Good Practice Guide for Home Builders - NHBC Home

DRAFT DOCUMENTGood Practice Guide forHome BuildersGuidance for Home Builders onhow to adopt and interpret theConsumer CodeComments on this code can be made to:ConsumerCode@nhbc.co.ukClosing date for comments – 20 February 2009Version 8.1 – 6 January 2009

C ONSUMER C ODE FOR H OME B UILDERSContentsIntroduction ........................................................................................................................... 3Definitions.............................................................................................................................. 4Scope .................................................................................................................................. 4The Consumer Code, including good practice guidance for Builders 51 ADOPTING THE CODE ........................................................................................................ 51.1 Adopting the code ....................................................................................................... 51.2 Making the code available........................................................................................... 51.3 Customer Service ....................................................................................................... 51.4 Appropriately trained Customer Service Staff.............................................................. 61.5 Sales & Advertising ..................................................................................................... 62 INFORMATION – PRE-CONTRACT ..................................................................................... 72.1 Pre-Purchase Information............................................................................................ 72.2 Contact information ..................................................................................................... 72.3 Warranty Cover ........................................................................................................... 82.4 Health & Safety for Visitors to Active Developments ................................................... 82.5 Pre-Contract Information ............................................................................................. 82.6 Reservation ................................................................................................................. 93 INFORMATION – EXCHANGE OF CONTRACT (BUILDERS’ MISSIVES)........................... 103.1 The Contract ............................................................................................................... 103.2 Contract Termination Rights........................................................................................ 113.3 Contract Deposits & Pre-Payments............................................................................. 113.4 Timing of Construction ................................................................................................ 124 INFORMATION – DURING OCCUPATION........................................................................... 144.1 After Sales Service...................................................................................................... 144.2 Health & Safety for Home Owners on Active Developments....................................... 145 COMPLAINTS & DISPUTES ................................................................................................. 155.1 Complaints Handling ................................................................................................... 155.2 Co-operation with Professional Advisors..................................................................... 15Appendix A – Consumer Code Redress Scheme ............................................................................ 17Appendix B – Sample Builder Charter Clauses ................................................................................ 18D RAFT 8.1 – 6 JANUARY 2009 P AGE 2 OF 20

CONSUMER C ODE FOR H OME B UILDERSINTRODUCTION• The purpose of this Consumer Code is to seek to ensure that Home Buyers:• know what service levels to expect,• are given reliable information upon which to make their own decisions,• know how to access speedy, low cost dispute resolution arrangements if they are dissatisfied,• are treated fairly• The Consumer Code sets requirements that all registered Home Builders shall meet. The Guidanceshown below is intended to give builders information on how the Consumer Code Requirements may bemet. If a Home Builder decides to adopt a different approach to satisfying the requirement, it mustachieve a comparable outcome, provide the same information and be to the same level or standard asdetailed in the Guidance notes.• Home Builders shall be expected to adopt the requirements and standards of good practice, proceduresand information, as detailed in the commentaries below.• The Home Warranty Bodies have agreed to require all their registered builders adopt and comply withthe terms of the Consumer Code as a condition of their registration. Where a Home Builder is found tobe in serious breach of the Code, the ultimate sanction will be removal from the relevant Home WarrantyBody’s register and exclusion from all other registers run by other Home Warranty Bodies who aresignatories to the Co-operation Agreement.• Home Buyers who consider they have suffered significant detriment as a result of a Home Builder’sactivities and who are unable to obtain redress through the Home Warranty Body’s dispute resolutionscheme will have the facility through their Home Warranty Body to an independent Dispute Resolutionscheme. Details of this are contained in Appendix A.• In an effort to establish how well the Consumer Code is working and measure the level of consumersatisfaction, Home Warranty Bodies will engage in consumer surveys. These may be telephone, postalor web based surveys. This is an opportunity for Home Buyers to make their views known (both positiveand negative) on a wide range of subjects relating to their purchasing experience and the serviceprovided by Home Builders. The information used for these surveys will come from data provided byboth Home Builders and the conveyancing professionals working for Home Buyers. The Home WarrantyBody and the Home Builders will ensure that the relevant sections of the Data Protection Act arecomplied with.• In an effort to establish how well the Consumer Code is being applied, or whether the Code needs to beamended or updated, the Home Warranty Bodies may:• undertake random audits,• undertake mystery shopping surveys,• review and assess customer satisfaction feedback and complaints,• provide training opportunities for Home Builders.• Nothing in this code shall affect a Home Buyer’s normal legal rights. In addition, whilst Home Buildersare not expected to exceed applicable statutory requirements, this code does not remove theresponsibility of a Home Builder to comply with all relevant legislation in respect of selling homes.D RAFT 8.1 – 6 JANUARY 2009 P AGE 3 OF 20

