The Consumer Code for Home Builders
1st February, 2014
When buying a newly built or converted property from a builder, buyers usually purchase with the benefit of a 10 year warranty and insurance policy that provides protection in the event that any building defects surface within the first 10 years following completion.
However, after April 2010, the majority of those buyers also get extra protection through the provisions of the Consumer Code for Home Builders.
The Code applies to home buyers (but not corporate bodies, partnerships or people buying property for investment purposes) reserving a new home built or converted by a builder registered with one of the three supporting new home warranty providers – the National House Building Council (“NHBC”), Premier Guarantee or the Local Authority Building Control (“LABC”) Warranty.
The Code is a voluntary code of practice, however its requirements are mandatory for those builders registered with one of these warranty providers.
The Code consists of 19 requirements that home builders must meet in their marketing and selling of homes and their after-sales customer service.
Home builders must adopt the standards of good practice, procedures and information detailed in the guidance against each of the requirements.
The purpose of the Code is to provide buyers with additional protection and ensure they are treated fairly, know what service levels to expect, receive reliable information on which to make their decisions and know how to access speedy, low-cost dispute resolution arrangements if they are dissatisfied.
The Code provides an alternative source of redress for a buyer which goes beyond the cover provided by the warranty schemes participating in the Code and, in certain circumstances, it will enable a buyer to get a remedy without having to take court action against a home builder.
If a home buyer has purchased a property that benefits from the Code and wishes to make a complaint against the home builder then they must do so within two years from the start date of the home warranty cover. Second or subsequent home buyers can also benefit from the Code but only on after-sales matters.
The complaint should initially be referred to the relevant home builder. If the buyer is not satisfied with the outcome then they can refer the matter to the home warranty provider and if the complaint cannot be adequately dealt with by them under the terms of the home warranty policy then the matter can be referred to the independent dispute resolution scheme provided by the Code.
The buyer must pay a fee of £100 plus VAT for referring the complaint to the resolution scheme and, if the complaint is upheld, a performance award (where the home builder has to do something) or a financial award (where the home builder has to pay the buyer some money) or a combination of the two can be awarded.
The maximum value of a combined award under the Code is limited to £15,000 including VAT.
The Code gives home buyers extra protection and added benefits in choosing a new home over a second hand one, giving buyers peace of mind and increased customer satisfaction, which can only be seen as a bonus in the current marketplace.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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