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A guide to the Consumer Code for Home Builders

The Consumer Code for Home Builders (the Code) has been in effect since April 2010. Despite this, there is still a general lack of awareness of its existence, and content, in the home builder market. A consultation on the Code closed at the end of October last year, and a further consultation on the proposed changes to the Code is expected to open in March. 

We set out what you need to know about the Code and how the proposed changes could affect you.

What is the Code?

The Consumer Code for Home Builders is a code of conduct that applies to all home builders who are registered with the UK’s main new home warranty bodies (NHBC, Premier Guarantee and LABC warranty). It consists of 19 requirements and principles that home builders must meet in their marketing and selling of homes and their after-sales customer service. 

The credibility of the Code in the market has been recognised by the fact that the terms of the Code have to be observed by home builders promoting the Help to Buy Scheme.

Nevertheless, there is still a general lack of awareness of the Code amongst home builders and consumers.

What is its purpose?

The aim of the Code is to ensure that buyers:

  • are treated fairly;
  • know what service levels to expect;
  • are given reliable information on which to make their decisions; and
  • know how to access speedy, low-cost dispute resolution arrangements if they are not satisfied.

The Code reinforces best practices among home builders to make sure the level of information and customer service provided by all home builders is consistently high.

Code review

The Code was last reviewed in 2012. Although this review did not result in changes being made to the Code itself, the guidance which affects the interpretation of the Code's requirements was amended. This resulted in greater clarity as to the obligations of home builders under the Code.

A further review was commissioned in 2015. One of the main drivers behind this review was the desire for the Code to meet the Chartered Training Standards Institute's (CTSI) Consumer Codes Approved Scheme (CCAS) requirements. If the Code is approved by the CTSI, consumers can rest assured that subscribers to it have a proven commitment to honest business practices and higher customer standards. 

The review closed at the end of October 2015 and we are awaiting the consultation response. Once responses have been evaluated, it is intended that a further consultation will be opened in March this year. This will seek views on the proposed changes, with a view to implementing them in 2017. 

The proposals for change include:

  • The Home Warranty Bodies are all organisations that have agreed to support the Code. They each maintain a register of builders and developers, provide Home Warranty cover and have undertaken to enforce the Code. Currently, if a home builder is found to be in serious breach of the Code, the Home Warranty Body can apply to remove the home builder from its register and exclude it from the registers of other Home Warranty Bodies that subscribe to the Code. The consultation proposes extending this exclusion to all registers run by Home Warranty Bodies that take part in CTSI’s scheme. This is to prevent home builders who have been excluded from registers run by Home Warranty Bodies under the Code, moving to registers of Home Warranty Bodies under CTSI's scheme.
  • Currently home builders are required to display the Code and give a copy of it to customers who ask for it, and to all buyers who reserve a home. It is proposed that this obligation be extended so as to make the Code more visible in Site Sales and Estate Agents offices at the point of sale. This is to maximise awareness and distribution of the Code.
  • Consideration is being given to whether any revisions are required to the Code’s guidance on sales and advertising to reflect changes resulting from the repeal of the Property Misdescriptions Act 1991.
  • Views are sought on the possibility of increasing home builders' obligations with regard to the provision of information on fees.

The second part of the consultation dealt with revisions to the Code that would be required to make it compliant with the CTSI's CCAS. These changes include provisions about dealing with vulnerable customers. 

The final part of the consultation asked for views on the operation of the Code generally (eg operation of the Independent Dispute Resolution Scheme).

Next steps

The consultation on the proposed changes is expected to be released on 1 March, and is expected to run until 30 April 2016. The changes will then be announced in June 2016. Home builders would be well advised to take the time to respond to the consultation when it is released. This will ensure that their views on the operation of the Code are taken into account. Failure to comply with the Code could result in home builders registered with the relevant Warranty Bodies being removed from their registers and, if the proposed changes are implemented, prevent them from obtaining registration with other Home Warranty Bodies that take part in CTSI's scheme.

Contributor: Alexandra Holsgrove Jones

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2016. Specific advice should be sought for specific cases. For more information see our terms & conditions on www.TLTsolicitors.com

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