C ONSUMER C ODE FOR H OME B UILDERSDefinitionsFor the purposes of this document the following words have special meanings:• Consumer Code – a set of core principles that are to be adopted by Home Builders. The ConsumerCode has been drafted in accordance with the guidance contained in the Office of Fair Trading’s ‘CoreCriteria for Consumer Codes’ document.• Dispute Resolution Scheme – an independent process set up to deal with issues that are covered bythe Code.• Home – a property registered with a Home Warranty Body and covered by their insurance warranty.• Home Builder – a builder or developer of new or newly converted domestic properties for sale to thegeneral public, and who is registered with a Home Warranty Body.• Home Buyer – the purchaser of a home from a Home Builder.• Home Warranty Body – a body that maintains a register of builders and developers, which issues aninsurance backed warranty for the protection of new Home Buyers and who have undertaken to enforcethe Consumer Code.• Scheme – a system adopted by a Home Warranty Body that includes the promulgation of the ConsumerCode with Home Builders registered with them.ScopeThis document should be read bearing in mind the following provisions and limitations:• This Code comes into force on the 1 st April 2010.• It applies only to individual Home Buyers who have contracted to buy, or have purchased under contract,a new or newly converted home built by a Home Builder and built under the insurance protection of oneof the Home Warranty Bodies.• The Code does not apply to:• properties purchased before 1 st April 2010,• second hand properties taken by Home Builders in part exchange,• properties for rent or shared ownership, including properties acquired by corporate bodies for thepurposes of investment,• property built by self builders for their own occupation.• properties built under Architects’ certificates,• In addition to the above, the Code and the associated Dispute Resolution Scheme does not cover issuesrelating to:• Personal injury claims,• Loss of property value,• Claims relating to the land sold and its boundaries,• Any matters covered by other redress or ombudsman schemes.• The Code’s pre-sale and handover requirements apply only to Home Buyers who are the first purchasersof a home. The requirements relating to after-sales service apply to all Home Buyers within the two-yearperiod following legal completion (Scotland: ‘date of entry’).• Complaints made under the provisions of the Code will only be considered if they are made within twoyears of legal completion (Scotland: ‘date of entry’) and the Home Buyer’s home is covered by aninsurance-backed warranty issued by one of the Home Warranty Bodies.• Complaints about individual Home Builders must be referred to the relevant Home Warranty Body.D RAFT 8.1 – 6 JANUARY 2009 P AGE 4 OF 20

CONSUMER C ODE FOR H OME B UILDERSTHE CONSUMER CODE REQUIREMENTS AND GOOD PRACTICE GUIDANCEThe Guidance shown below is intended to give builders information on how the Consumer CodeRequirements may be met. If a Home Builder decides to adopt a different approach to satisfying therequirement, it must achieve a comparable outcome, provide the same information and be to the samelevel or standard as detailed in the Guidance notes.1 ADOPTING THE CODE1.1 Adopting the CodeRequirementHome Builders shall adopt theprinciples and good practiceguidance of this code.GuidanceEvery Home Builder is expected to adopt all the principlesof this code. Should the builder so wish, this could bedone by incorporating the Code requirements into aCustomer Charter.Example charter clauses that cover these Consumer Coderequirements are given in Appendix B, which HomeBuilders may adopt as part of their overall customercharter.1.2 Making the Code AvailableRequirementThe Home Builder shall give,without charge, a copy of theConsumer Code to customers whoask for it and to all Home Buyerswho reserve a property.GuidanceThe Homebuilder shall provide, without charge, a copy ofthe Consumer Code for Home Builders. It should beavailable on first contact between Home Buyer and HomeBuilder and shall be given to anyone who asks for it, andbe given automatically on reservation.For Home Buyers who have special needs (such as theelderly, those whose first language is not English or HomeBuyers who have impaired sight) alternative formatsshould be considered.The Code should be clearly displayed - for example on adevelopment site, it may be contained in sales brochuresor in Home Buyer reservation packs, displayed in a publicplace such as the site sales office or on a Home Builder’sweb site.1.3 Customer ServiceRequirementThe Home Builder shall havesuitable systems and procedures inplace to ensure reliable andaccurate delivery of thecommitments on service,procedures and relevantinformation in this Consumer Code.GuidanceThe aim is for Home Builders to have formal processes inplace to deliver reliable and consistent service to theirHome Buyers.D RAFT 8.1 – 6 JANUARY 2009 P AGE 5 OF 20

