UK: New Consumer Code For Home Builders

Last Updated: 10 June 2010

A new Consumer Code for Home Builders which was introduced on 1 April applies to reservations of new or newly converted homes on or after this day. All builders registered with a Home Warranty Body (an organisation maintaining a register of builders, providing home warranty cover and supporting the Consumer Code - the largest being NHBC) must comply with the Code from 1 April onwards. The aim of the Code is to improve consumer satisfaction in the home building industry- a significant step in assisting the return of confidence in the housing market following the recession. But the Code goes further than that and provides the buyer with more consumer protection. There is also a dispute resolution scheme for aggrieved buyers and sanctions may be imposed for non-compliance.

What do I need to do to ensure compliance with the Code?

The Code deals with the three different stages of the house-buying process (pre-contract, contract and post-completion) and lists a set of 19 Requirements which must be followed to ensure compliance. These Requirements are mandatory, but they are also quite general and the Code itself is backed up by a non-mandatory "good practice" note which provides guidance on how these Requirements should be implemented. In order to reduce exposure to possible claims by buyers, it is suggested that the good practice guidance is followed - a more individual approach to compliance with the Code, whilst permitted, could provide the buyers with more grounds to seek redress.

Pre-Contract Stage

The buyer needs to be able to make an informed decision on whether to buy the home in question and so must be given details of warranty cover, details of factoring services, a plan showing layout, plot position and appearance of the home, a list of contents and detail of building standards being adopted. The buyer must be advised to seek professional legal advice and where applicable be given health and safety information for visiting a construction site.

As regards Reservations, the builder must provide a written reservation agreement, specifying any fee payable, the subjects of sale, the purchase price, along with conditional matters (such as shared equity) and details on termination of the reservation agreement. If the reservation agreement is cancelled by either party during the reservation period or the period expires without being extended or without missives being concluded, then the reservation fee must be reimbursed (less any administration costs which must detailed in the original agreement).

Missives Stage

The legal contract needs to be clear and fair, it needs to give buyers a prediction on when the home is likely to be ready for occupation and define the notice period for completion. Under the Code the buyer now has a right to terminate the contract in certain circumstances (for example, the home not being completed within a specified time or a variation to the materials used in construction of the home which results in a substantial or significant change to the home). In the event of termination any reservation fees or deposits must be repaid. Less significant variations to the home also require to be notified to the buyer and extras affecting the completion date need to be documented.

After Sales

At handover, builders must ensure that the buyer is shown the facilities at the home and how they work (and provided with guarantees and warranties for appliances), is provided with an after-sales service, is notified of arrangements for completion of outstanding development works and where appropriate is advised of health and safety precautions when living on a construction site.


Every builder needs to have a procedure for handling complaints and the buyer must be notified of this and of the dispute resolution scheme which operates under the Code. Failure to deal with a complaint satisfactorily allows the buyer to seek redress from the Home Warranty Body who may then deal with the complaint under their policy or refer the complaint to the dispute resolution scheme to be decided by an adjudicator who can impose a maximum penalty of £15,000 where a financial loss has been incurred. So, compliance with the Code should not be taken lightly, indeed a serious breach could result in removal from the Register of all Home Warranty Bodies which would have a disastrous impact on the offending party.


Builders need to get up to speed quickly on their duties under the Code and ensure that procedures and documents are in place to meet its requirements. Sales teams need to be made aware of their obligations and legal advisers need to look at legal offers to sell to ensure compliance with the Code. Implementation of the Code is likely to result in a considerable shift in favour of the rights of the buyer and it remains to be seen how the industry will respond to this potentially significant change in consumer protection.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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