An adjudicator should deal with defects disputes, not the New Homes Ombudsman

Last August, a research briefing landed in the House of Commons Library. It said, “There’s evidence of owners of newly built homes struggling to achieve satisfactory resolution when defects are reported to builders.” Well, did you ever! The briefing paper is headed: New-Build Housing: Construction Defects – Issues and Solutions (England). The result is the slogan “more homes, fewer complaints”.

The idea is to:

• Improve the systems in place to check quality and workmanship
• Develop a new quality culture within the construction industry
• Improve customers’ means of redress through the establishment of a New Homes Ombudsman and a review of the warranty system
• Improve the information customers receive about their new home, including standardised contracts and a right to inspect before completion.

The New Homes Ombudsman will be, says the briefing paper, “a watchdog that will champion homebuyers, protect their interests and hold developers to account”. None of this has yet become an act of parliament.

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But wait: last year a voluntary scheme was introduced. It is a rehearsal, and is important. This meanwhile enterprise is named the New Homes Quality Board 2021 (NHQB). It can refer issues to the New Homes Ombudsman Service. Seemingly 170 or so housebuilders and developers have signed up. Mind you, no dispute, conflict has yet reached the ombudsman here. I do hope that once it gets going it will spot some weaknesses in this NHQB, and iron them out.

The first flaw is that it is too ambitious. Go to its menu and you’ll see there are 10 commandments. By all means beat the drum about fairness, service, responsiveness, transparency, inclusivity, compliance and more. Most of the code is excellent ombudsman territory. This person will attempt to resolve complaints about poor service through recommendations or mediation.

An adjudication about a defect dispute needs a person from the construction industry, such as an engineer, architect or surveyor, someone with the law about building disputes running through them from head to toe

You can immediately see that this cannot be an independent, impartial, detached person, however. Their job is to “champion homebuyers, protect their interests and hold developers to account”. And yes, that’s useful stuff; giving the housebuilder a thick ear. So be it.

The heart of this housebuilding rumpus is disputes about defects in my new house. But no snagging list that I know of is accepted willy-nilly by the builder. Put aside the rude, indifferent, foot-dragging pain-in-the-butt builder; the most attentive, polite and well-meaning builder will also argue that a defect is not a defect at all. And yes, before long the developer’s solicitor will enter the arena. These quarrels drag on and on. The homeowner becomes utterly fed up, but the arguments may have legs.

So, please, all you new folk at the New Homes Quality Board, separate out one, just one topic: it is whether the alleged defect is made out, and if so, to what extent, and if so, what is the remedial work needed, and if so, what compensation is payable. To do all that and be effective in law, it must be a judicial process. The outcome is the independent, impartial deliberations of a person qualified to adjudicate upon the quarrels.

The construction industry already has a fully developed judicial dispute resolution system; it has been operating for 25 years. It is called the Housing Grants, Construction and Regeneration Act 1996, otherwise known as the Construction Act. With a few tweaks, it fits the bill exactly.  

Those tweaks would be very easy to trigger. The minister for new housing, Rachel Maclean, has the power under the existing act to introduce new-build homes into the HGCRA adjudication scheme. First she would simply declare that the building and sale of a new dwelling counts as a construction contract. Then in section 106 of the Construction Act she would need to remove just one word – “not” – whose presence stops the act applying to residential occupiers. The minister then would lay a statutory instrument before parliament. It would be approved, believe me. Then leave the ombudsman to do all that the New Homes Quality Code asks them to do, except make binding decisions on defects – that is adjudicators’ work.

An adjudication about a defect dispute needs a person from the construction industry, such as an engineer, architect or surveyor, someone with the law about building disputes running through them from head to toe. They deal with disputes while the ombudsman deals with improving fairness and service, being polite, and all these things that create improved standards – and, yes, that can avoid the disputes arising at all. But do accept that you will never, ever stop disputes cropping up: it just needs a damn good referee to sort them out. This person is a hard-nosed independent, impartial beast. No adjudicator is there to protect the interests of the new homeowner. To do that, in law, is bias. Do you see the difference between the ombudsman’s work and an adjudicator’s job?

Tony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple