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New Home Builders Consumer Code benefits purchasers and developers

Published: 1/06/2017 Last Updated: 1/06/2017 15:28:21 By: Alison Mackay Tags: new build

Since April 2017 all registered builders or developers of new or newly converted homes for sale to the public are required to comply with the updated Consumer Code for Home Builders (the Code).

The Code, which was first introduced in 2010, was developed to improve consumer satisfaction in the homebuilding industry and give the purchaser more consumer protection.  It aims to ensure that all buyers are treated fairly, know what service levels to expect, are given reliable information upon which to make their decisions and are provided with a quick, low cost dispute resolution scheme to deal with complaints.

The Code applies to reservations of new or newly converted homes on or after 1 April 2017 and to homebuilders and agents who are registered with a Home Warranty Body – that is an organisation maintaining a register of builders, providing home warranty cover and supporting the Code, the largest of which is NHBC.

What do I need to know about ensuring compliance with the Code?

Three different stages of the home buying process are affected by the Code - pre-purchase, exchange of contracts and after sales. And nineteen mandatory Requirements must be followed to ensure compliance.

New definitions of “customer” and “home buyer” - a customer is a person who makes enquiries about buying a home but who has not reserved a home, whereas the latter has reserved or goes on to buy a home.

Raising awareness of the Code – the scheme logo must be prominently displayed in the homebuilders’ and agents’ sales offices and in sales brochures. Previously a copy of the Code had only to be provided to customers who asked for it, now all home buyers must be given a copy of the Code and Code scheme documents with the reservation agreement.

Restrictions on choice of advisor removed – homebuilders may offer incentives and/or refer home buyers to a panel of solicitors but they can no longer restrict their choice of legal representative, financial advisor or mortgage intermediary.

Opportunity to investigate and rectify issues - before a complaint can be made under the dispute resolution scheme the home buyer must give the homebuilder an opportunity to investigate and rectify the problem. The timescales within which a home buyer can raise a complaint have been changed. A complaint under the dispute resolution scheme cannot be brought before 56 calendar days have passed since it was first raised with the homebuilder and no later than 12 months after the homebuilder’s final response. The maximum award for inconvenience which can be made by an adjudicator under the dispute resolution scheme has been increased from £250 to £500. This only applies where there has been a breach of the Code and will not be awarded for emotional upset and stress as awards will be judged as a matter of fact.

Excluded properties - the Code does not apply to second hand properties, properties acquired by registered social landlords for rent, or investors or individuals who buy more than one property on the same development for investment purposes.

There will be a three month implementation period until 30 June 2017 to allow homebuilders and agents time to comply with the Code and its Requirements.  If a homebuilder is found to be in breach of the Code, Home Warranty Bodies can apply a range of sanctions.

If you require further information in relation to the Code please see contact details here