C ONSUMER C ODE FOR H OME B UILDERS1.4 Appropriately trained Customer Service staffRequirementThe Home Builder shall providesuitable training to all staff whodeal with Home Buyers about theirresponsibilities to them and whatthe Consumer Code means for thecompany and its directors.GuidanceThe relevant Home Builder’s staff should be trained tounderstand:• the detail of the Consumer Code,• the company’s key legal responsibilities; and• their personal responsibilities to its Home Buyers.Not all staff need be trained to the same level. The extentof the training required for the Home Builder’s staff variesand depends on the extent of their role and involvementwith Home Buyers.Where external agencies are used by Home Builders toprovide this service, Home Builders should ensure that therelevant staff are also trained to the same level.1.5 Sales & AdvertisingRequirementSales and advertising material andactivity shall be clear and truthful.GuidanceThe Home Builder’s sales and advertising material shouldbe clear and truthful, and thus comply with and adhere tothe relevant legislation.The Trade Descriptions Act 1968 and the PropertyMisdescriptions Act 1991 say that any services offeredmust not be wrongly described and information must notbe false or misleading.The Consumer Protection from Unfair Trading Regulations2007 requires that all traders must trade fairly whendealing with consumers and must not use aggressive ormisleading practices.D RAFT 8.1 – 6 JANUARY 2009 P AGE 6 OF 20

CONSUMER C ODE FOR H OME B UILDERS2 INFORMATION – PRE-CONTRACT2.1 Pre-Purchase InformationRequirementHome Buyers shall be providedwith sufficient pre-purchaseinformation to help them makeinformed purchasing decisions.GuidanceDuring the pre-reservation, reservation and pre-contractperiod, the Home Buyer should be provided withappropriate information about the property to help themmake their own informed decisions about the purchase,prior to making a binding commitment.The information should be fair and reliable, in plainlanguage and without jargon, and include:• a reservation agreement in writing setting out thekey terms and price. (see 2.6 below for theminimum required content),• a specification of the contents and standards towhich the dwelling is being constructed,• a brochure or plans reliably depicting the dwellingaccommodation layouts, appearance and plotposition,• the nature of the Warranty Cover provided (see 2.3below),• a description of any management services andorganisation to which the homebuyer will becommitted, along with an itemised estimate of themanagement service charges, maintenance costsand fees. The Home Buyer shall be advised of theterms by which the charges and fees may bechanged.Where the property being sold is completed, it may be sold‘as seen’. Plans and specification are not required to beprovided in these circumstances.When a Reservation Agreement has been entered into,the Home Builder’s Solicitors should provide the HomeBuyer’s legal representative with the proposed contract,legal title and other statutory documents and approvals.2.2 Contact InformationRequirementHome Buyers shall be advised howtheir questions will be dealt withand who to contact during theproperty sale, purchase andcompletion process.GuidanceThe Home Builder should tell Home Buyers how it will dealwith their questions and who to contact when buying theproperty and thereafter during the first two years followinglegal completion (Scotland: ‘date of entry’).Advice should be given on the accepted methods ofcontact – email, phone, letter or SMS text for example.D RAFT 8.1 – 6 JANUARY 2009 P AGE 7 OF 20

