The New Homes Quality Code - Further thoughts for Housebuilders - No. 2

We have previously commented on the introduction of the New Homes Quality Code and the timetable for registration. In this note we look at some of the features of the Code and the issues to be faced by developers as a result.

Who can benefit from the Code?

The Code is intended to benefit individuals buying or intending to buy a new home for occupation for themselves or an individual beneficiary.  NHQB has indicated that they will be looking to extend the benefit of the Code to other groups of customers including shared ownership owners and buy to let owners.  The NHQB does not appear (YET) to be extending the benefit of the Code to limited companies, for example, companies established as a vehicle for buy to let investments.

Information for customers during the transition

As the Code runs through its transitional period, developers are required to make it clear to customers whether they are applying the provisions of the new code or any other legacy code (such as the Consumer Code for House Builders) to their new property. 

Developers will need to ensure their sales and marketing teams and external selling agents include this information in their communications to prospective buyers.

Deadline for registration

Developers are expected to adopt the New Homes Quality Code no later than 31 December 2022. 

Why introduce the Code?

Housebuilders have been the subject of almost daily criticism for past practices. It has been perceived that existing consumer protection for buyers of new homes have proven to be ineffective/ignored leaving individual consumers high and dry.  New home buyers are faced the unenviable choice of engaging in lengthy and expensive litigation and/or enduring ongoing problems with their new property. 

Press and social media reports of individual horror stories and MPs’ case books have all contributed to the conclusion that greater protection is needed for consumers. 

It is clear, however, that the existence of glossy customer service brochures is not in itself a guarantee of fair and efficient dealings by housebuilders with their customers. 

Problems are not confined to small scale developers with limited resources and financial pressures driving inappropriate behaviour but it seems that even large national plcs are not immune from failings in their systems which result in poor quality build and/or poor quality service. 

What will it cost Housebuilders?

The extent to which developers have to incur additional costs to comply with the Code (in addition to paying for registration and a per-new home fee to the NHQB) will depend on the existing arrangements that individual developers have already in place.  Those already with a culture of high customer service and effective systems to deliver that will probably not need to change too much. 

Those whose compliance with the previous Consumer Code has been lost in the day to day pressures of running their businesses may find themselves forced to incur significant amounts of time and money upgrading their paperwork and procedures and ensuring that they can in the future demonstrate compliance in the event of future complaints or enquiries.

The many housebuilders who pride themselves on their customer service and the quality of their workmanship will naturally feel aggrieved that high profile failings on the part of a minority of other developers mean that greater regulation and cost is imposed upon them and that their own good practices are tainted by blanket accusations of malpractice against the whole industry.

Further commentary on issues relating to the New Homes Quality Code will follow in further briefing notes.