Pre-purchase information – how much is enough?

The Code requires builders to give new home buyers and/or their professional advisers “enough pre-contract information to help them make suitably informed purchasing decisions”. But how much information is enough? And what has changed under the revised Code (fifth edition)?

The minimum amount of information that must be shared with home buyers has increased under the new Code. Under the fourth edition, builders were required to provide:

• written reservation agreement
• home warranty information
• a description of any management services including estimated costs
• nature, method of assessment, and cost of any event fees

The fifth edition requires the following additional information:

• whether the property is leasehold or freehold
• planning consent reference number and details of future build phases
• contents included in the price
• specification of the home including main structural materials
• the standards to which the property is being built
• any exceptional restrictions on use
• details of any facilities or services that may not transfer to the buyer on completion

If the home has not yet been completed both versions of the Code require home buyers to be given a brochure or plan and other details. Full information can be found in section 2.1.2 and 2.1.3 of the revised Code Scheme and Builder Guidance.

To help you provide a great service and comply with the Code, we’ve outlined some of these requirements in more detail below.

Your Reservation Agreement – what’s included?

Your buyers will naturally be excited and very keen to secure their new home but does your reservation agreement cover everything your buyer needs to know before they sign? Is it free of jargon and easy to understand?  Your reservation agreement must include:

• details of the reservation fee
• details of the 14-calendar day cooling off period
• how and when the agreement will end
• range of reservation fee to be retained if the reservation is cancelled (after 14 days)
• the property purchase price and how long it remains valid
• full details and estimates of any management services and associated organisations or utilities which your buyers will be committing to with their purchase.

However, this is not an exhaustive list. Check the Consumer Code Scheme and Builder Guidance for full details.

The 14-day cooling off period is a new requirement under the Fifth Edition of the Code. It’s important that buyers understand they can receive a full refund of their reservation fee if they change their mind within 14 calendar days. It’s equally essential to highlight the range (in monetary terms) of the reservation fee that may be retained if your buyers change their mind after 14 days. Be aware that this retention may be challenged through the Code’s Independent Dispute Resolution Scheme if such costs are considered excessive.

We provide a Sample Reservation Agreement which covers all the requirements as set out in the Code.  This is freely available to download from our Resources Hub and can be adapted to suit your processes.

Warranty cover

An explanation of the warranty cover with reliable and accurate information will help your buyer understand who is responsible for putting right any issues. Explaining the difference between the first two years covering defects and the full 10 year structural warranty will help prevent any potential misunderstanding once the buyer has moved in.

Contact details

Who should your buyers contact in the event they have a query? Does this point of contact change during the buying process? Give your customers plenty of opportunity to ask questions and encourage them to seek clarification if they are unclear.  A Code compliant information pack will include all relevant contact details, a copy of your complaints procedure and how best to raise queries before, during and after purchase.

Health and safety on site

Buyers will be subject to the usual health and safety precautions on a site that is still under development, and it is your responsibility to ensure they are fully informed about these prior to their visits.  Have you included this in your pack and are your buyers fully aware?

Legal Providers

At the point of reservation your buyers should appoint a professional legal adviser to carry out the legal formalities of the purchase.  You can suggest a preferred provider in the interests of speed and convenience, but it must also be made clear to the buyer that they are free to select their own legal adviser if they wish and that whoever they choose will be required to act in their best interests. You must inform your buyer if you receive any fee, commission or any other reward or advantage for introducing any adviser.

A copy of the Code

Does your purchase pack include a copy of the Code?  The Code is available to download from our website as a hard copy for your buyers’ pack. Alternatively you can provide a link for your buyers to access our website to find out more about their rights and protections throughout their purchasing journey.

Complaints policy

Have you given your buyers a copy of your complaints policy? The revised Code requires you to do this twice during the sales process, at pre-contract stage and at legal completion to help ensure buyers are aware of how to raise a complaint throughout their buying journey and after occupation.

Vulnerable Customers

Working with vulnerable buyers may involve a more flexible approach, providing additional resources and information and a means of communication appropriate to support their specific needs.  Your customers may not identify as being vulnerable so the onus is on you to recognise those buyers who may need extra support – including first time buyers – to help ensure they understand every stage of the buying process. For further guidance, take a look at section 1.6 of the Consumer Code Scheme and Builder Guidance or download our ‘Right First Time fact sheet’ on consumer vulnerability.

Code Compliance Starter Pack

To help you comply with these obligations, we have created a Code Compliance Starter Pack available from our Resources Hub. This features a handy Code compliance checklist covering pre-contract, exchange of contract and the first two years of occupation.  You will also find a host of other resources available to you as downloads or quick links to relevant information as well as a training section on the Code requirements for you and your sales agents.

We also provide a dedicated Transition Pack which is there to help you comply with the newer requirements and guidance included in the Fifth Edition of the Code from January 2024.

Buying a new home is likely to be the largest purchase your buyers will make and supporting them with as much information as they need throughout the process is not just complying with the Code requirements, it’s also fundamental to providing great customer service.

This is an updated version of our February 2023, taking into account changes introduced in the 5th edition of the Code.