C ONSUMER C ODE FOR H OME B UILDERS2.3 Warranty CoverRequirementHome Buyers shall be givenaccurate and reliable informationabout the insurance-backedwarranty provided on the propertyand any other guarantees andwarranties from which they maybenefit.GuidanceThe aim is to make sure that, before exchange ofcontracts (Scotland: ‘exchange of missives’), the HomeBuyer receives:• the name of the provider of the insurance-backedhome warranty that is included in the transaction,• details of the insurance cover protection providedby the insurance-backed home warranty, and• details of any other standard guarantees (forexample for electrical appliances) included in thetransaction that will benefit the Home Buyer.2.4 Health & Safety for Visitors to Active DevelopmentsRequirementHome Buyers shall be informedabout the health and safetyprecautions to be taken beforevisiting an area of a developmentwhere construction work iscontinuing.GuidanceThe Home Builder should inform all Home Buyers who visitan active development about the health and safetyprecautions that both parties should take. They shouldalways be briefed on what to expect, how to behave andwhat to do in an emergency.Information given to visitors on an active developmentshall make clear their own personal responsibility to followhealth & safety procedures and signage.2.5 Pre-contract informationRequirementHome Builders shall advise HomeBuyers to appoint a professionallegal adviser to carry out the legalformalities of buying the propertyand to represent their interests.GuidanceThe aim is to make sure that the Home Builder advisesHome Buyers to choose and appoint a professionaladviser when they reserve a property to look after theirinterests in all aspects of the transaction.This should include, for example, appointing a solicitor orconveyancer to deal with the legal formalities of thetransaction, including exchange of contracts (Scotland:‘conclusion of missives’) and legal completion (Scotland:‘date of entry’).D RAFT 8.1 – 6 JANUARY 2009 P AGE 8 OF 20

CONSUMER C ODE FOR H OME B UILDERS2.6 ReservationRequirementHome Buyers shall be given areservation agreement that setsout clearly the terms and the legalstatus of the reservation.GuidanceThe aim is to make sure that the Home Buyer fully andproperly understands the terms under which a reservationis being made. Amongst matters the reservationagreement shall clearly state are:• what is being sold (for example plot number,address, etc),• at what price,• the date by which the reservation agreement willterminate if contracts are not exchanged,• the time for which the price remains valid,• the value and nature of any management services(Scotland: ‘Factoring’) to which the Home Buyermust commit and pay for.Once the reservation document is signed, the HomeBuilder shall not sell or attempt to sell the home to anotherbuyer within the time period stated in the reservationagreement.The home buyer has the right to cancel the reservation atany time during the reservation period ending with thecontract deadline date stated in the reservation agreement.Please refer to 3.3 below in respect of deposits,refunds and pre-payments.D RAFT 8.1 – 6 JANUARY 2009 P AGE 9 OF 20

C ONSUMER C ODE FOR H OME B UILDERS3 INFORMATION – EXCHANGE OF CONTRACTS (BUILDERS’ MISSIVES)3.1 The ContractRequirementContract-of-sale (Scotland:‘missives’) terms and conditionsshall be clear and fair and thecontract termination rights clearlystated.GuidanceThe Home Builder should ensure that the contract termsare clear and fair and comply with the Unfair Terms inConsumer Contracts Regulations 1999. In particular:• Oral StatementsTo avoid disputes over oral statements, the HomeBuilder should ask the Home Buyer to state inwriting at contract stage, any oral statements onwhich they are relying. Oral statements made bythe builder or their representatives shall not beexcluded nor shall liability be limited.The Builder may protect themselves from claims byensuring that, immediately prior to exchange ofcontracts, the purchaser through their legalrepresentative is required to state in writing what, ifany, oral representations that are not alreadyexpressed in the written documentation they areplacing material reliance upon when entering intothe contract.Material oral representations will then be confirmedor otherwise, as appropriate, by the Home Builderin writing.• Changes to Design or ConstructionThe home buyer shall be advised in writing prior toexchange of contracts that there could becircumstances arising which may necessitatechange to some elements of design, construction,or materials to be used in the dwelling duringconstruction, and how they will be advised orconsulted.The Homebuyer should be advised that where achange occurs to items contained in the brochure,plans or specification of contents provided to theHome Buyer at exchange of contracts (Missives), isof a minor nature and is of no less quality andmonetary value, they will be advised in writing ofthe change.Where a significant and substantial change isnecessary, which significantly and substantiallychanges the size and appearance of the dwelling,and its monetary value, the Home Buyer shall betold that they will be formally consulted and theiragreement sought. The Homebuyer shall be toldthat they shall have the right to terminate thecontract should they find change not acceptable,and their deposit refunded.D RAFT 8.1 – 6 JANUARY 2009 P AGE 10 OF 20

