Scope of the Code
What type of protection does the Code provide?
Our Code covers the home buyer for aspects relating to the purchase of a new home that are not already covered by the builder or home warranty body. This includes setting standards for customer service and complaints handling, ensuring contract deposits are protected and that sales literature is clear and informative.
Structural issues are covered by the builder (within the first two years) and/or home warranty body. Where problems cannot be satisfactorily resolved, further support can be accessed through the home warranty body’s dispute resolution scheme and/or through the builder’s complaints process. If a builder fails to provide or adhere to their complaints policy, this may be considered a breach of the Code and could be brought as a claim through our IDRS.
Does the Code offer any more rights than existing legislation?
The Consumer Rights Act 2015 does not cover purchases of new homes. The Code gives buyers of new homes protection if they change their mind or find sales literature misleading or inaccurate.
The Consumer Protection from Unfair Trading Regulations 2008 offers some protection. However, it requires Trading Standards to take enforcement action or consumers to bring their own legal action, which can be complex and costly.
Where issues are identified under the Code, home buyers can use the Code’s IDRS rather than take lengthy and costly legal action through the courts.
Does the Code apply to all new Homes?
The Code applies to homes built under the insurance protection of one of the supporting home warranty bodies, NHBC, Premier Guarantee, LABC Warranty and Checkmate, unless the builder has activated registration with the New Homes Quality Board.
What support are builders expected to provide for customers who may be vulnerable?
Home builders must ensure that all new home buyers are treated fairly, particularly those who may be vulnerable. A customer is potentially vulnerable if their personal circumstances make them especially susceptible to detriment. This could include those facing challenging personal situations and those less able to make decisions in their own best interest due to health conditions or other factors such as bereavement or divorce.
Vulnerability can also be caused by market conditions. Many people will have limited experience of the home buying process, and first time buyers may be particularly at risk of detriment.
Home buyers will not necessarily identify as being in a vulnerable position so the onus is on home builders and their sales agents to recognise those buyers who may need extra support and adapt their approach accordingly. Tips and useful links to help builders get it right are covered in our factsheet ‘Supporting vulnerable consumers’.
Does the Code cover snagging?
Following an independent review of the Code, from 1 January 2024 our Code will require builders to give buyers (or their professional advisers) the opportunity to visit and carry out a pre-completion inspection and include in their after-sales service details of how snags will be dealt with during the two years after legal completion. The Code will require builders to resolve snags or defective, faulty or incomplete works covered by the after-sales service as soon as possible and within a mutually agreed timescale. If they fail to do so, then a complaint may be brought through the Independent Dispute Resolution Scheme. Builders must also provide an explanation of how snags and defective, faulty or incomplete works and service calls will be managed, including timescales, how they should be reported and the names and contact information of the builder’s staff to whom such issues should be addressed.
Does the Code apply to developments in areas such as Northern Ireland and the Isle of Man?
If the home is covered by one of the participating home warranty bodies, then the Code does apply unless the home builder has chosen to operate under a different code.
How do you monitor whether agents and developers are complying with the Code?
We encourage compliance through effective communication, training and assessments, as well as following up any Code breaches to ensure lessons are learned. In addition, experienced independent auditors from the Chartered Trading Standards Institute visit sites across the UK to monitor compliance with the Code and provide recommendations where needed to plug any gaps. Read our Compliance Auditing Guide for details.
Does the Code cover corporate bodies and partnerships if they only buy one property?
No, the Code is intended to cover private buyers only.
Independent Dispute Resolution Scheme (IDRS)
Can buyers raise a complaint via the Code’s IDRS?
Yes – provided their home is covered by the Consumer Code for Home Builders and subject to them having first raised their complaint with the home builder.
What support is available to help home buyers make a complaint?
Our aim is to make the complaints process as accessible as possible. To enable complaints to be dealt with quickly, where possible buyers should state clearly which requirements of the Code they feel have been breached, and how.
In addition to providing as much detail as possible, it is very important that home buyers back up any claims with evidence. For example, complaints relating to financial loss should be supported with quotes demonstrating the cost of carrying out or rectifying works.
Visit our complaints summary page for an overview of the process.
Is there a limit to how much buyers can claim?
The financial limit for claims via the IDRS will rise from £15,000 to £50,000 for homes registered from 1 January 2024. The increase follows the recommendations made in a Government All Party Parliamentary Group that looked at new homes purchases. To date, very few claims have been awarded the pre-2024 maximum limit and awards can only be made where the buyer can evidence financial loss or to cover the costs of rectifying problems (which must be supported with quotes).
As part of the recent review of the Code, our Board considered raising the limit to match other new homes codes but felt that cases over £50,000 would be more appropriate to be handled via the courts with appropriate legal support for home buyers. Although there is no evidence to suggest that a higher sum is required and/or home buyers have been inhibited from bringing a claim, our Board has resolved to keep this under review.
