The Fourth Edition of the Consumer Code for House Builders (the “Code”) came into effect on 1 April 2017.
The Code was introduced in 2010 to make the new home buying process fairer and more transparent and provides minimum requirements for customer care and complaints handling. The Code is voluntary albeit the leading new homes warranty providers require their members to comply with the Code in relation to the sale of new or newly converted homes.
Subscribers include NHBC, Premier Guarantee and LABC. Please refer to www.consumercode.co.uk for further details of the warranty providers that subscribe to the Code.
Failure to comply with the Code can result in the developer losing its ability to benefit from its new build warranty scheme and, in severe cases, can result in the developer being prevented from registering with other participating new home warranty providers.
The Fourth Edition of the Code introduces a number of amendments that developers may wish to note and could result in changes to standard practices:
- The Code will no longer apply to transactions involving purchasers of new homes by investors and individuals buying more than one property on the same development for investment purposes.
- Where the Code applies to a development all buyers must be provided with a copy of the Code at the point of reservation. The Code scheme logo must be prominently displayed in the sales offices and all marketing literature.
- The Code scheme documents must be provided to the buyer with the reservation agreement and to their legal representatives with the draft Contract as sale documents.
- The developer is required to state at the commencement of the transaction the likely range of monetary deduction that will be made from the reservation fee in the event the reservation is cancelled.
- Developers may offer incentives and/or refer buyers to a panel of solicitors but cannot restrict their choice of legal representation. In addition, the developer can no longer restrict the financial adviser or mortgage intermediary that the buyer may wish to use.
- All appendices or schedules attached to the reservation agreement (such as agreed specifications and details of any agreed “extras”) must be evidenced by the developer and the buyer in recognition that they have been sent and received by the other party. This is intended to avoid dispute as to the terms agreed between the parties at the point of reservation.
- If a buyer has a complaint that is outside the scope of the complaints procedure for the relevant new homes warranty provider then the complaint can be referred to the independent scheme governed by the Code. Claims cannot be brought under the Code unless 56 calendar days have passed since the complaint was first raised with the developer and no later than 12 months after the developer’s final response.
- The maximum award for the cost of inconvenience to a buyer has increased from £250 to £500.
For more information on the Code, please click here.
For a copy of the Fourth Edition of the Code, click here.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.