The Consumer Code for Home Builders Scheme came into effect on the 1st April 2010. This Code aims to add to the protection of individuals who reserve to buy a new or newly-converted home and to reduce disputes.
The Consumer Code is a voluntary industry code setting out requirements and principles that home builders registered with a relevant warranty provider must meet. Although the Code will only apply where the home is built by a builder who is providing insurance protection through a home warranty provider, such as the NHBC , Premier Guarantee or LABC New Home Warranty, the builder will be bound by the Code which is good news for new home buyers.
The Code takes a common sense approach, requiring home buyers to be treated fairly, setting out service levels, ensuring that they are given reliable information upon which to make their decisions. Most importantly, a low-cost speedy dispute resolution procedure is detailed in the Code enabling buyers to avoid long, drawn-out disputes with their builder if they are dissatisfied and believe that there has been a breach of the Code.
The Code includes provisions about:
- Marketing – sales and advertising material must be truthful, clear and comply with the law.
- The Reservation Fee that a builder charges - including a requirement that the Reservation Fee must be reimbursed if the Agreement is cancelled, subject to deduction expenses and costs.
- The Warranty Provider – before exchange of contracts, details of the provider should be given to the buyer.
- Pre-contract information – should be clear and fair including contract termination rights.
- The Right to terminate a contract and the return of reservation fees and deposit (subject to the deduction of reasonable administrative costs) if design, construction or material changes are made to the property ie if the house is significantly altered in size, appearance or value.
- Completion timescales – information must be reliable and realistic.
- After-sales service - details should be clearly given.
The Code is not applicable in all cases. Investor buyers are not covered by the Code, nor, for example, are self-builders (building for their own occupation) or properties built under architects’ certificates. The Code only applies to claims made in writing within two years of legal completion and does not extend to claims for personal injury, loss of property value or issues such as noise, nor to claims relating to the land or its registered area. Second and subsequent buyers are covered but only in respect of after-sales matters that are reported within the first two years. The purchase of second–hand homes from builders, eg houses that builders have taken previously in part-exchange, is not covered.
Whilst the Code is unlikely to change your life, it is a welcome support for buyers of new homes and will hopefully make new home purchase less stressful.
Of more relevance to all house buyers and sellers is the suspension and anticipated withdrawal of Home Information Packs. Sellers will still need to provide an Energy Performance Certificate but will not be required to provide a HIP. Hopefully, this will mean that if you see a house that you wish to buy it will be easier, cheaper and quicker for you to put your own house on the market.
Mike Sheldon is a partner and head of residential property at Raworths. To contact Raworths telephone 01423 566666 or visit our offices at Eton House, 89 Station Parade, Harrogate, HG1 1HF. Alternatively you can contact him by email - mike.sheldon@raworths.co.uk