CONSUMER C ODE FOR H OME B UILDERS3.2 Contract Termination RightsRequirementThe Home Buyer shall be advisedof their rights to terminate thecontract (Scotland: ‘missives’).GuidanceThe Home Buyer should be advised of the circumstances inwhich they have the right to terminate the contract(Scotland: ‘missive’). The homebuyer may terminate thecontract:• where there is a substantial and significant changeto the dwelling (see 3.1 above);• if there is ‘Unreasonable Delay’ in completing thedwelling and serving the notice to complete.‘Unreasonable Delay’ may be defined byincorporating the following clause in the contract ofsale:‘The Builder shall complete the dwelling andserve notice upon the buyer to complete withinsix months for houses and twelve months forapartments from the latest time stated in thecontract, failing which the Home Buyer mayterminate the contract.’The contract of sale should state that the dwellingwill be completed and notice served within either a‘season’, ‘month’ or ‘week’, depending on the stageof construction (see 3.4 below). The applicabledate for determining the latest time stated in thecontract for delay purposes shall be the last day ofthe stated period.3.3 Contract Deposits and Pre-paymentsRequirementThe Home Builder shall clearlyexplain how Home Buyers’reservation fee and contractdeposits are protected and howany other pre-payments are dealtwith.GuidanceThe Home Builder should have arrangements to protectany property reservation fees and contract deposits paid byHome Buyers.Where a reservation is cancelled, the reservation feeshould be returned by the Home Builder to the HomeBuyer, less any reasonable administrative and legal costsincurred in processing the reservation.Where a contract is terminated by the Home Buyer forreasons of both substantial and significant change indesign, or for unreasonable delay as defined in theContract of Sale, then the contract deposit and reservationfee should be returned in full.Repayments back to Home Buyers should be made asquickly as possible, preferably within fourteen days of thecancellation.Note:Where a Builder agrees to undertake additional works orincorporate additional items, to be paid for by the HomeBuyer, and these are not specifically included in theReservation Agreement or Contract of Sale, then they shallbe set out and agreed in writing by separate quotation andwritten order signed by the parties.D RAFT 8.1 – 6 JANUARY 2009 P AGE 11 OF 20

C ONSUMER C ODE FOR H OME B UILDERSThe Home Builder shall make clear the terms of suchagreement including cancellation and refund rights, and theextension of time to the dwelling completion, if any, thatmay be incurred as a result of incorporating such works.Such additional works agreements or agreements reachedbetween subcontractors and buyers with or without theBuilders agreement are not covered by this Code.3.4 Timing of ConstructionRequirementThe Home Buyer shall be givenreliable and realistic informationabout the timing of construction,legal completion (Scotland: ‘dateof entry’) and handover of thehome.Guidancea) Construction of the propertyHome Buyers should be advised of the uncertainnature of the building timescales caused by weatherand other matters beyond their reasonable control.Timing information to the Buyer shall be givenrecognizing the stage of construction when theinformation is assessed and the timescale to elapseto completion.It would be unreasonable to give or expect to begiven a definite date months in advance; however,there should be increasing assuredness the nearerthe property construction gets to completion. Forexample, the following or similar framework fortiming advice could be used:• before completion of foundations and oversite –the season for anticipated completion could begiven;• when the roof is completed and the buildingweatherproof – the month for completion couldbe given;• when the property is decorated, and mainservices are connected the Home Builder maylet the Home Buyer know what week theproperty is expected to be completed.b) Legal completion (Scotland: ‘date of entry’)The Home Builder should give reliable information toHome Buyers on the timing of legal completion(Scotland: ‘date of entry’).The Contract Of Sale (Scotland: ‘builders missives’)shall clearly define the notice period within whichlegal completion (Scotland: ‘date of entry’) will beeffected; for example: ‘14 days from the serving ofnotice to complete’. In the case of a property that iscomplete, the contract may state a ‘fixed’ date forcompletion.c) Handover and occupationThe Home Builder should have appropriatearrangements in place to hand over a property to theHome Buyer and to demonstrate the facilities andoperation of the property. This may require the HomeBuyer to sign a document to confirm thedemonstration and the receipt of keys and otheritems.D RAFT 8.1 – 6 JANUARY 2009 P AGE 12 OF 20

