Let’s extend 28-day adjudication to buyers of new homes

Mr Mallas and his family moved into their new detached – and very smart-looking – double-fronted four-bedroom house in Reading nine years ago. The purchase price was £650,000, paid to Persimmon Homes. A few cracks here and there appeared, then more. The new house was not what it had been cracked up to be. Last month, a judge of the High Court ordered Persimmon to pay damages of £423,243 to Mr Mallas. A costs award for the six-day trial is to follow – which means a heap more money is yet to be argued about..

The Mallas family have, year on year, had a bad time in their home. The judge said, “I have considerable sympathy for the claimant. […] The discovery that the property was beset by ground heave problems has no doubt caused him a great deal of stress and worry. He has, at times, faced difficulties in obtaining relevant reports and other documentation from [Persimmon] and his refusal to countenance allowing [Persimmon] to design and implement a remediation works project. […] He wants what he paid for, a new house that he feels confident is free from latent defects and can, in future, be sold without needing to disclose a complex history to prospective purchasers.” The house was not fit for habitation. When Persimmon put spades in the ground it didn’t dig deep enough. The trench strip foundations were inadequate.

Let’s be realistic. Persimmon, I say, builds very good homes. So too Vistry, Crest Nicholson, Bellway, Barratt and more. But just occasionally when building, things go adrift. And then the Mr Mallases go through a bad time in getting a remedy. This was full-blown litigation, solicitors, barristers, experts and a High Court judge – the whole shebang – and masses of lawyer’s fees. Say what you like, Persimmon could do without all that expense. The answer is easy, and it is in the sole hands of the Rt Hon Steve Reed OBE MP – secretary of state for housing, communities and local government. 

By a snap of his fingers, he alone can amend the law to give home owners and builders access to high-speed, low-cost answers to defect disputes in new housebuilding

Here is how, by a snap of his fingers, he alone can amend the law to give home owners and builders access to high-speed, low-cost answers to defect disputes in new housebuilding. I ask Steve Reed to look at a device that we have been using for 25 years in construction, with huge success. The Construction Act provides for an immediate right to any party to a construction contract to refer a dispute to a binding but temporary decision within 28 days. It applies to all construction contracts – save for those that are with a residential occupier. That exception applies to construction operations to build, or to work on, a dwelling that one of the parties to the contract occupies or intends to occupy as their residence (such as Mr Mallas’s house). 

But if Mr Steve Reed MP snaps his fingers, he can change that. All he has to do is publish the amendment to parliament. Going further, I ask Persimmon – and Vistry, Crest Nicholson, Bellway, Barratt and all the other housebuilders – to support this plea to Steve Reed to snap those fingers.

It is timely to do so. Reed recently said: “Getting spades in the ground is crucial if we want to see the biggest increase in social and affordable housing and meet our target of delivering 1.5 million homes in our plan for change.” It’s crucial that all those dwellings are defect-free – and if some homes do slip through the net when spades and trowels are being wielded, heating and plumbing installed, or flooring, roofing and paving laid – especially if done at high speed and when tradespeople are in short supply – then we need technicians to decide what repair remedy is wanted. 

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That, my friends, is where our industry can immediately step up. The Construction Act offers a way, in the form of 28-day adjudication. We can give immediate answers to defects claims and immediate answers to exaggerated claims. In 25 years of doing this in commercial contracts, we have got pretty damn good at it. 

Steve Reed has already shown his enthusiasm for immediate action on defects in homes. On 24 October he published what will be known as Awaab’s Law. This arose from circumstances when two-year old Awaab Ishak tragically died from prolonged exposure to mould in his Rochdale home. From Monday 27 October, millions of tenants will benefit from safer homes, as social landlords will be required to fix emergency health and safety hazards within 24 hours of them being reported. 

It wasn’t black mould that plagued the new four-bedroom detached house in Reading; it was instead the nine years of asking for defects to be put right. Unsurprisingly, the worried home owner wanted the house knocked down and rebuilt. The court ordered it to be vacated while a piled raft was installed independent of the inadequate strip foundations. It’s highly likely this same result would have been arrived at by deploying 28-day adjudication as per the Construction Act – only far, far, sooner and at a fraction of the legal costs. Over to you, Steve Reed – and the homebuilders too. 

Tony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple