The Latest Updates On The New Home Quality Code

• Published date: 28 February 2022
• Subject Matter: Real Estate and Construction, Real Estate
• Law Firm: Gowling WLG
• Author: Mr Rob Bridgman, Thomas Kiernan and Tom Walsh

We previously provided our initial observations on the New Home Quality Code (NHQC), released in December 2021, and what this will mean for housebuilders. During the course of 2022 housebuilders will need to register with the New Home Quality Board (NHQB) to comply with the Code, meaning many are now gearing up to fulfil these new regulations.

To help gain a further understanding of these new rules, our housebuilder litigation specialists hosted an event to discuss the upcoming changes that the Code will bring. We were joined by Douglas Cochrane, Vice-Chair of the NHQB who gave a talk that outlined several of the key changes, including an indication that the maximum compensation that the New Homes Ombudsman can now award would be '75,000 (albeit this is subject to change) - not the '50,000 as previously thought.

After the talk we hosted a roundtable discussion with key stakeholders from the country's leading housebuilders, who discussed the Code and what it will mean for them. In this article we will cover the some of the issues covered by Douglas in his talk and some of the key themes of the roundtable discussion which followed

Sales process

The NHQC has the customer at its heart. The NHQC (and its guidance) places a particular emphasis on protecting vulnerable customers and the general principle of "TCF" - treating customers fairly. Whereas under the Consumer Code for Homebuilders it was permissible for developers to provide information to customers during the legal process, Douglas was keen to stress that the emphasis under the NHQC would shift to providing this information earlier - during the reservation process.

There has always been a requirement for developers to consider the needs if vulnerable customers, but the NHQC places the onus on developers to identify vulnerable customers, even if they do not declare a vulnerability. During the roundtable discussion it became clear that this is likely to prove difficult in practice, particularly so for sales teams who have the majority of customer-facing contact before exchange of contracts. It may be that one way to circumvent the issues would be to include a standard question about vulnerability in reservation checklists, albeit this also has its drawbacks.

While the Code appears to deliberately avoid providing a clear definition for what constitutes a vulnerable customer, the aims of the Code seem to mirror the regulation of financial institutions. This means that:

• sales teams must avoid assuming that vulnerabilities are limited to physical or mental limitations on their ability to understand or progress the transaction;
• with this in mind, sales teams may need to be more vigilant in recording what customers disclose to them. For example, an off-hand remark...