To protect customers, the UK government has introduced a new code of practice and ombudsman scheme that applies to all private new home buyers across the UK.
The New Homes Quality Board (NHQB), an independent body set up by Westminster in 2020, has established the New Homes Quality Code and the New Homes Ombudsman Service following industry wide consultation.
As a result, all private new build developers have until December 2022 to register with the NHQB and will then be subject to code compliance. The NHQB is funded solely from developer registration fees, which are collected annually and calculated based on developer size and revenue.
The purpose of the code is to improve the quality of new construction and improve customer service and protection. The Code is divided into “Basic Principles” and “Practical Steps”. Principles include fairness, safety, quality, service, responsiveness, transparency, independence, inclusivity, security and compliance. The practical steps are mandatory requirements, including:
protecting vulnerable customers, prohibiting high-pressure sales and requiring that any down payment a customer pays to a contractor be protected; A requirement for developers to provide all relevant information during the sales process, including any future administration or service fees; establishing requirements for a fair reservation agreement, including a cooling off period and requirements for sales contracts; Allow a professional to pre-inspect your home; A new home must be “ready” to prevent developers from incentivizing clients to move early to a new home when there is work to be done; Developers must operate comprehensive after-sales services to resolve issues in a timely manner, with the option to escalate complaints to the Ombudsman.
In addition, the Ombudsman was introduced to replace the current framework where clients often deal with different organizations. Currently, if a home builder has a complaint about the quality of the home and the customer is not satisfied with the response they received, they can complain to the new home warranty and insurance provider. If the performance of a property developer is objected to, the customer currently has to submit a separate complaint under the Consumer Protection Act for the independent dispute resolution body for builders.
Under the new regime, customers who are not satisfied with the quality of their home or the service provided will turn to the Ombudsman for any complaints instead. The complaints system is available two years after the completion of a new home purchase.
Access to the Ombudsman is free as the costs are borne by the developers. However, there is a gray area and it has yet to be confirmed whether developers will still be charged if a complaint is made but not upheld by the Ombudsman.
Although consumers cannot yet rely on the Code or the Ombudsman, the rules are being implemented and are expected to come into force this autumn. In fact, some developers are now applying to register with the NHQB and are making all the necessary preparations to comply with the new code. From the day a developer “activates” their registration, all customers reserving a new home with that home builder will be covered by the new code and have access to the Ombudsman. The earliest date that developers anticipate activation is this October.
Existing agreements with other consumer code bodies will remain in place until a contractor has been activated. It’s still unclear what the implications are for developers who haven’t registered by December, but under the Building Safety Act the government has the power to require companies that build and sell new homes to be part of an ombudsman scheme .
Developers should start preparing now. Sooner than later the code needs to be embedded throughout the sales process, the sooner they adopt it the better. This avoids potential last-minute complications and delays in sales processes.
Consumers buying a new home should check that their builder has activated their rights under the Code and make themselves familiar with their rights and how to escalate the matter to the Ombudsman if necessary.