Building Legal Solutions
New Code for Home Builders
- AuthorHarvey Gibbs
If you are a builder and/or developer of new homes, you need to be aware of the New Homes Quality Code which was published in December 2021, following a full public consultation. The general aims of the Code are to improve the quality of new build homes and to provide more robust protection for buyers of new homes, particularly in relation to customer care. It replaces the previous Consumer Code for Home Builders.
All new home builders and developers are required to make an application to the New Homes Quality Board to become a “Registered Developer”, and therefore abide by the Code, by 31 December this year. In the meantime, they must make it clear to their buyers whether the new home that they are purchasing is covered by the Code.
What is the New Homes Quality Board?
It is an independent not-for-profit body which was constituted in January 2021 and which has the support of the Government. It has been established for the purposes of creating a new framework to oversee reforms in the build quality of new homes and the customer service which is provided by builders and developers. Membership of the Board is made up of representatives from consumer bodies, mortgage lenders, Homes England, developers, new home warranty providers and some independent members.
The Code will apply to all private buyers who are purchasing their new home for owner occupation. It will take effect from the date when the developer from whom they are purchasing is activated under the Code and provides an additional layer of requirements which is intended to cover the shortfalls in current protections for home buyers. It has been drafted to ensure that every aspect of a new home purchase, from the moment when a buyer walks into a sales office right through to two years after occupation of the home, is covered.
The aims of the code
The Code sets out a statement of fundamental principles which Registered Developers must apply to their business and to their dealings with buyers, and details of the steps that should be followed at each stage of the sale process. The general aims of the Code are to:
- Ensure that all relevant information is provided by Registered Developers to buyers before they make a reservation so that the buyer will be able to make an informed decision about making the purchase. This will include details as to whether the new home is freehold or leasehold, any future communal land management or service charges, the aftercare and new home warranty arrangements.
- Regulate reservation deposits
- Provide for a “cooling off” period following reservation
- Eliminate pressure selling or the supply of misleading information.
- Provide the right for a buyer to have a professional inspection carried out on their behalf by a suitably qualified inspector prior to legal completion to ensure that the building works are complete before the buyer moves in.
- Ensure that an effective after sales service is in place for snagging or any other issues.
- Ensure that a complaints process is in place, for two years after completion, which will respond to the buyers concerns within “a timely manner and to their satisfaction”, and keep the buyer informed throughout the process.
- Provide improved protection for vulnerable buyers which requires Registered Developers to identify, and give additional attention to, any such buyer.
- Provide for a reference to an Ombudsman if there is no satisfactory outcome to a complaint.
Once the application has been made to the Board the developer will have to complete mandatory training and demonstrate that they have the necessary after-sales and complaints procedures in place to meet the requirements of the Code. Only once this has been completed will the developer become a “Registered Developer”
It is expected that the Code will bring about a significant change in how developers deal with their buyers and that it will result in a consistently high standard of new home build quality and service. Furthermore, in those cases where these standards are not delivered, there will be more effective dispute resolution procedures in place for buyers.
Should a buyer not be satisfied with how any snagging issue/s or defects (which they have reported to the Registered Developer) have been dealt with, then they can refer their complaint to the New Homes Ombudsman Service, whose decisions will be entirely independent of the New Homes Quality Board and the building industry. The Service will be provided by The Dispute Service Ltd and is intended to provide effective and independent redress for buyers of new homes. If buyers are not happy with the quality of their new home, or the service provided by the Registered Developer, they will be able to make an application to the Service if their complaint has not been dealt with to their satisfaction. The Service will then will consider the evidence provided by both the buyer and the Registered Developer before making an adjudication. It is hoped that the Service will be in place by 30 June 2022.
What should developers be thinking about now? Initially the application will have to be made. Existing documentation and processes will then have to be reviewed to ensure that they comply with the new Code. Following on from that initial training on the Code will have to be given to staff, particularly those who are customer facing, followed by annual refreshers. After sales procedures and a complaints procedure will also need to be put in place.
It is expected that mortgage lenders and building warranty providers will make it a condition of their products that the developer must be a Registered Developer, and so any developers who are possibly thinking that they do not need to register should think again.
For an initial consultation or quotation regarding advice about the New Homes Quality Code, please contact the Feldon Dunsmore team on 01926 954694.