New Homes Quality Board - Code of Practice
On 17 December 2021, the New Homes Quality Code was published by the New Homes Quality Board [NHQB]. The NHQB, which describes itself as an "independent body", was finally officially launched in February 2021 to "champion quality new homes and better consumer outcomes for buyers" with responsibility for developing a new framework to oversee the build quality and customer service provided by developers of new homes.
From January 2022, house builders and developers will be expected to register with the NHQB, complete training and ensure they have the required complaints procedures in place and meet the "ten guiding principles" of the Code (listed below). Developers must register by no later than 31 December 2022. It should be noted that regional subsidiaries can become active at different times, depending on their readiness to transition to the new arrangements. During the transitional period (throughout 2022) when registrations are allowed to take place, developers must clearly advise their customers whether the provisions of the Code apply to them. The new Code of Practice will replace the current Consumer Code for Home Builders by the end of 2022. In March 2022, the NHQB confirmed "In terms of builder registration, we have started with a soft launch by invitation only, in order to test that our systems and processes are working as expected. So far we have invited 14 builders and had responses from 10. Of those, 8 have completed the application process and are now in the transition period, completing their training and other readiness preparations before going live. We expect to send the next tranche of invitations out in the next couple of weeks, and envisage the system being fully opened for all applications during May.”
Purpose of the new Code of Practice
The NHQB new Code of Practice "aims to drive up the quality of new build homes and strengthen protections for customers, address the gaps in existing protections." This follows a draft of the Code was consulted on in summer 2021.
Unlike the existing Consumer Code for Home Builders which had just 19 requirements over 11 pages (3,034 words), this new 30-page Code of Practice "aims to ensure that every aspect of a new home purchase is covered for the first two years following completion" with 26 requirements set out clearly in detail over 30 pages (8,752 words).
The new House builder Code of Practice:
Statement of Principles:
"This Statement of Principles (the Fundamental Principles) sets out the fundamental and overriding obligations which Registered Developers agree to follow for their Customers of New Homes.
1. Fairness: treat Customers fairly throughout the home buying and After Sales process.
2. Safety: carry out and complete works in accordance with all requisite Building Regulations and Requirements, as may be set out by a Building Safety Regulator or local authority, as applicable.
3. Quality: complete all works to a good quality in accordance with all applicable building and other standards and regulations as well as to the specification for the New Home and ensure that Legal Completion only takes place when a New Home is complete (as defined in section 2 of this Code).
4. Service: have in place systems, processes and training of staff to meet the Customer service Requirements of the New Homes Quality Code and not use high-pressure selling techniques to influence a Customer’s decision to buy a New Home.
5. Responsiveness: be clear, responsive and timely in responding to Customer issues by having in place a robust AfterSales Service and effective Complaints process as required by the Code.
6. Transparency: provide clear and accurate information about the purchase of the New Home, including tenure and potential future committed costs such as those relating to Leasehold or Management Services.
7. Independence: make sure that Customers are aware that they should appoint independent legal advisers when buying a New Home and that they have the right, as set out in the Code, to an independent Pre-Completion Inspection before Legal Completion takes place.
8. Inclusivity: take steps to identify and provide appropriate support to Vulnerable Customers as well as to make the Code available to all Customers, including in appropriately accessible formats and languages.
9. Security: ensure that there are reasonable financial arrangements in place, through insurance or otherwise, to meet all obligations under the Code, including timely repayment of financial deposits when due and any financial awards made by a New Homes Ombudsman Service.
10. Compliance: be subject to, co-operate and comply with the Requirements of the New Homes Quality Board and a New Homes Ombudsman Service."
Conservative MP Natalie Elphicke, former chairman of the NHQB, said: "This powerful new code is a central plank in our work to drive up the quality of new build homes and strengthen redress for consumers."
The new Code has several new requirements all of which should be beneficial to new home buyers, if plc house builders fully adhere to them. It is therefore vital that new home buyers are made aware of this new Code of Practice at the outset and before reservation. The previous Consumer Code for Home Builders not promoted to prospective new home buyers which received a total of only 889 complaints over its eleven years of existence, with 54% of complainants succeeding in part (35%) or in full (18%) resulting in awards averaged just 10% of the amount claimed.
The new Code of Practice:
- Requirement for builders to provide all relevant information including tenure, management charges, estate charges and event fees etc. Information should also include details of services facilities which transfer to the buyer at a later date such as utilities, restrictions on provision of services and service providers; drainage, non-adopted roads and public open spaces. (Fleecehold) Details of the new home, size, specification, layout and plot position and any "significant" gradients to the garden and grounds of the new home.
- Gives new home buyers the right to inspect their new home, or have a professional snagging inspector carry it out on their behalf, BEFORE legal completion. (See Code requirement 2.8) All pre-completion inspections will only be accepted if they are carried out using the NHQB standard form Pre-Completion Inspection Checklist, yet to be made public!
- It is a breach of the Code requirement 2.10 for Legal Completion to take place on a new home that is not a "complete new home" defined as "one that has a new home warranty cover note issued" House builders must not offer any incentive to move into a new home that is not a "complete new home".
- Developers must inform new home buyers of any fees or commissions the builder receive for recommending of a "professional advisor"
- House builders are prohibited from suggesting a sale may not proceed unless a customer uses a specific third-party solicitor or mortgage broker. In addition, house builders cannot restrict a buyer’s choice to one of those recommended by the builder, or offer or link any inducement or incentive when recommending any third party services. Forcing a new home buyer to use the builder’s solicitor is now clearly not permitted for the first time and would breach Code requirement 1.7.
- New requirements for Part-exchange and assisted moving schemes and Early-bird arrangements.
- A 14-day cooling off period, during which the new home buyer can cancel their reservation for any reason and receive a full refund of any fees. Code requirement 2.3
- House builders must ensure that snags and defects reported to them are dealt with promptly, within 30 calendar days, other than where there is an exceptional reason for delay. The new Code of Practice (3.4) sets out time-scales for each of the required written house builder responses, following receipt of a new home buyer’s complaint. If any of the issues in the complaint are not resolved within the timetables or procedures (56 days after the initial complaint) then new home buyer can refer a dispute to the New Homes Ombudsman Service.
Return to Top
