The Consumer Code for Home Builders
Buyers of New Homes should now benefit from this new Code which applies to reservations made after 1 April 2010.
Most Home Builders will offer Buyers the benefit of an insurance backed guarantee for the New Home usually with the National House-Building Council (NHBC). Where this applies there is now an additional benefit as the Home Builder must also comply with the Code, the objects of which are to ensure Home Buyers are treated fairly, know what service levels to expect and have access to a speedy low cost dispute resolution service if dissatisfied.
The Home Builder must display the Code and provide copies if requested. A copy should also be supplied when any reservation is made.
The main points covered in the Code include:
• Sales & advertising material- should be clear and truthful
• Pre-purchase information- must be given to enable suitably informed purchasing decisions,
• Off plan property- the Home Buyer should be provided with a brochure or plan reliably showing the layout appearance & position, a list of contents & the standards to which it is being built
• Independent legal advice- Home Buyers should be advised to appoint an independent legal adviser and the Home Builder should not restrict the Home Buyers' choice
• Reservations- a written reservation agreement must be provided setting out clearly the terms of this, and whilst this is in force the Home Builder cannot enter into a new agreement with another buyer.
• The Contract- must be clear and fair
• Timing of construction, completion and handover- the Home Buyer must be given reliable and realistic information as to when the Home may be finished and as to date of legal completion/handover
• Termination rights- must be clearly set out in the contract as must information with regard to the return of reservation fees
• After sales service- an accessible service must be provided
• Complaints handling- a system and procedure must be in place and details provided
For Homes bought off plan, the timing of the construction is of critical importance to Home Buyers. The Home Builders are provided with guidance on the Code and in this it is suggested that estimates are given based on the state the construction is at. So if this is at foundation stage, then which calendar quarter it is likely to be ready, where the roof is complete and it is waterproof, which month it is likely to be ready, and when it is decorated, what week it is likely to be ready.
The guidance also suggests that contracts contain a long stop date after which if the Home is not complete the Home Buyer may terminate the contract. This is a very welcome development as Home Builders have to date refused to include any cut off point leaving Home Buyers to wait potentially indefinably. This has left some Home Buyers in difficulty recently where Home Builders have exchange contracts on some homes and then not progressed the development due to the economic downturn.
The most innovative feature of the Code is the introduction of a disputes resolution scheme which is handled by an adjudicator, however the maximum award is limited to only £15,000. Any complaints under the Code must be made within 2 years, and the Code does not apply to all buyers, notably excluding investment buyers.
Full details can be obtained from the dedicated website:
Our conveyancers are experienced in providing practical guidance support, and assistance throughout the conveyancing process relating to New Homes. If you have any questions do not hesitate to contact us:
New Homes Specialist
T: 0117 943 4800