CONSUMER C ODE FOR H OME B UILDERSd) Completeness of the Dwelling and Works.The Homer Builder shall explain to the Home Buyerthe provisions for the completion of any items of workoutstanding at handover, including roads andlandscaping. The Home Buyer shall be advised ofany warranty protection and bonds that providesecurity for the completion of such works.D RAFT 8.1 – 6 JANUARY 2009 P AGE 13 OF 20

C ONSUMER C ODE FOR H OME B UILDERS4 INFORMATION – DURING OCCUPATION4.1 After-Sales ServiceRequirementThe Home Buyer shall beprovided with an accessible aftersaleservice and explanation as towhat the service includes andwho to contact.GuidanceThe Home Builder should provide an after-sale service andlet Home Buyers know what it is and how to use it. Forexample, it should include:• who to contact during the first two years followingcompletion, including names, addresses andtelephone numbers,• the handling of emergencies and issues arisingunder the home insurance warranty,• the Home Builder may wish to give examples of whatqualifies as an emergency that the Home Builder willdeal with,• It should state clearly the duration of the after-salesservice.4.2 Health & Safety for Home Owners on Active DevelopmentsRequirementHome Buyers shall be informedabout health and safetyprecautions to be taken whenliving on a development whereconstruction work is continuing.GuidanceThe Home Builder should inform Home Buyers who occupya property on an active development site about the healthand safety precautions that they should take.The Homebuilder shall provide the Homebuyer with theHealth and Safety file for the property in compliance with theConstruction (Design and Management) Regulations 2007.D RAFT 8.1 – 6 JANUARY 2009 P AGE 14 OF 20

CONSUMER C ODE FOR H OME B UILDERS5 COMPLAINTS & DISPUTES5.1 Complaints HandlingRequirementThe Home Builder shall have asystem and procedures for thereceipt, handling and resolution ofHome Buyers’ service calls andcomplaints. The Home Buyershall be advised of this, and of theDispute Resolution arrangementsoperated as part of this Code, inwriting.GuidanceThe information provided should inform the Home Buyerthat:• in the first instance, all complaints should be made tothe Home Builder in writing to a defined person andaddress;• if the complaint is not dealt within a reasonable timeor the Home Buyer is not satisfied, they may ask forthe complaint to be referred to the Home WarrantyBody for their dispute resolution service; the HomeBuilder shall agree to this request;• if the complaint is about matters covered by theinsurance-backed warranty provided with theproperty, it will be dealt with under the terms ofthe warranty; the Home Warranty Body will advisethe Home Buyer how it intends to help with thecomplaint against the Home Builder;• if the complaint is about matters that are notcovered by the insurance-backed warranty, theHome Warranty Body will arrange for a speedy,low cost independent resolution process to beprovided.The Home Builder must co-operate with this process.• if at any time the Home Buyer takes legal action toresolve the complaint, the Home Warranty Body maysuspend the handling of the complaint until the legalprocess is completed.The Disputes Resolution scheme is explained in moredetail in Appendix A.5.2 Co-operation with Professional AdvisersRequirementThe Home Builder shall cooperatewith appropriatelyqualified professional advisersappointed by the Home Buyer orwith consumer representatives(such as Trading Standards,Citizens Advice or ConsumerAdvice Centres), to resolvedisputes.GuidanceThe aim is to make sure that there is proper, prompt andprofessional co-operation between the Home Builder andany appropriately qualified professional advisers appointedby the Home Buyer or with consumer representatives toresolve legitimate disputes.D RAFT 8.1 – 6 JANUARY 2009 P AGE 15 OF 20

