of the CCHB in 8 years!

3.2 Since its launch, the Code has led to a step-change in how builders deal with customers through the sales process and is now in its fourth edition. It has been reviewed three times with wide consultation across the industry; consumer groups and Government, most recently in 2016 whereby the review was overseen by a former Director General of Fair Trading. Each time, the Code has been updated and improved to provide greater protection for consumers.

Four revisions to the CCHB in 8 years! “Updated and improved” – for who? The latest CCHB evision making it more difficult for new homebuyers to get justice. The CCHB is not even a Chartered Institute of Trading Standards approved scheme!

Moving forward
4.1 All that said, to further improve consumer protection and address any identified gaps when dealing with new home problems, we are working closely with the HBF, Homes for Scotland and representatives from other warranty providers. To date, those discussions have included:
• Working towards a single common Code;
• Working towards an agreed set of warranty standards which conform to best practice;
• Improving the independence of the existing governance structure;
• Improvement of the existing Independent Dispute Resolution Scheme(s) by way of providing free access to consumers and extending it to cover any gaps identified between the home builder and the home warranty cover in relation to dealing with quality issues;
•  Implementation of an Ombudsman redress scheme.

All of which is too little, too late. It is ONLY now being looked at because of the threat of a fully independent, government-appointed, new homes ombudsman. Otherwise why haven’t the CCHB and the industry acted before now? The Barker Review was way back in 2004 and the Office of Fair Trading Market Study of Home Building in the UK published in October 2008, both many years ago!

7.2 However, we believe it [CCHB] can be strengthened further by making it more independent of the Industry. This would not preclude the Industry being represented on the Board; on the contrary we believe that this would be desirable in the interest of reaching effective and practical solutions. However, the Board should be balanced, but with a majority of independents. Plans are already in place to make such changes.

The CCHB will never be independent of the industry. Its tentacles will be all over it, even with “independents” on the board. The NHBC has a council from many disciplines, but it has been controlled and influenced by housebuilder representation. Only a government-appointed new homes ombudsman, accountable and answerable to government, would be truly and demonstrably independent.

8.1 We are currently looking at ways we can improve the existing Independent Dispute Resolution Scheme by way of providing free access to consumers and extending it to cover any gaps identified between the home builder and the home warranty cover in relation to dealing with quality issues.

The CCHB should have included defects, poor quality and warranty issues but these were and still are, specifically excluded to protect housebuilders and warranty providers, not new homebuyers.

8.2 You have asked within your consultation whether purchasers of new build homes should have access to an Ombudsman scheme; we consider that the importance is not necessarily whether it is an Ombudsman scheme, but more that there should be access to an Independent Dispute Resolution Scheme that can determine on issues that arise.

Unsurprisingly, as a proper new homes ombudsman would make the CCHB redundant. IDRS has not served new home buyers within the “limited scope” of the existing CCHB. Far too often, even when buyers succeed, payments are a small fraction of what was justifiable.

8.3 Whilst we understand that the Property Ombudsman and Ombudsman Services (Property) have proved to be effective in addressing issues with estate agents in the second-hand homes market, our Code along with others in the sector already use CEDR Ltd:  They are the leading independent commercial Alternative Dispute Resolution (ADR) provider in Europe and one of the largest and leading ADR organisations internationally, dealing with over 300,000 people in commercial disputes and resolving over 100,000 consumer disputes across 30 differing sectors.

CEDR Ltd are indeed a commercial ADR, As such they have commercial interests to protect. An independent new homes ombudsman would be non commercial: FREE – FAIR – FOR EVERYTHING

8.4 CEDR Ltd are accredited with the Chartered Trading Standards Institute under the ADR Directive and are an associate member of the Ombudsman Association and we are already in discussion with them as to how they may alter their services to meet Government’s expectations.

CEDR may well be accredited with the Chartered Trading Standards Institute (CTSI) but the CCHB is not approved by the CTSI.

8.6 We do not believe an Ombudsman scheme in isolation would, or could, offer the same levels of protection to consumers as home buyers currently have under the Code as it would not, by definition, embody a compliance regime as referenced above. A voluntary Ombudsman scheme inevitably would not engage all home builders as happens with the current warranty-led scheme where involvement in the Code is made mandatory by way of the warranty bodies’ Rules of Registration.

As previously mentioned, the CCHB does not offer any “protection” to buyers whatsoever! A New Homes Ombudsman scheme would not be voluntary at all. Every housebuilder would be legally required to be bound by its decisions and scrutiny, paying a levy based on the number of homes each build.

8.14 Many of the issues being raised recently in the media are deemed to be “snagging” issues. This is a broad term and further clarity on what this means would help – some may be quality issues, others maintenance issues that appear over time as the property “settles in” and dries out, and others might relate to work that needs to be completed. An agreed timeframe for resolution of defects may reduce the volume of complaints and it is then possible to consider that those that are not dealt with in that time could then be escalated either through the home warranty provider or failing that, the Independent Dispute Resolution Scheme.

