The Fourth Edition of the Consumer Code for Home Builders will apply from 1 April 2017.
The Consumer Code for Home Builders ('the Code') was developed by the home-building industry to make the home buying process fairer and more transparent for purchasers. The Code aims to ensure that all buyers are treated fairly, know what levels of service to expect, are fully informed about their purchase and their consumer rights before and after they move in, and are provided with a speedy, low cost dispute resolution scheme to deal with complaints.at
A Home Builder is a builder or developer of a new or newly converted home for sale to the public and who is registered with a home warranty provider.
The Code has been reviewed following an extended consultation which expired on 30 April 2016. The new edition of the code will introduce a number of amendments. Some of the key changes are set out below:
- Schedule 4 has been amended so that the Code does not apply to investors and in particular does not apply to individuals buying more than one property on the same development for investment purposes.
- The definitions of 'customer' and 'home buyer' have been clarified. A 'customer' is a person who is making enquiries about buying a home but who has not reserved a home and a 'home buyer' is somebody that has reserved or goes onto buy a home.
- During the consultation it was recognised that it was important to provide customers with copies of the Code. It is now important that the Code scheme logo is prominently displayed in both the Home Builders and any sales offices and all sales brochures. The previous requirement to only provide a copy of the Code for all customers who asked for it has now been removed and all home buyers must be provided with a copy of the Code at the point of reservation.
- The Code scheme documents must be provided to the home buyer with the reservation agreement and the Code scheme must be provided to the Home Builder's legal representative with the draft Contract as sale documents.
- Importantly it has been clarified that Home Builders may offer incentives and/or refer home buyers to a panel of solicitors but cannot restrict their choice of legal representation. In addition, the Home Builder can no longer restricting the financial adviser or mortgage intermediary that the home buyer may wish to use.
- Guidance is added to the reservation agreement to the effect that any appendices or schedules attached to it need to be evidenced by both the Home Builder and the home buyer in recognition of them having been seen and received. This has been changed as there has been a number of adjudications found against home buyers who are unable to prove that the home and its specification was as agreed and explained to the home buyer at the point of reservation and subsequent contract.
- Guidance has also been given regarding retention of monies from the reservation fees on the cancellation of a reservation form. The Home Builder is required to state the likely range of monetary deduction rather than a fixed monetary reduction.
- With regard to any claims brought under the scheme a claim cannot be brought before 56 calendar days have passed since first raising it with the Home Builder and no later than 12 months after the Home Builder's final response. The maximum award for inconvenience has increased to £500.00, up from £250.00.
All Home Builder's standard practices need to be updated to comply with the updated code which comes into force on 1 April 2017.
This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.