New Homes Quality Code

The New Homes Quality Board (NHQB) recently announced that more than 50% of all new homes sold in England, Scotland and Wales are now protected by the New Homes Quality Code (the Code) and a large proportion of our developer clients are now registered with the NHQB.

What is the Code meant to do?

The aim of the Code is to improve the quality of service and construction offered by housebuilders. The Code sets out robust obligations that developers must meet when building and selling new homes. The framework sets high standards for developers whilst aiming to deliver fair outcomes for home buyers who are disappointed with their purchase.

The key requirements of the Code are that developers must:

have an effective after care service in place to deal with any issues or ‘snagging’ problems that new home buyers may have; and
have a robust complaints process in place to comply with mandatory milestones during the handling of a complaint for communication with home buyers (5, 10, 30 and 56 calendar days) to respond to home buyers’ key concerns.

The requirements seek to:

ensure that the industry delivers consistent quality with new homes in relation to both the information given and the service provided;
strengthen the approach to complaints and fill the perceived gap in existing protection for customers; and finally,
provide a route for redress where finish or standards fall short.

Areas that are not covered by the Code include claims for diminution in value or blight, personal injury claims and/ or claims that are not covered by the scheme rules of the New Homes Ombudsman Service.

Claims under the Code

A home buyer has two years from reservation or completion of a property (whichever is the later) to make a claim under the Code.

If a home buyer makes a claim, the developer has the opportunity to respond. The Ombudsman will then make an assessment by reviewing all the information and evidence provided by both parties. It will subsequently publish a draft decision and both parties will have 10 days to provide any further comments and/ or information before the decision is finalised.

What are the fundamental changes to the previous regulations?

The Code’s aims are laudable as they intend to ensure that the quality of the final product is improved. There is no doubt, however, that there are a number of changes that housebuilders will need to consider and ensure they have carefully implemented sooner rather than later. For example:

There will be a greater burden upon sales staff to ensure that extensive and comprehensive information is provided at the point of reservation.
Training for sales staff is mandatory and essential.
Spoken statements should be recorded.
Time should be allocated for inspections to be conducted, prior to completion, even on completion day if such inspections are needed.
The absence of any penalties for customers who pursue spurious claims could encourage more claims as could raising the cap on compensation levels. If a complaint is upheld by the Ombudsman, the Ombudsman may require the developer to issue an apology and/ or explanation to the home buyer and/ or to rectify and/ or award compensation to the home buyer of up to a maximum of £75,000, payable by the developer.

What have the case studies taught us so far?

Our team of experts are monitoring the case studies issued by the NHQB carefully to understand the impact of decisions made and how this will affect developers in their implementation of the Code and engagement with customers.

Our team of experts can offer training on the Code as well as reviews of key documents and webpages to understand whether these comply with the Code and can assist in preparing responses to complaints.

Click here to find out more about how we support housebuilders