Consumer Code for Home Builders - FAQs

What is the Consumer Code for Home Builders?

The Consumer Code for Home Builders (the Code) aims to give more protection to buyers when acquiring a new house or flat (or a newly converted house or flat) throughout the entire acquisition process including the marketing of the property and the after sales service.

The Code seeks to ensure that home buyers:

• are treated fairly
• are given information on what service levels to expect
• are given reliable information which allows them to make informed decisions, including build timescales, construction delays and rights to terminate the contract
• know how to resolve disputes relatively quickly and at a low cost, if they are dissatisfied

This should ensure that home buyers in the UK receive a consistently high level of customer service, and if they are not happy with that service they don't have to take legal action as there is an independent dispute resolution scheme in place.

Who does the Code apply to?

The Code is a voluntary scheme. However its requirements are mandatory for the builders and developers that are registered with one of the following home warranty providers that are participating in the Code:

• NHBC
• MD Insurance Services Ltd trading as Premier Guarantee & LABC New Home Warranty

This means that only buyers purchasing from builders and developers who are registered with one of the above organisations will benefit from the Code.

Importantly, a buyer will not benefit from the Code if they are a registered social landlord, a corporate body, a partnership or if they are buying for investment purposes. So the Code is really aimed at benefitting the individual buyer purchasing a home.

When did the Code come into force?

The Code came into force on 1 April 2010, and does not apply retrospectively.

Why did the Code come into force?

In September 2008, the OFT (Office of Fair Trading) published a home building Market Study which revealed that organisations such as the Council of Mortgage Lenders, the Home Builders Federation and the NHBC were committed to introducing a code of conduct to promote consumer protection.

The government stated that it supported the industry setting up a voluntary code of conduct in March 2009.

The Code was then formed by NHBC and Premier Guarantee & LABC agreeing that builders and developers registered with them will adopt the code.

What do builders or developers need to do if they are participating in the Code?

• Ensure all procedures comply with the Code
• Review sales brochures and any other literature to ensure they are Code compliant, as the Code must be 'displayed'
• Review terms of reservation agreements to ensure they are Code compliant
• Review sale contracts to ensure they are Code complaint
• Avoid breaching the Code as penalties include removal from the relevant home warranty provider's register, and exclusion from all registers run by other participating home warranty providers. This could leave the builder or developer looking to obtain home warranty insurance cover from another provider to satisfy buyer's mortgage requirements

More questions on the Code?

Visit the Consumer Code for Home Builders website.

Alternatively, contact Helen Scott in the Michelmores New Homes Team for further information: Helen.scott@michelmores.com