Background:

Historically, developers have been required to comply with the Consumer Code for Homebuilders when selling new build development homes but after much consultation, the New Homes Quality Code (The Code) was published in December 2021.

The new code builds on the existing obligations already imposed on developers but with additional responsibilities around after sales service and dispute resolution. It is intended that the new code will apply to all Developers and from January 2022, all house-builders who build and sell new homes will be required to register with the New Homes Quality Board (NHQB).

The Code is part of a broader set of protection measures for consumers which also includes the provision of the New Homes Ombudsman Service, which will deal with complaints arsing under the Code.

Key principles of the Code:

• the emphasis is on protection of vulnerable customers and the Code contains specific provisions relating to protection of consumer deposits (which must be at a fair level) and the prohibition or pressure selling;
• Developers will be required to provide a cooling off period for buyers;
• Buyers must be allowed to have a suitably qualified inspector carry out a pre-inspection check of their new home on their behalf;
• all relevant information (such as anticipated service charges) must be available during the sales process to ensure that buyers are provided with all relevant information before committing to the purchase (in particular, if a developer is selling on behalf of a third party land owner, this must be made clear in the sales information);
• An obligation is placed on the developer to ensure that the new home is complete so that buyers are not moving into properties where there is still work to be done;
• The real focus of the Code is ensuring that Developers have an effective after sales service in place to deal with snagging issues. This must marry into a comprehensive complaints process with Developers having a duty to respond to Buyers complaints in a timely fashion. If this process fails to achieve a satisfactory outcome for a buyer then they will have the ability to refer the matter onto the New Homes Ombudsman Service

What should Developers be doing now?

• Developers should be reviewing their standard form documentation (such as reservation agreements, early bird arrangements etc) to ensure that these take into account the new cooling off period;
• Sales and marketing information should be reviewed to see if it they are likely to meet the new criteria under the Code (e.g. service charge details);
• Standard contracts should be checked to ensure that they provide for the expected date of completion and the new pre-completion buyers inspection (there will be a standard form of checklist produced specifically for this purpose);
• Ensure that all sales staff have suitable training so that they are clear on the obligations under the code – training records should be maintained and training updated annually;
• The after sales service period under the Code will be two years – Developers should start to put in place processes to ensure that snagging issues are recorded, monitored and dealt with in a timely fashion and that a suitable complaints monitoring protocol is set up.

The window for registration with the New Homes Quality Board opens in January 2022.

You can find the link to the specific guidance for developers on the New Homes Quality Board here: https://www.nhqb.org.uk/wp-content/uploads/2021/12/The-Code-Developer-Guidance-15.12.21-Final.pdf

We will continue to monitor the guidance and provide further updates on this topic.

If you have any queries about the Code and what you might need to do then please contact the Prettys Commercial Property Team CPSupport@prettys.co.uk or call 01473 232121 an ask to speak to one of the team