Estate agents will be covered by new homes ombudsman, government confirms

More regulation of the property market is on the way after the government revealed its intention to introduce a powerful New Homes Ombudsman.

Following a nine-month consultation process during which it received 376 submissions, the government has now decided to bring forward legislation. The proposals were initially flagged up during the Queen’s Speech last year.

Once enacted, the law will bring in a new ombudsman for any company building homes for private buyers and introduce a right to redress for home buyers. It will have powers to investigate agents who sell new-build properties too, but hand in hand with the existing ombudsman schemes covering agents.

The main thrust of the proposals is create a new homes ombudsman that will have powers to hold developers to account and require them to put matters right when the sales, construction or snagging process goes badly wrong.

The government says there will not be one single ombudsman offering redress to home buyers but several all operating under one scheme.

But one of the more controversial aspects of the proposed scheme is that, like TPO in sales and lettings, a developer who refuses to cooperate or pay an award will be ejected from the scheme and, therefore, not be able to trade.

£50,000 awards

The government also says that the ombudsman will be able to make awards of up to £50,000, reflecting the fact that it often costs considerable sums to remedy problems within badly-built new homes.

Also, because smaller builders can easily disappear or go bust, a central fund will be established to compensate buyers in these cases, funded by the wider newbuild construction industry.

Builders hoping that the slow legislative process will give them breathing space will be disappointed. The government is to help organise an industry-wide voluntary scheme to operate until the new legislation is ready.

Read the consultation submissions and the government’s response in full.