19 August 2021
New Quality Code set to transform housebuilding

In June 2021, the New Homes Quality Board (NHQB), a new independent body launched in February this year, published its draft Quality Code for new build homes. It “aims to address the gaps in existing protections for new build customers for which the house building industry has been so heavily criticised in recent years.”

In 2019, Channel 4’s Dispatches series looked into allegations of poor standards and customer care at Persimmon, one of Britain’s biggest developers. The programme commissioned an inspection of a brand new Persimmon home which was supposedly ready to be sold. The inspector found 295 snags, 70% of which were so severe they failed to reach Building Regulations ‘tolerance’ limits. And yet, before Dispatches began its investigation, homebuyers were being given just 24 hours after receiving their keys to find and report snags.

The New Homes Quality Code

The publication of the draft Code was followed by a four-week consultation, which closed on 17 July. The publication of the final Code is expected imminently, and must be complied with by all developers and new homes builders who are registered with the NHQB. It will apply to all new residential homes (although not those purchased as buy-to-let investments or through a shared ownership scheme) for a period of two years from the date of completion.

The draft Code is centred around 10 ‘guiding principles’, namely:

  • Fairness – treating customers fairly before, during and after the homebuying process
  • Safety – ensuring works are completed in line with Building Regulations
  • Quality – ensuring works are completed to a good quality standard
  • Service – putting systems in place to meet the Code’s customer service level requirements and not using high-pressure selling techniques
  • Responsiveness – providing a clear and timely response to customers’ issues
  • Transparency – providing clear and accurate information about the purchase of the new home, including potential future costs i.e. service charges
  • Independence – ensuring customers are aware they should appoint independent legal advisers before buying a new home
  • Inclusivity – taking appropriate steps to support customers identified as vulnerable
  • Security – ensuring there are reasonable financial arrangements in place to meet all obligations under the Code (e.g. through insurance)
  • Compliance – complying with the requirements of the New Homes Quality Board, the New Homes Quality Code and the New Homes Ombudsman.

Essentially, the draft Code:

  • Protects vulnerable customers
  • Bans high-pressure selling techniques, for example rushing a decision by implying there are other customers interested, when there aren’t
  • Requires any customer deposits to their developer to be protected
  • Obliges builders to set out fair reservation agreements and ‘cooling off’ periods
  • Allows customers to carry out an independent inspection of their new home prior to completion
  • Specifies that homes must be fully complete before legal completion
  • Requires developers to have an effective aftercare service in place to deal with issues and snags.

If a customer is not satisfied with the quality of their home and their complaint is not resolved by the builder, they will be able to take their complaint to the newly established New Homes Ombudsman Service (NHOS).

The New Homes Ombudsman

In 2018, the government committed to introducing an ombudsman service to oversee the new build housing sector, following recommendations published a report entitled Better redress for homebuyers – June 2018 by the All-Party Parliamentary Group for Excellence in the Built Environment.

The appointment of the NHOS is now underway following a tendering process; the NHQB will appoint a body to head the service, which will enable customers to seek redress without costly legal representation.

The industry reaction

Responses to the consultation have poured in from across the industry, with bodies such as the Law Society, the Homeowners Alliance and UK Finance submitting their views. The feedback includes:

  • Many respondents would like to see the Code covering all new homes
  • The Homeowners Alliance and the Law Society mentioned the possibility of a retention mechanism that would see some of the developer’s payment held back until the home is complete and the snagging period has elapsed
  • Some respondents would like there to be clearer quality standards so that builders understand what quality means in relation to the Code.

At Focus, we are looking forward to the publication of the final version of the New Homes Quality Code, and hope it marks the beginning of a new chapter for the new build housing sector.