Carol Brady

The Consumer Code for Home Builders is designed to make the home buying process fairer and more transparent for purchasers, helping new home buyers to be fully informed about their purchase, understand the levels of service to expect from their home builder, and know their consumer rights before they move in.

However out of the hundreds of thousands of new homes built each year, we recognise that sometimes things go wrong, and it can be incredibly challenging for home buyers in that situation. Support does exist, in the form of the Code, warranty protection and, if necessary, legal action, but it isn’t always immediately clear who does what. 

We sort the fact from the fiction in our latest article:

Fiction:  The Code covers issues related to defects and structural problems.

Fact: The Code does not directly cover build quality issues as these are already covered by the Home Warranty Providers. However, it does require the home builder to explain that they are responsible for remedying relevant defects arising under the Home Warranty twoyear defect period and to provide an after sales service and complaints process to put things right. Click for more information on the Code:

Fiction: The Code duplicates existing consumer protection legislation and provides no extra protection for consumers 

Fact: The Code covers the consumer specifically for aspects relating to the purchase of a new home, including mandatory requirements that home builders must meet in their marketing and selling of new homes and their after-sales customer service. While legislation exists to cover some aspects of property sales and purchase, the Code covers aspects such as reservation agreements and deposits which in most cases would not otherwise be protected.  

Legal action is sometimes only accessible through Trading Standards but these can be lengthy criminal proceedings and while they may prevent a repeat of the issue, they may not compensate a consumer. Alternate legal action through the civil courts can also be lengthy and costly – the Code offers a free alternative with a decision often made within eight weeks. Click for more information on the Code:

Fiction: The Code’s dispute resolution scheme is run by the Code and industry representatives.

Fact: The Code’s Dispute Resolution scheme is completely independent of the industry, the Home Warranty Bodies and the Code. It is run by CEDR Ltd which is a leading independent commercial ADR provider approved by the Chartered Trading Standards Institute and all decisions taken are wholly independent of the Code Board. Click for more information about the IDRS:  

Fiction:  Using the Code’s IDRS will prevent a consumer from bringing court action at a later date.

FACT: Use of the Code’s IDRS will not prevent court action if a home buyer subsequently decides to pursue their claim in the courts.

Fiction: The Code does not pay out compensation or sanction home builders

FACT: The IDRS adjudicators award financial settlements based on the evidence submitted, including compensation for inconvenience. Action taken by the Code against home builders for non-compliance includes suspension and removal from all the home warranty schemes supporting the Code, which effectively prevents the builder from trading. This powerful ‘last resort’ sanction has been successfully applied when required in cases of non-compliance.

Fiction: The Code has no powers to enforce sanctions against home builders that do not comply with Code requirements.

FACT:  If a Home Builder is found to be in serious breach of the Code and/or fails to comply with an adjudicator’s decision, Home Warranty Bodies can apply a range of sanctions. These include removal from the relevant Home Warranty Body’s register and exclusion from all registers run by other Home Warranty Bodies that take part in the Code Scheme. This has been applied a number of times in recent years. However, we do try in the first instance to work with home builders to get it right and  sanctions such as removal from the register is seen as a last resort.

Fiction:  The Code is opposed to the introduction of a New Homes Ombudsman

FACT: The Code and the wider industry is not opposed to a New Homes Ombudsman. However, an ombudsman alone is not sufficient as it would not have the jurisdiction to proactively improve standards and reduce the number of incidents where problems occur. We are therefore encouraging the government to look at a more comprehensive and robust solution which tackles the issue of build quality at the point of delivery.

Related articles:

Busting the myths about the Consumer Code for Home Builders

Clearing up the Confusion

Related Posts

Who's supporting The Code