Consumer Code welcomes proposals for new scheme to support first time buyers

The Consumer Code for Home Builders (the Code) has welcomed the Government’s announcement of a new scheme to make it easier for people to buy their first home. By focusing the scheme on new build home purchases, new home owners would also benefit from a home warranty and the additional support and protection provided by the Code. However, it is essential that any new plans build in appropriate safeguards and are easy for people to understand to minimise the risk of consumer detriment.

Emerging proposals announced this week by the Prime Minister, Andy Burnham, look set to provide a replacement for the previous Help to Buy scheme. The ‘Your First Home’ programme is expected to offer a 20% equity loan to help consumers buy their first home, with a reduced deposit requirement of just 2.5%. The programme is specifically for purchasing new build homes.

Although full details are yet to emerge, the Code has cautiously welcomed the plans as an opportunity to provide more consumers with help to get on the property ladder. This support is further strengthened by the additional protections that come with buying a new build home. The Code sets requirements builders must meet in the buying and selling of new homes*, including:

• Clear, transparent sales and marketing information written in plain English
• A 14 day cooling off period
• Details and costs of any financial commitments associated with buying the property, including any management or maintenance fees
• Cancellation rights, including after contract exchange if the home is changed significantly without the buyer’s consent
• Pre-completion inspection
• After sales support, including snagging and defect resolution for the first two years
• Access to independent dispute resolution should something go wrong.

This is in addition to a 10 year home warranty policy, which covers buyers for structural defects that occur within 10 years of legal completion.

Code Chair, Noel Hunter OBE, said: “The proposed Your First Home programme is a welcome development which should help more people take their first step toward owning their own home. But as with any financial arrangement, detail matters. Buyers must be given clear, accurate information that is easy to understand so they feel sufficiently well informed before making such a major purchase.

“The Code has set out best practice on how to provide clear, transparent information for new buyers for over a decade. We will look to work with the Government to share the learnings from operating our Code of Practice to help ensure consumers are given the right support at the right time”.

The Code also requires builders to consider consumers who may be vulnerable to detriment – which can include those experiencing a home purchase for the first time. The Code Scheme with Builder Guidance sets out ways builders can provide additional support to those who need it.

“We will be actively monitoring developments with the Your First Home programme and look forward to working with government as plans progress.” Noel concluded.

*New homes codes approved by the Chartered Trading Standards Institute’s Approved Codes Scheme offer similar protection, meaning most consumers will benefit from additional support whether their home is covered by the Consumer Code for Home Builders or a different new homes code scheme.