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Consumer Code for Home Builders - Positive news for the residential property market

Consumer Code for Home Builders - Positive news for the residential property market

The residential property market, particularly the market for new-build homes, has been one of the recent hot topics in the news.  The onset of the Spring market has seen higher seller asking prices with the March figures being 1.7% up on the February House Price Index figures.  The growing belief in price stability is seeing momentum grow in the market and holds potential for 2013 transaction volumes to increase.  The recent budget brought housing-led schemes, particularly home builder schemes, to the fore and confidence seems to slowly be returning to this sector of the market.  Another reason to be positive is that the Third Edition of the Consumer Code for Home Builders came into effect on 1 April 2013.  The new edition applies to all Home Buyers who sign a reservation agreement for a new or newly converted home on or after 1 April 2013.  Not much has changed from the Second to the Third Edition but the main changes brought about by the Third Edition are:

  • The Code and associated Dispute Resolution Scheme do not apply to homes assigned or sub-sold by an investor to a third party before settlement of the purchase.
  • If a reservation deadline is extended by agreement between the Home Builder and the Home Buyer, this should now be confirmed in writing.
  • If the reservation agreement is cancelled or expires, the reservation fee is to be returned to the Home Buyer, less any reasonable costs the Home Builder has genuinely incurred in processing and holding the reservation.  It is not acceptable to set or deduct a fixed percentage or fixed amount from the reservation fee.
  • If the terms of a reservation agreement relating to incentives (e.g. discounts, part exchange or similar) have to be altered due to a change in mortgage scheme proposals (e.g. from a straight mortgage to ‘new buy’), the Home Builder and Home Buyer should cancel the existing reservation agreement and enter into a new agreement without any deduction from the reservation fee.
  • It is not necessary for the Home Builder to notify the Home Buyer of changes of construction materials that do not affect the home’s size, appearance or value.
  • If the Home Builder fails to serve notice on the Home Buyer to complete the sale before the long-stop date, the Home Buyer may have the right to cancel the contract as well as being able to seek out-of-pocket expenses through the independent Dispute Resolution Scheme.

All Home Builders and those representing them in the sales process need to consider the Code.  The NHBC have said that Code compliance is a matter that they will consider when it comes to them determining a Home Builder’s continued registration with NHBC.

The new procedures give Home Buyers fuller protection and added benefits in choosing a new home over a second hand one with peace of mind and protection.  This can be seen by many buyers as a real bonus in the current marketplace.

Select this link to view the Consumer Code for House Builders

Jill Andrew
Associate

Carolyn Richards
Senior Associate

 

Burness admin