Is there a limit to the number of claims a home buyer can make?
No. There is no limit to the number of individual claims a home buyer can make however, the maximum award for all claims on the same property shall not exceed the maximum financial limit for awards which is £15,000 for properties reserved up to 31 Dec 2023 and £50,000 for properties reserved from 1 January 2024.
Matters in dispute must not be the subject of any current or previous adjudication involving the same buyer and the same property.
Are the findings of the independent adjudicator legally binding?
Under the rules of registration, the home warranty bodies require each registered builder to honour any award made against them under the IDRS if it has been unconditionally accepted by the home buyer. If a home builder fails to honour any award, the home warranty bodies can apply sanctions including financial penalties, re-training or suspension from the new home warranty bodies’ registers.
Home builders have in the past been removed from the home warranty bodies register for failure to comply with the Adjudicator’s award, and details are published on our website and in our Annual Report when this happens.
Our independent Disciplinary and Sanctions Panel, chaired by Citizens’ Advice, reviews all decisions and takes further action where a serious breach or repeated complaints have been registered.
A home builder remains liable for an award, even if they are removed from a home warranty body’s register.
Can new build homes be sold as leasehold under the Code?
Currently yes. However, under The Leasehold Reform (Ground Rent) Act 2022 which came into force on 30 June 2022, landlords are banned from charging ground rent. This came into force for retirement properties on 1 April 2023. It puts an end to ground rents for new, qualifying long residential leasehold properties in England and Wales.
Home buyers covered by our Code must be informed prior to purchase about any management services and organisations to which they will be committed, and an estimate of their cost. Furthermore, solicitors should, as a matter of course, ensure their client is aware of any additional costs associated with a property.
Can home buyers make a complaint via the Code about the cost of leasehold fees?
If the complaint relates to a period within two years of occupancy (the time period covered by the Code) and the home builder did not provide adequate information about management services and charges, the buyer may be able to claim a breach of the Code. Outside of the two-year period, they may be able to complain to the Legal Ombudsman if they feel their solicitor did not alert them to fees and charges associated with the property.
Why doesn’t the Code prevent builders offering incentives to use their recommended solicitors?
Home buyers are not obliged to use advisers recommended by the builder or agent.
The Code makes clear that consumers should be advised to seek professional advice prior to purchase. In some cases, using a recommended solicitor can be advantageous to both the buyer and the seller if that solicitor knows the site and associated paperwork as it can speed up the process for all parties. However, a solicitor must always act in the best interests of its client (the home buyer in the case of a house purchase).
Even where the wider firm may also work for the builder, there are strict rules that law firms follow to prevent conflicts of interest. The Solicitors Regulation Authority’s Principles and Code of Conduct state that a solicitor must not allow their independence to be compromised.
New-build homes codes of practice
Are all new build homes covered by a single code?
No, but the Consumer Code for Home Builders covers most new build homes constructed across the UK which are covered by one of the four main warranty bodies – NHBC, LABC Warranty, Premier Guarantee and Checkmate, except those that at the time of reservation by the first buyer are covered by the New Homes Quality Code.
Is the New Homes Quality Board (NHQB) part of the Consumer Code for Home Builders?
No. Like the Consumer Code for Home Builders, the NHQB is a not-for-profit company which set itself up in 2020 and operates its own code. It has commissioned a newly-created New Homes Ombudsman to provide its alternative dispute resolution service. However, neither the New Homes Quality Code nor the Ombudsman are statutory bodies and developers remain free to choose which code they comply with, subject to restrictions set out by their warranty provider.
Will the Consumer Code for Home Builders be replaced by the NHQB?
There are no plans to replace the Consumer Code for Home Builders. The Building Safety Act 2022 makes provision for a statutory new Homes Ombudsman and a single code, although both require secondary legislation. In the current political climate, it is likely this won’t happen for some time, and it is unclear how it will be achieved.
Would consumers be better protected by an Ombudsman?
No. The Code resolves disputes through its IDRS which is provided by the Centre for Effective Dispute Resolution Ltd (CEDR). CEDR is approved by the Chartered Trading Standards Institute as the ‘competent authority’ acting on behalf of the Secretary of State for dealing with disputes that are raised with the builder from the Reservation date until two years after the date of Legal Completion. In line with the government’s alternative dispute regulations, the time to deal with complaints under our scheme usually takes no longer than 8 weeks.
The level of financial settlements is based on evidence provided to determine the actual financial loss. This would be judged in the same way through an Ombudsman. The main difference is in the maximum financial limit, although the Code’s limit has increased for homes reserved from 1 January 2024.
However, the downside of an Ombudsman is that it does not regulate and only deals with complaints which is a weakness in Ombudsman schemes. Through the supporting home warranty bodies, we take action against home builders to improve standards. This can and has involved excluding them from the home warranty scheme, fundamentally affecting their ability to trade.