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Buying a New Build? – The Consumer Code for Home Builders

The Consumer Code for Home Builders (“the Code”) is a voluntary code of conduct devised in conjunction with the National House Building Control (NHBC), Premier and Local Authority Building Control (LABC) New Home Warranty brands.

This article looks at how the code operates.

Who does it affect?

The Code applies to individual homebuyers who reserve a new build or newly converted home on or after 1 April 2010 which is being built by a homebuilder who is registered with NHBC, Premier or LABC. It doesn’t relate to properties purchased for investment purposes.

Homebuilders must comply with a set of mandatory requirements in respect of the marketing and selling of the home and their after-sales customer service.   The Code Disputes Resolution Scheme applies to complaints arising and made in writing to the homebuilder within two years from the start date of the Home Warranty Cover.  Subsequent homebuyers will benefit from the Code in respect of after-sales matters where any complaint is reported within the two year period.

Specific requirements

Purchase information

Homebuyers must be given enough pre-purchase information to help them make suitably informed purchasing decisions. This must include a written reservation agreement, an explanation of warranty cover, description of any managerial services and organisations to which a homebuyer will be committed and an estimate of their costs. If the home is not complete, the information must also include a brochure showing the layout, appearance and plot position, a list of the contents, and the standards to which the home is being built. Information must be provided about contact, the type of warranty cover and advising the buyer to appoint a professional legal adviser.

Reservation

Buyers must be given a reservation agreement clearly stating the terms and the reservation fee, what has been sold with the purchase price, how and when the reservation will end, how long the price remains valid and any management services the homebuyer must pay and their estimated cost . It must also state that the reservation fee will be reimbursed if the reservation agreement is cancelled, and detail any deductions which might be made. A homebuilder cannot enter into a new reservation agreement or sale agreement with another customer for the same home whilst a reservation is in force,

Sale contract

The sale contract has to be clear and fair and include the contract termination rights. It must give an anticipated build completion date, and the availability to terminate, together with the deposit returned.

Information during occupation

The homebuilder must provide the homebuyer with accessible after sales services, a point of contact, what guarantees and warrantees apply, and health and safety cautions whilst the property is under construction.

Complaints and Disputes

The homebuilder must have a system and procedure for receiving, handling and resolving homebuyers’ service calls and complaints, and let the homebuyer know this and also the dispute resolution arrangements operated as part of the code. They must cooperate with appropriately qualified professional advisers appointed by the homebuyer to resolve disputes.

If the homebuilder isn’t compliant with the above, it can be removed from the Home Warranty Body’s register and excluded from all registers run by other Home Warranty Bodies that take part in the Code scheme.

Need more information?

Copies of the Code can be obtained from the Consumer Code for Home Builders website.  The website includes guidance on the Code and replies to ‘Frequently asked questions’ and ‘Why buy this home?’.

A Law Plain and Simple Guide

Author: Ian Lewis

Allington Hughes