Consumer Code for Home Builders

From 1st April 2010, builders of new or converted homes who are registered with a Warranty Provider (for example NHBC) must comply with the Consumer Code for Home Builders. There are some exemptions from compliance.

The purpose of the code is to ensure that home buyers are:-

• Treated fairly
• Know what service levels to expect
• Given reliable information upon which to make their decisions
• Know how to access speedy, low cost dispute resolution arrangements if they are dissatisfied

The code is required to be displayed by builders and a copy provided to anyone who requests it and to everyone who reserves a home. Builders are also required to be able to demonstrate that they have systems and procedures in place to meet their commitments contained in the code.

The main purpose of the code is to ensure that home buyers have enough pre-purchase information to help them make an informed decision. More pre-missive (legal contract of sale) information is to be provided to purchasers including:-

• A written reservation agreement containing specified information
• An explanation of the Home Warranty cover
• A description of any management services and organisations to which the home buyer will be committed and an estimate of their costs

If a home is not already built, the information given to the home buyer must include a brochure or plan reliably showing the layout, appearance and plot position of the house. A list of the home’s content must also be given, together with details of the standards to which the house is being built.

Missives must be clear and fair and comply with certain statutory provisions. Code guidance states that before missives are concluded, a builder must ensure that the buyer confirms in writing any spoken statements upon which he is relying. After conclusion of missives any changes to design, construction or materials that would significantly or substantially alter the size, appearance or value of the property must be agreed by the buyer. The buyer would have a right to resile (walk away) from the missives if he wishes and is entitled to repayment of the deposit if he finds the changes unacceptable.

The missives should clearly state the missive termination rights (i.e. the rights of the buyer to end or walk away from the missives). The buyer is to be given reliable and realistic information about when construction of the home may be finished, the date when the legal formalities are concluded and the date for hand over of the home.

After completion the builder must provide an accessible after sales service explaining to the buyer what this encompasses and whom to contact.

The builder requires to have a complaints system and procedure in place and must let the buyer know of the dispute resolution arrangements operated as part of the Code.

In practice much of the code will already be part of a builder’s good practice but given the potentially severe consequences of a breach, all builders would be advised to study it and implement its requirements. Builders who breach the code face the possibility of exclusion from Registers of Home Warranty bodies that participate in this scheme. If this were to happen then that builder’s homes would effectively become un-mortgageable and therefore unsaleable to those who require a loan or mortgage.

We would strongly advise home builders to carry out a review of their standard documents and procedures and contact us for further clarification and advice.

This briefing is intended as only a brief overview of the Consumer Code for Home Builders.

For more information please contact Corra Irwin

Disclaimer: The information in this publication is based on our current understanding of the law. It has been produced for information purposes only. Professional advice should always be sought before taking any action.

Macleod & MacCallum cannot take any responsibility for loss incurred through acting or failing to act on the basis of anything contained in this publication.