Independent Dispute Resolution Scheme
One of the fundamental aspects of the Consumer Code for New Homes is the provision of access to a free and effective Dispute Resolution Scheme in the event that a dispute arises between a Buyer and a registered Developer. This can help to avoid costly and protracted legal action.
The Code is underpinned by an Independent Dispute Resolution Scheme operated through CEDR Limited (CEDR).
CEDR is approved by the Chartered Trading Standards Institute as the ‘competent authority’ acting on behalf of the Secretary of State for dealing with Disputes that are raised with the Developer from the Reservation date until two years after the date of Legal Completion.
A Dispute may arise if a Buyer believes the Developer has failed to meet the Code’s Requirements and it falls outside the Structural Warranty Body’s resolution scheme for defects or damage. If so, the Dispute may be resolved by the Buyer applying to the Code’s Independent Dispute Resolution Scheme.
This means a trained adjudicator will review written submissions from both parties and issue a Decision based on their conclusions. The Adjudicator will decide whether or not a Developer has breached the Consumer Code for New Home’s Requirements and if so, whether or not the Buyer has been caused detriment or suffered financial loss (or both) as a result.
The Independent Dispute Resolution Scheme is applicable in the event that a dispute arises between the Buyer and the Developer where agreement cannot be reached within 56 calendar days of the complaint being raised with the Developer.
NB: Decisions made by the Independent Dispute Resolution Scheme are not insured under the Structural Warranty.
Overview of the Scheme
Below is a summary setting out the key steps in the process used by the Independent Dispute Resolution Scheme (IDRS), operated by Centre for Effective Dispute Resolution (CEDR) on behalf of the Consumer Code for New Homes. This summary is intended to act as guidance only. It is CEDR’s Service Rules that apply to Disputes that are referred to the IDRS. In the event of a conflict of information between the Service Rules and this summary, the Service Rules will prevail.
- 1. To use the IDRS, the Buyer must contact Consumer Code for New Homes, which will provide an IDRS Referral Notice to the Buyer.
- 2. The Buyer has 12 months from the Developer’s final response to the Complaint, or 12 months from the last written contact with the Developer if no final decision has been reached, to submit an application to CEDR. Please note that being provided with an IDRS Referral Notice does not guarantee access to the IDRS. The process and scope of the IDRS is governed by a set of Service Rules. It will be at the sole discretion of the IDRS to determine if the Buyer’s complaint is eligible to use the Service.
- 3. The Buyer must complete an application form and send it to CEDR with any evidence they wish to rely on. The Buyer’s application form should contain all the information relevant to the Dispute and, where possible, identify the Requirements they allege have been breached. The Buyer should also provide copies of receipts or other evidence of expenditure if making a financial claim.
- 4. CEDR will ask the Developer to respond to the Buyer’s application and supporting evidence. At this stage the Developer may challenge the eligibility of the Buyer’s complaint (‘object’) or resolve the Dispute without a formal adjudication (‘early settlement’). An early settlement costs the Developer a reduced case fee.
- 5. If early settlement does not happen, the Developer must submit their response to the Buyer’s application along with payment of the required fee. CEDR will give the Buyer a copy of the Developer’s response and will be invited to respond if they wish. At this stage, the Buyer cannot add any new complaints or issues to the Dispute.
- 6. An Adjudicator will be appointed by CEDR to consider both parties’ submissions and decide whether or not the Developer has breached the Consumer Code for New Homes Requirements and, if so, whether or not the Buyer has been caused detriment or suffered financial loss (or both) as a result. Both parties will be expected to have acted reasonably and to have controlled their costs.
- 7. The Adjudicator will prepare a written proposed conclusion to the Dispute, with reasons for that proposed conclusion (‘the Proposed Decision’), and CEDR will send it to both parties. The parties will be invited to provide comments on any factual inaccuracies and/or errors in law.
- 8. The Adjudicator will consider any comments made and has the power to make any amendments they consider appropriate to the Proposed Decision before making their Final Decision.
- 9. The Final Decision may be a performance award (where the Developer must do something, such as apologise to the Buyer) or a financial award (where the Developer must pay the Buyer money), or a combination of the two. The maximum value of the combined award available is £50,000 including VAT. Please note – where the Decision relates to a Common Area, the Adjudicator cannot make a financial award for this to the Buyer.
- 10. The Adjudicator may make a discretionary award for upset and inconvenience, up to a maximum of £2,000. They will do so if, in their sole consideration and opinion, the Buyer has been caused more than minor inconvenience as a result of the Dispute or how the Developer handled it (or both). The Buyer will not receive an award for distress and inconvenience if the Adjudicator does not find a breach of the Code. The £50,000 maximum award includes any award for inconvenience.
- 11. The Final Decision cannot be appealed; it can only be accepted or rejected by the Buyer.
The process above relates to Version 5 of the Code for all reservations made from 1 January 2024. If a New Home was reserved prior to that date, Version 4 of the Code will apply.
The rules of Consumer Code for New Homes registration, and the registration requirements of the Structural Warranty Bodies, require each registered Developer to honour any Decision made against them by the IDRS.
The Adjudicator’s decision may comprise any of the following:
- The maximum value of any award will be 25% of the contract price of the New Home subject to a maximum award of £50,000 (inclusive of VAT) in the aggregate for all claims arising in respect of the New Home.
- Awards for emotional distress and/or inconvenience, subject to a maximum award of £1,000 for reservations made up to 31st December 2023 (Code Version 4) and £2,000 for reservations made from 1st January 2024 onwards (Code Version 5).
- Comply with any performance award that may be advised by the Adjudicator.
- Comply with any combination award i.e. a combination of reimbursement of financial loss, compensation for emotional distress and inconvenience not to exceed £2,000, and carrying out work on the New Home.
- Referral of the Developer to the Disciplinary and Sanctions Process.
A Developer remains liable to comply with the directions made in a Final Decision that has been accepted by the Buyer, even if they are removed from the Consumer Code for New Homes register.
The agreement between the Code and the Developer governs the contractual relationship in relation to the terms of this Code, which requires the Developer to agree to comply with the terms of the Consumer Code for New Homes and expressly undertakes to comply with any decision given as a result of the Independent Dispute Resolution Scheme and accept the award of the Adjudicator.
If the Developer fails to accept the Adjudicator’s award, CCNH may take action against the Developer to enforce the terms and conditions of the award.
What is not covered by the IDRS?
The Consumer Code for New Homes does not cover Disputes that concern:
- matters that are covered by the Structural Warranty.
- damaged or faulty items not caused by the Developer or their Agents.
- personal injury claims.
- loss of property value or blight.
- claims about land conveyed or its registered title.
- Snags not reported to the Developer within the Developer’s stated timescales for reporting such matters.
- claims that exceed the Independent Dispute Resolution Scheme’s limits unless the complainant opts to restrict their claim to the Scheme limit.
- complaints already dealt with by an alternative dispute-resolution process including courts and Ombudsman schemes.
Matters within the scope of other dispute resolution or ombudsman schemes should be referred to the relevant organisation. In such cases, these schemes may take precedence over the Consumer Code for New Homes and its associated Dispute Resolution Scheme.
Downloads for Developers
Version 5 – Applies to all reservations from 1st January 2024