The Consumer Code for Home Builders (the Code) will be strengthened to provide more comprehensive protection for new build home buyers following a comprehensive independent review led by John Bridgeman CBE, former Director General of the Office of Fair Trading (OFT).
The Review will result in the most significant enhancements since the Consumer Code for Home Builders was launched in 2010, including broadening the scope to include customer pre-inspections, how ‘snagging’ issues are dealt with, and raising the maximum claim limit for complaints.
The Review, commissioned by the Code’s Management Board as part of its triennial refresh of the Code, involved extensive liaison with industry and consumer stakeholders, as well as an online survey which was open to all interested parties, including home buyers.
Bridgeman’s report concludes the Code is doing a good job of protecting consumers and driving improvements in customer service standards, with highlights including:
• The Government-approved Independent Dispute Resolution Scheme which is free for consumers to access.
• Full accreditation through the independent Consumer Codes Approval Scheme.
• The sanction regime, including the ability to exclude companies from warranty schemes for failure to comply.
• Its informative website and government-approved contact centre to aid consumers.
However, the report also highlights the need to address gaps and recommends several enhancements to improve the protection offered. These include:
• Aligning different code schemes and simplifying access to complaint advice for consumers (supported by 95% of respondents to the Code Review stakeholder questionnaire).
• Raising the maximum financial compensation threshold, as well as the individual amount that can be awarded for distress and inconvenience.
• Incorporating new requirements for home builders to improve how snagging issues (non-structural defects identified in the first two years post occupation) are dealt with, tackling some of the most common causes of complaint from new build home buyers.
• Broadening the scope of the Code to include shared ownership and strengthening requirements to support vulnerable customers.
• Outlawing financial incentives to complete on properties that haven’t yet met warranty standards and requiring any commissions for recommending products and services to be declared.
The Review also makes recommendations for the wider industry and policymakers to consider, including a cash retention scheme to give consumers extra leverage, as well as an industry compensation fund to underwrite awards made to consumers.
Report author, John Bridgeman CBE, said:
“Buying a new home is one of the most significant purchases we can make which is why proper protection of consumers is essential. My recommendations are designed to deliver enhanced protection, greater levels of financial recompense and a more cohesive approach to customer service and support across the industry.”
Originally due in 2020, this review was delayed due to expectations that the Government may introduce a single statutory code of practice and statutory new homes ombudsman. With this now unlikely to happen in the foreseeable future, it has become more important to align existing Codes where this benefits consumers, to minimise confusion.
Code Chairman, Noel Hunter OBE, said:
“This Review reinforces the importance of robust consumer protection for the buyers of new build homes. The Code’s Management Board has accepted most of the recommendations and we will shortly be consulting on an updated Code. We will also work with policymakers and the wider industry to support the broader recommendations which sit outside our remit.”
The Code review took place from August 2022, involving a wide range of stakeholders, including consumers and consumer advisory groups, industry bodies, developers, agents, and those involved in the wider home building industry. The recommendations were delivered to the Code’s Management Board in March 2023 and the updated Code, incorporating recommendations from the Review, is due to be launched in early autumn, post consultation. Home builders will be given time to transition to the new arrangements and all homes built prior to the launch of the updated Code will continue to benefit from the existing cover in place at the time of purchase (until two years after occupancy). Updated training and support materials will be provided on the Consumer Code for Home Builders website to explain the new recommendations and protection available.
The full report and Code’s Management Board response are available to download in full.
The Consumer Code for Home Builders (“the Code”) was established in 2010 in partnership with the leading home warranty providers, the Home Builders’ Federation and consumer rights organisations. The supporting Home Warranty Bodies are NHBC, Checkmate, LABC Warranty and Premier Guarantee.
The Code sets mandatory Requirements that most home builders registered with the supporting home warranty bodies must meet in their marketing and selling of new homes and their after-sales customer service. The Code also provides access to an Independent Dispute Resolution Scheme, provided by the Centre for Effective Dispute Resolution.