Dear Colleague,
New Homes Ombudsman and Help to Buy Measures
Housing is a priority for this Government and we have committed to building at least one million new homes over the Parliament. As more homes are built, people should be confident that when they purchase a new build home, they get the quality of build they expect. We want everyone to know that when they buy a new build home they are getting what they rightly deserve – and developers are held to account to put things right.
No one expects to purchase a poor-quality home or receive poor customer service, and action should be taken against those that do not deliver. That’s why we have announced we will establish a New Homes Ombudsman to protect the rights of homebuyers and hold developers to account when things go wrong – including introducing legislation to require all developers of new build homes to belong to this Ombudsman.
We want the New Homes Ombudsman to deliver wider benefits to consumers and drive up improvements in the new build homes sector. This includes building better homes of the highest standards and quality – as well as ensuring new homes are sustainable and fit for the future.
The Government’s response to the consultation Redress for purchasers of new build homes and the New Homes Ombudsman sets out how the New Homes Ombudsman will be delivered. We also consulted on whether a Code of Practice for developers should be underpinned in legislation.
The consultation response sets out that:
• There will be a statutory requirement for developers to belong to a single New Homes Ombudsman scheme, procured by the Government for this purpose and we will set out who will be required to belong to it. The New Homes Ombudsman can be delivered by either a private or public sector scheme.
• The New Homes Ombudsman will be independent and free for consumers – paid for by developers.
• Powers will be provided in legislation to ensure requirements to belong to the New Homes Ombudsman are effectively enforced. This will include the power to provide compensation to homebuyers where it is deserved.
• Legislation will include a power for the Secretary of State to create or approve an existing Code of Practice. The Code of Practice will set guidance on what consumers can expect and what is expected of a developer, standardising the approach across the industry, and used by the New Homes Ombudsman to resolve disputes.
• Our ambition is for UK-wide legislation, working with the devolved governments as the legislation is brought forward.
• We will establish a New Build Quality and Consumer Experience Monitoring Group with consumer groups and industry to seek opportunities to collect better information on issues in relation to new build homes, help to improve industry practice, and increase consumer satisfaction.
Our intention is to seek to introduce UK-wide legislation to ensure consistent access to redress for all buyers of new build homes across all of the nations in the union. As the policy develops, we will continue to work with the devolved governments to seek agreement for UK-wide legislation.
But we will not wait for legislation before homebuyers are given better protection. We will work at pace with consumer groups, industry and others for better protection for homebuyers prior to legislation – including working with them to set up an interim voluntary New Homes Ombudsman, so developers know what is expected of them.
The Government has also announced further details on the new Help to Buy scheme that will run from 2021 to 2023. This scheme will be more targeted and continue helping more people onto the property ladder: • It will be restricted to first time buyers, defined in line with stamp duty land tax exemption, as someone who has never owned a property before.
• It will include regional property price caps based on average first time buyer prices in each region. The published caps take average first time buyer prices for the region (inflated to account for property price growth) and add a further 50% to ensure there is good availability of the scheme. Further, as part of the Government’s work to raise the standard of homes across the country, developers wishing to use the Help to Buy scheme must adhere to a range of new quality measures to improve consumer experience and safety, including:
• Builders must be subject to adjudication provided by the New Homes Ombudsman and the preceding voluntary scheme (when established).
• Builders with a Home Builders Federation star rating must clearly communicate that rating on Help to Buy related communications and advertisements.
• All buyers will be entitled to view the actual home being purchased (with their own surveyor if desired) before legal completion of sale.
• Homes built from May 2020 must comply with the most recent energy efficiency requirements.
• Builders must sign up to the Building Safety Charter (when launched), if selling residential units under Help to Buy in blocks above 18m (or 6 floors whichever is lower.)
• Any ground rent on the sale of leasehold properties through the scheme must be restricted to a peppercorn rent. I expect all housebuilders to put quality and safety at the forefront of their business to ensure that we deliver the homes that people expect and deserve.
RT HON ROBERT JENRICK MP
