New Consumer Protection – Code for Home Builders

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Buying a home is stressful at the best of times but when that home is a new build the stress levels can rise even further. What redress does the consumer have if things go wrong?

There already exist a number of home warranty providers, such as NHBC Building Control Services Limited, Premier Guarantee and LABC New Home Warranty who provide protection for buyers of new build property. Those protections have now been supplemented by The Code for Home Builders Scheme (The Code). The Code came into force on the 1st April 2010. It does not apply retrospectively and applies to England, Wales and Scotland.

The above organisations combined to form the Code and they have agreed that builders and developers that are registered with them will adopt the code. The Code is a voluntary code of practice but its requirements are mandatory for those that are participating in it. The idea behind the Code is to provide new build home buyers more protection from the beginning of the transaction right through to when they have moved and are living in the property.

The Code aims to see that new build 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 quick, low-cost dispute resolution arrangements if they are not satisfied. The Code provides another course of action to buyers in addition to the home warranty schemes that already exist. In certain situations the Code can save the buyer from having to take court action against the builder or the developer.

A buyer will not be able to use the Code if they are a registered social landlord; a corporate body; a partnership or buying for investment purposes. The Code does not apply to new houses purchased from builders or developers that are not registered with one of the participating home warranty providers; second hand properties that a participating builder or developer takes in part exchange that it resells; properties built by self-builders for their own occupation and properties built under architects’ certificates.

Any disputes are sorted using an adjudication process. A buyer can make a complaint at any time within two years from the start date of the home warranty cover. The buyer should first direct the complaint towards the builder or developer. If not resolved then they should approach the home warranty provider. If the complaint is still not resolved, then the home warranty provider must see that the buyer is referred to the independent disputes resolution scheme. Providing the adjudicator does not reject the claim then they may award a performance award, a financial award or a combination of the two, a combined award. The buyer has no right of appeal against the adjudicator’s decision though. The maximum value of the award under the Code is £15,000.

The penalties on the builder or developer for non-compliance of the Code include removal from the relevant home warranty provider’s register and exclusion from all registers run by other participating home warranty providers. A builder or developer is therefore unable to breach the Code without fear of the consequences.

The Code is in its infancy at the moment and it is too early to say how well it is being applied but certainly it will be a welcome addition for the protection of home buyers.

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This article was written by James Blower, Conveyancing Team.


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