Scope of the Code
What type of protection does the Code provide?
Our Code covers the consumer for aspects relating to the purchase of a new home that are not already covered by the builder or warranty provider.
At present, the Code does not cover issues related to defects that may arise, or structural problems as these are not dealt with directly between home buyers and their builders. Where problems cannot be satisfactorily resolved, buyers can access further support through their home warranty provider’s dispute resolution scheme and/or through the builder’s complaints process.
Why doesn’t the Code apply to all new Homes?
The Consumer Code applies to homes being built under the insurance protection of one of the supporting Home Warranty Bodies:
- Premier Guarantee
- LABC Warranty
Between them, the above bodies cover 90% of the new Homes built in the UK. Other Home Warranty Bodies may offer their own Code Schemes.
Does the Code apply to developments in areas such as Northern Ireland and the Isle of Man?
If the Home is covered by one of the participating home warranty bodies, then the Code does apply.
Under Scope of the Code, it states the Code and the Independent Dispute Resolution Scheme do not apply to “properties acquired by corporate bodies, partnerships and individuals buying more than one property on the same development for investment purposes”. Does this mean that corporate bodies and partnerships are covered if they only buy one property?
No, the Code is intended to cover private buyers only and in future revisions, the Scope will be reworded to read that the Code and the Independent Dispute Resolution Scheme do not apply to: “properties acquired by corporate bodies and partnerships, and individuals buying more than one property on the same development, for investment purposes” to make this point clearer.
Are Homes which are built under architects’ certificates covered by the Code?
No. The Code only applies to Homes that have been built by a Home Builder registered with one of the Home Warranty Bodies.
Adopting the Code – Making the Code available
The Consumer Code Requirement 1.2 states that the “Consumer Code for Home Builders’ Scheme logo must be prominently displayed in Home Builders’ sales offices, those of appointed selling agents, and in sales brochures”. What is meant by a sales brochure?
A sales brochure is defined as the printed development brochure (including any electronic version) employed by a Home Builder to present their general development details such as the location and range of dwelling types. This would also include the general Development details produced by Estate Agents for a development.
How do you monitor whether agents and developers are making the Code available to potential home buyers?
Code members are required to meet the conditions of the Code, including ensuring home buyers who reserve a Home are provided with a copy of the Code Scheme with the Reservation agreement. If a new home buyer is not given a copy of the Code at reservation, this would be a breach of the Code and the buyer could choose to make a complaint, via their warranty provider.
We encourage compliance through effective training and monitor the impact through regular assessments of home builder. In addition, we have recently begun a programme of independent compliance visits led by Quincetree Ltd. Quincetree’s experienced auditors are visiting sites across the UK to monitor compliance with the Code and provide recommendations where needed to plug any gaps.
The Independent Dispute Resolution Scheme
The Rules for the Independent Dispute Resolution Scheme say that the Home Buyer must, on their application, state the alleged breach of the Code. If they fail to do so does that mean the case can be dismissed?
The case cannot be dismissed if the Home Buyer does not correctly identify the Code Requirements that they allege have been breached. While it is important that the Home Buyer identifies the Code Requirement(s) that they consider have been breached, the Adjudicator can use their discretion when examining the claim, if they consider the relevant Requirements have not been properly identified by the Home Buyer.
Section 2.8 of the Independent Dispute Resolution Scheme Rules say that the matters in dispute must not be the subject of any current or previous adjudication involving the same Home Buyer and the same property. Does this prevent Home Buyers from bringing numerous small value claims?
No. There is no limit to the number of individual claims a Home Buyer can make however, the maximum award for all claims on the same property shall not exceed £15,000 and they cannot bring a repeat claim about a dispute on the same subject matter. In each new case, the Home Buyer has to pay a fee and there are time limits for disputes. In future revisions of the Code, it is the intention that the Rules will be amended to clarify this point.
Would consumers be better protected by an Ombudsman?
No. An Ombudsman does not regulate and only deals with complaints which is a weakness in Ombudsman schemes. Through the supporting home warranty bodies, action can be taken against a builder to the extent of excluding them from the scheme, fundamentally affecting their ability to trade. The level of consumer settlements would not be affected.
The Code resolves disputes independently through its dispute resolution scheme and the level of financial settlements is a matter of fact and judged in the same way as an Ombudsman.
Why do Home Buyers pay a fee to lodge a complaint?
Both Home Buyers and Home Builders have to pay a modest fee when a complaint is passed to the Independent Dispute Resolution Scheme. The current fees are £120 for the Home Buyer and £360 for the Home Builder.
The fees are largely there to fund the independent process but also help to ensure the Scheme does not become overwhelmed with minor disagreements which could be more easily resolved directly between the parties involved.
Where a case is upheld by the IDRS, the Home Buyer may receive a full refund of the fee – at the Adjudicator’s discretion – in addition to any compensation which may be awarded.
What support is available to help Home Buyers make a complaint?
Our aim is to make the complaints process as accessible as possible. To enable your complaint to be dealt with quickly, you should state clearly which Requirements of the Code you feel have been breached, and how.
In addition to providing as much detail as possible, it is very important that Home Buyers back up any claims with evidence. For example, complaints relating to financial loss should be supported with quotes demonstrating the cost of carrying out or rectifying works.
Are the findings of the independent adjudicator legally binding?
Under the rules of registration, the Home Warranty Bodies require each registered builder to honour any award made against them under the Independent Dispute Resolution Scheme. If a Home Builder fails to honour any award, the Home Warranty Bodies can apply a number of sanctions including financial penalties, re-training or suspension from the new Home Warranty Bodies’ registers.
In 2016, there were three instances of the Home Builder’s registration being suspended by the Home Warranty Body for failure to comply with the Adjudicator’s award.
If the Home Buyer accepts the Adjudicator’s award, the courts will usually recognise this as evidence that the Home Buyer’s claim was valid. A Home Builder remains liable for an award, even if they are removed from a Home Warranty Body’s register.