This is typical of this industry, to attempt to minimise often serious defects in new homes as minor, snagging, or maintenance issues after “settling in”. In reality, thousands of new homebuyers have recently found a voice and engaged with the media to make very public the extent and often serious defects in their new homes, such as missing insulation, weak mortar, defective render and issues with timber floors.

Increasingly, buyers are required to move out of their dream homes whilst their homes are torn apart and (hopefully) defects are rectified. It is neither fair nor just that in these instances, many of which cause ill health due to the stress and anxiety caused by housebuilders’ persistent denial of obvious issues, that there is currently no independent mechanism for justifiable compensation to be paid. An independent new homes ombudsman would address this gap.

8.16 Given all of these issues, we would suggest that a time-limited and independent study is carried out to review the way in which quality issues are dealt with, and to identify the gaps which an independent dispute resolution service would be best to address. Such a study would ensure consumers are fully covered for all matters of complaint in the future.

The last thing beleaguered new homebuyers need is yet more delay. There is no need for a study, this industry knows full well the serious nature of defects, poor quality and how it acts towards its own customers. It chooses to do nothing. Further consultations, calls for information or green and white papers will only give more delay. What is needed is action, the setting up of a new homes ombudsman as soon as possible.

Sanctions
9.1 In respect of your consultation question around what kind of sanctions should a redress scheme have access to, we do not believe the purpose of a redress scheme is to act as a regulator but rather the purpose of the scheme should be to put the individual back in the position they would have been in had the service failure not occurred.

A redress scheme that does not actively punish or sanction miscreants or act to prevent reoccurrence of similar complaints will be ineffective and not give consumers the redress they deserve or seek. To “put the individual back in the position they would have been in had the service failure not occurred.” With new homes would mostly mean remedial works to bring the new home up to the required standard. It would not address the issue of compensation for inconvenience and stress caused both before and during the required works.

Publication of decisions
10.2 A large business may receive more complaints just by the nature of the volume of homes sold but that may not mean that it is worse than perhaps a small business that might receive one or two cases, which could, therefore, indicate a more severe problem. Consumers often only look at the volume of complaints and perception is often the more complaints the worse the company.

The more complaints the worse the company is a fairly logical conclusion. Barratt (17,395 homes) have fewer complaints than Taylor Wimpey (14,842 homes) and both have fewer complaints than Persimmon (16,042 homes) – based on HBF survey star rating and social media. With a housebuilder league table, new homebuyers would be able to avoid the worse of the plc housebuilders, or at least know what they were letting themselves in for!

10.3 Trends data and context is key here and while we would not oppose the publishing of such information, it nonetheless should be in a considered and balanced way given that consumers will often buy a new home due to the location and affordability as opposed to the identity of the developer building it.

“A considered and balanced way”? In other words, in a way that the industry approves of.

Next Steps
11.1 The consultation asks if there should be a statutory body and our concern is that this will require parliamentary time to establish, which could take several years through the legislative framework. 90% of the home building industry is already supported by, and complies with, our Code and we believe that by finding an industry-led solution, we can increase the cover.

Time is of the essence. The only delay being government lack of urgency. Any legislation could be sorted out in a week if there was a will to do so. Implying a new homes ombudsman would take several years as a justification to trust the existing and failing CCHB to “find an industry-led solution” is ridiculous. That time has long since passed as Tony Lloyd MP for Rochdale said:
“We must have not a nice, cosy, industry-led ombudsman, but an ombudsman process that has real teeth and the capacity to make a material difference” During a debate in the House of Commons the then APPG EBE chair Jo Churchill said: “I applaud the Department for Communities and Local Government for getting the Home Builders Federation to look into the voluntary ombudsman scheme, but perhaps the time for any such voluntary scheme has passed.”

11.2 By expanding its remit to cover the issues currently being faced by home buyers in relation to redress, and by working with others within the home warranty and home building sector, supporting HBF, we believe we can provide an industry-led solution that could more easily be implemented with support of both the industry and key stakeholders.

The CCHB had an opportunity to “expand the remit” during the fourth revision to the CCHB.  Yet the latest incarnate of the Code made it even more difficult and placed new obstacles for new homebuyers seeking redress.

11.3 If agreed, we will continue to work with HBF, Homes for Scotland and other colleagues to address the issues raised within the consultation setting out a framework and agreed timetable for implementation.

In other words work with the wider industry to protect its interests and ensure that any new homes ombudsman redress scheme is managed and set up by the industry, no doubt as the CCHB was and will be “limited in its scope” and “not appear to us objectively to offer consumers a wholly satisfactory form of redress”

The British new homebuyer deserves better from government! The CIOB hold the view that only a fully independent New Homes Ombudsman, by its very existence, would drive housebuilders to reflect on the work they carry out and drive them to aspire to ‘do better’ in the knowledge that their customers can complain to an independent ombudsman.

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