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 Home Warranty Body. This includes setting standards for customer service and complaints handling, ensuring reservation agreements are protected and that sales literature is clear and informative.
If you have a concern about a defect or structural issue, these should be raised directly with your builder (within the first two years) and/or Home Warranty Body. Where problems cannot be satisfactorily resolved, further support can be accessed through your Home Warranty Body’s dispute resolution scheme and/or through the builder’s complaints process.
To find out more about what to expect from your new home, download our guide.
Does the Code apply to all new Homes?
The 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 offer any more rights than existing legislation??
The Consumer Rights Act 2015 does not cover purchases of new homes. That’s why the protection provided by the Code is so important – the Code gives buyers of new homes protection if they change their mind or find sales literature misleading or inaccurate.
The Consumer Protection from Unfair Trading Regulations 2008 offers some protection. However, it requires Trading Standards to take enforcement action or consumers to bring their own legal action, which can be complex and costly.
Where issues are identified under the Code, home buyers can use the Code’s Independent Dispute Resolution Scheme rather than take lengthy and costly legal action through the courts.
Why doesn’t the Code prevent builders offering incentives to use their recommended solicitors?
The Code makes clear that consumers should be advised to seek professional advice prior to purchase. In some cases, using a recommended solicitor can be advantageous to both the buyer and the seller if that solicitor knows the site and associated paperwork as it can speed up the process for all parties. However, a solicitor must always act in the best interests of its client (the home buyer in the case of a house purchase).
Even where the wider firm may also work for the builder, there are strict rules that law firms follow to prevent conflicts of interest. You can refer to the Solicitors Regulation Authority’s Principles and Code of Conduct which state that a solicitor must not allow their independence to be compromised. http://bit.ly/2FuIMrM
Home buyers are not obliged to use advisers recommended by the builder or agent.
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.
Does the Code cover corporate bodies and partnerships if they only buy one property?
No, the Code is intended to cover private buyers only.
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 Home Warranty Body.
We encourage compliance through effective training and monitor the impact through regular assessments of home builder. In addition, experienced independent auditors, Quincetree Ltd visits sites across the UK to monitor compliance with the Code and provide recommendations where needed to plug any gaps.
The Independent Dispute Resolution Scheme
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. However, you will be given the opportunity to review the draft judgment and provide additional evidence if needed before a final decision is reached.
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 (IDRS). 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.
In almost all cases that have been upheld by the IDRS, the home buyer has received a full refund of the fee. This is at the Adjudicator’s discretion and in addition to any compensation which may be awarded.
Why doesn’t the Code deal with more cases?
The cases reported in our Annual Report cover those which proceed to the Independent Dispute Resolution Scheme (IDRS). The Code’s supporting Home Warranty Bodies deal many enquiries and complaints which are resolved without needing to raise a formal complaint with the IDRS.
We are continually raising awareness of the Code so that we can encourage more people to access our IDRS and have seen cases increase in recent years. We are also working on removing/reducing any barriers that may exist to raising a complaint as well as investigating options to raise the maximum award limit.
Encouragingly, satisfaction with new homes has increased according to the Home Builders Federation which surveys new home owners. The latest survey response rate was 62% (57,972 responses), in which 90% said they would buy a new build again. The Code’s supporting Home Warranty Bodies have also seen a drop in claims raised.
We recognise that not everyone has a good experience, and where problems relate to a breach of the Code, we encourage people to raise a complaint – for more details on how to do so, visit http://bit.ly/CCHB_01
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, we take action against home builders to improve standards. This can and has included excluding them from the home warranty scheme, fundamentally affecting their ability to trade.
The Code resolves disputes through its Independent Dispute Resolution Scheme and the level of financial settlements is based on evidence provided to determine the actual financial loss. This would be judged in the same way through an Ombudsman.
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.
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. Our independent Disciplinary and Sanctions Panel, chaired by Citizens’ Advice, reviews all decisions and takes further where a serious breach or repeated complaints have been registered.
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.