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New Homes Quality Code Parts 1 and 2 – mis-selling and legal

Outcome: Complaint upheld in part

Case date: 20th February 2024

The Issues

The customer considered that the plot they reserved was mis-sold as having full planning permission in place when there were outstanding conditions to be discharged. The customer also complained about the way they had been treated by members of the developer’s team.

The Circumstances

The customer reserved the property, paying a reservation fee and further sums for optional extras. Their solicitor subsequently told them that not all planning conditions on the plot had been discharged and discussions took place between the developer and the customer’s solicitor to put in place an indemnity or indemnity insurance to allow the sale to proceed while the developer investigated the issue with the council.

Before the investigation was concluded, the customer’s lender withdrew their mortgage offer, citing issues with planning. The customer decided to withdraw from the transaction and purchased another property.  The developer was able to resolve the issues with the council and it was confirmed that the planning conditions for the plot had been discharged retrospectively.

The developer agreed to return the customer’s reservation fee and extras payments in full.  The customer also wished the developer to meet the costs of their legal fees on the transaction and brought their complaint to the New Homes Ombudsman.  The complaint included concerns about the customer’s interaction with a member of the developer’s team.  The customer said they were shouted at and threatened that the police would be called.

The developer accepted that there had been an issue with the mechanism for discharging the planning conditions which they had been unaware of until the customer’s solicitor raised it.  The developer felt they had acted appropriately in offering practical solutions to allow the sale to proceed and then reimbursing the customer in full for payments made.  The developer offered a contribution towards the customer’s legal fees during the course of the New Homes Ombudsman’s investigation, but the customer declined the offer.

The developer denied that they had treated the customer inappropriately.

The Ombudsman’s Decision

The New Homes Ombudsman acknowledged the assistance the developer had offered the customer and that the customer’s reservation fee and extras payments had been returned in full which went beyond the requirements of the code.  We also accepted that the developer had been unaware of an issue with how planning conditions were being discharged until it was raised by the customer. 

However, from the customer’s perspective, the situation should not have arisen and their reservations about proceeding were understandable in light of the advice they had received from their solicitor and the communications from their mortgage lender.  The customer had provided evidence of the legal costs they had incurred in pursuing the transaction.  Although the sum was higher than indicated on the solicitor’s website, the Ombudsman accepted that the transaction had involved additional complications and concluded that the developer should pay the customer’s legal costs in full.

The complaint about inappropriate treatment was not upheld.

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