Housebuilders that have registered with the New Homes Quality Board (NHQB) are now subject to significant new requirements in relation to their complaints procedures.
The NQHB's Code applies to homes built by a registered developer which were reserved on or after the developer's registration date. We have considered in a previous article the differences between the new Code and the Consumer Code for Home Builders.
One of the key changes is that the New Homes Quality Code sets out a new, five-step procedure which developers must follow when dealing with customer complaints.
The procedure is built around the "complaint start date"*. The complaint start date is the first business day after the complaint is received by the housebuilder. For example, if the complaint is received on a Monday, the complaint start date is Tuesday. If a complaint is received on a Friday, Saturday or Sunday then the start date is the following Monday (or, in the case of a public holiday, the next working day).
*(An alternative term, the "complaint initiation date", is used in the NHQB's guidance for developers. The two terms are interchangeable; this article will refer to the complaint start date, which is the term used in the Code itself.)
Housebuilders who have signed up to the Code must now ensure that their complaints procedure includes the following steps as a minimum.
1. Written acknowledgement
No later than five days from the complaint start date, the developer must send the customer a written acknowledgement of the complaint. The written acknowledgment will usually be very short and need not include any comment on the substance of the customer's complaint.
It should be noted that, unlike the complaint start date, the date by which a written acknowledgement must be sent is calculated based on calendar days, not business days. This means that the last day for an acknowledgment to be sent could fall on a weekend or public holiday. The same is true of the deadlines for the other steps listed below.
2. Written path to resolution
No later than 10 days from the complaint start date, the developer is required send the customer a 'path to resolution'.
The path to resolution, which must be in writing, sets out how the developer intends to investigate the customer's complaint. This may include undertaking an inspection (or instructing a contractor to do so), reviewing previous correspondence with the customer and/or discussing the complaint with sales or site staff or a contractor.
It will be good practice for developers to include, in their path to resolution, an explanation of the other stages in the complaints process (including stages 3 to 5 below). This can be done using standard text which developers can include in each path to resolution they issue.
Finally, the path to resolution must tell the customer whether they can refer the complaint to a dispute resolution service offered by their warranty provider if they are not satisfied with the outcome of the complaint procedure.
3. Complaint assessment and response letter
No later than 30 days from the complaint start date, the developer must send the customer a complaint assessment and response letter.
The complaint assessment and response letter will include a report on the complaint (or, in the case of multiple complaints, a separate report on each one). It will explain whether the developer accepts the customer's complaint, rejects the complaint or needs more time to reach a decision.
If the developer accepts the complaint, the letter should set out what action has been taken to rectify the situation and/or what further correction action the developer intends to taken and when.
If the developer rejects the complaint then it must give a clear explanation for this and provide the customer with information about the New Homes Ombudsman Service (NHOS) and any dispute resolution service offered by the warranty provider.
If the developer needs more time to conclude its investigations then it should explain what further steps it needs to take and why. It should also state when the developer will receive a further update (which must be within 28 days) and give an estimate of when the developer expects to reach a decision.
4. Eight-week (56-day) letter
If the complaint is not closed within 56 days from the complaint start date, the developer must send an 'eight-week letter'.
The eight-week letter must include, as a minimum:
- a clear summary of what action has been taken to date;
- details of the actions or investigations which remain outstanding and an explanation of why these have not yet been concluded;
- an estimate of when the developer will make a decision on a complaint or, in the case of a complaint that has already been accepted, complete any outstanding correction work; and
- a timeline for further updates to the customer - these must be provided at least every 28 days until the complaint is closed.
5. Closure letter
As its name suggests, the purpose of a closure letter is to bring the complaints process to an end.
The developer can send a closure letter at any time after the complaint start date, though in practice it will almost always be appropriate to issue a complaint assessment and response letter first.
The closure letter should confirm the housebuilder's final decision and, where a complaint has been accepted, list the corrective actions that the housebuilder has taken. It must also provide information about how the customer can refer the matter to the NHOS if they are not satisfied with the housebuilder's response to the complaint.
What housebuilders need to do
Housebuilders who have signed up to the New Homes Quality Code, or who are planning to do so, should make sure that their internal complaints processes include all of the above steps.
Once a Code-complaint process is in place, it is also important for developers to ensure that they meet the relevant deadline for each step. The NHQB has confirmed that a failure to issue any of the required communications within the periods set out in the Code will entitle the customer to refer their complaint to the NHOS immediately.
The good news for developers is that, as long as they stick to their complaints process, customers are unlikely to be able to refer any matter to the NHOS until at least 56 days after the complaint start date. Where a customer tries to refer a case prematurely, it is expected that the NHOS will simply refer them back to the developer.
Our market-leading Real Estate Litigation team can assist with ensuring that housebuilders' complaints processes are compliant with the new Code and regularly support developers in dealing with complex or high-value complaints. Just get in touch with our team of your usual Brodies contact for assistance.