Non-compliant defects reporting policy

The buyer’s claim

The buyer claimed the builder had provided poor customer service and failed to rectify numerous defects identified by their surveyor.

The buyer requested the builder rectify the outstanding defects or pay £15,000 compensation to enable them to arrange the remedial work themselves.

The builder’s defence

The builder stated the buyers had not followed the correct procedure for reporting the defects and made no offer of settlement.

The adjudicator’s findings

Whilst the adjudicator was satisfied that the builder had systems and procedures for receiving, handling and resolving home buyers’ complaints, it had imposed a seven day reporting policy outside which issues were not investigated and no further explanation provided.  The adjudicator found that builders have an obligation, under section 5.1 of the Code, to investigate snagging reports up to two years after legal completion, to consider whether the reported defect was present at the point of completion, and to respond explaining why they accept or reject that remedial work is necessary. The builder had also failed to consider a defects report carried out by a suitably qualified professional.

Learning points

For buyers:

• Under the Code, builders must investigate snags reported within two years of legal completion. However, the earlier you report snags the better as it can help to differentiate between defects and wear and tear.
• If you reserved your home after 1 January 2024, you are entitled to a pre-completion snagging inspection. This is an important opportunity to highlight any imperfections that should be resolved, ideally before completion.
• When raising a dispute via the Code’s Independent Dispute Resolution Scheme (or any ombudsman or alternative dispute resolution scheme) bear in mind that adjudicators can only award sums which relate to the actual costs of rectifying issues. These claims must be supported with quotes or other written evidence. Additional sums for compensation can be awarded but tend to be limited. In the Code’s case, the maximum amount that can be awarded for inconvenience is £2,000 (under the latest edition of the Code).

For builders:

• Under the Code (and your home warranty policy) you are responsible for resolving defects and snags for two years after legal completion. You cannot implement time restrictions for reporting snags within this period.
• The Code requires you to offer buyers a pre-completion snagging inspection, which can be undertaken by the buyer themselves or by their professional adviser. To comply with the Code, you must consider the outcome of this report and rectify the defects identified. If you do not agree with some of the findings, you must explain why and ensure your responses are compliant with the Code and your home warranty provider’s technical standards.
• Having a complaints policy is a good start, but how you handle those complaints really matters. Make sure you follow up with buyers, explain what you’re doing about a complaint and if it’s not something you’re able to resolve, explain why. Our Right First Time factsheet on handling customer complaints can help.