New Consumer Code For Home Builders

A new Consumer Code for Home Builders which was introduced on 1 April applies to reservations of new or newly converted homes on or after this day. All builders registered with a Home Warranty Body (an organisation maintaining a register of builders, providing home warranty cover and supporting the Consumer Code - the largest being NHBC) must comply with the Code from 1 April onwards. The aim of the Code is to improve consumer satisfaction in the home building industry- a significant step in assisting the return of confidence in the housing market following the recession. But the Code goes further than that and provides the buyer with more consumer protection. There is also a dispute resolution scheme for aggrieved buyers and sanctions may be imposed for non-compliance.

What do I need to do to ensure compliance with the Code?

The Code deals with the three different stages of the house-buying process (pre-contract, contract and post-completion) and lists a set of 19 Requirements which must be followed to ensure compliance. These Requirements are mandatory, but they are also quite general and the Code itself is backed up by a non-mandatory "good practice" note which provides guidance on how these Requirements should be implemented. In order to reduce exposure to possible claims by buyers, it is suggested that the good practice guidance is followed - a more individual approach to compliance with the Code, whilst permitted, could provide the buyers with more grounds to seek redress.

Pre-Contract Stage

The buyer needs to be able to make an informed decision on whether to buy the home in question and so must be given details of warranty cover, details of factoring services, a plan showing layout, plot position and appearance of the home, a list of contents and detail of building standards being adopted. The buyer must be advised to seek professional legal advice and where applicable be given health and safety information for visiting a construction site.

As regards Reservations, the builder must provide a written reservation agreement, specifying any fee payable, the subjects of sale, the purchase price, along with conditional matters (such as shared equity) and details on termination of the reservation agreement. If the reservation agreement is cancelled by either party during the reservation period or the period expires without being extended or without missives being concluded, then the reservation fee must be reimbursed (less any...