C ONSUMER C ODE FOR H OME B UILDERSAPPENDICESD RAFT 8.1 – 6 JANUARY 2009 P AGE 16 OF 20

CONSUMER C ODE FOR H OME B UILDERSAppendix A – Consumer Code Redress Scheme1. A Home Buyer’s complaint shall be dealt withby the Home Builder in accordance withCode Requirement 5.1.2. In the event that a Home Buyer is notsatisfied with the Home Builder’s decision oractions, the Home Buyer can be referred tothe Home Warranty Body. The HomeBuilder cannot object to the complaint beingreferred and therefore cannot give orwithhold permission.3. The Home Warranty Body will either:• deal with the complaint under the termsof their home warranty policy, or• where the complaint falls outside theHome Warranty Body’s own disputesresolution scheme, refer thecomplainant to the approved DisputeResolution Scheme provider.4. The approved Dispute Resolution Schemeprovider will manage the case, including:• the assessment of the eligibility of thecomplainant’s rights under thisConsumer Code (as defined in theScope on page 4),• the collection of a referral fee from theHome Buyer and the Home Builder,• the appointment of the Arbitrator, and• the issuing of the award to both parties.5. The Arbitrator’s remit will includeconsideration of whether the Home Buyerhas suffered ‘Significant Detriment’. Thiscould be described as non-financial loss orinconvenience due to, for example:• major heating failure• or power failures,• serious plumbing leaks• the loss of use of certain key rooms inthe dwelling, particularly bathrooms andkitchens.6. In addition to the above, the Arbitrator mayalso consider financial loss due to out ofpocket expenses.7. In respect of a financial award encompassingboth types of claim, the maximum of any oneaward shall not exceed that which wouldordinarily be decided by a Small ClaimsCourt – typically £5000.8. The Arbitrator’s award would be issued inwriting giving a summary of the facts, theconclusions and the reasons for reachingthem. The decision is binding on both theHome Builder and the Home Buyer and isenforceable through the Courts.9. Where appropriate, the Arbitrator’s award willinclude a decision on costs over and abovethe initial registration fees from both parties.10. The Dispute Resolution Scheme process isnot suitable for:• personal injury claims,• loss of property value,• claims relating to the land sold (asopposed to the property),• any matter covered by another redressor ombudsman’s scheme, such asmaladministration by a selling agentcovered by the Estate AgencyOmbudsman Scheme.11. Home Warranty Bodies will have writtenprocedures in place to deal with anybreaches of the Code in a fair, effective,impartial and as quick a manner as possible,and provide them to Home Builders andHome Buyers both on request and when acomplaint is made about a breach of theCode;12. Home Warranty Bodies shall takeappropriate action against the Home Builderfor any proven breach of the code raised bythe Home Buyer or their advisers.The sanctions will be commensurate with thenature of the breach and may for examplerange from, warning letters to a requirementfor further training, temporary suspensionfrom registering properties or, ultimately,termination of the Home Builder’sregistration.The sanctions do not have to includefinancial penalties;13. Home Warranty Bodies will publish details ofany Home Builder removed from registrationas result of a breach of the code.D RAFT 8.1 – 6 JANUARY 2009 P AGE 17 OF 20

C ONSUMER C ODE FOR H OME B UILDERSAppendix B – Sample Charter ClausesThe following text gives some examples of how the Code Requirements may be incorporated into a CustomerCharter…Sample Customer Charter1. Adopting The Code1.1. We confirm that we have adopted theprinciples and good practice of theConsumer Code as part of our customercharter.1.2. We will give you a copy of our customercharter if you ask for one. We willautomatically give you a copy when youreserve a property1.3. We will work to set procedures to meetthe commitments we have stated in ourcustomer charter.1.4. We will train our staff to understand theirresponsibilities in our dealings with youand what the Consumer Code means foryou.1.5. Our marketing and advertising will beclear and truthful.2. Information Pre-Contract2.1. We will give you sufficient pre-purchaseinformation to help you make aninformed decision about buying theproperty.2.2. We will let you know:• who to contact at every stage of yourpurchase• how we will deal with your questions;and• any relevant choices and options youcan consider.2.3. We will give you reliable informationabout the Home Warranty provider’scover and any other guarantees andwarranties from which you may benefit.2.4. We will give you health and safety adviceto reduce, as far as possible, the risk ofdanger whilst you visit the working areasof the site during construction.2.5. We will seek to ensure that you appoint aprofessional legal advisor to carry out thelegal formalities of buying the propertyand to represent your interests.2.6. Once you have decided to buy aproperty, we will give you a ReservationAgreement that clearly sets out theterms of the purchase.3. Information at Exchange of Contracts3.1. Our contract-of-sale terms andconditions will be clear and fair.3.2. We will make clear to you yourcancellation rights. If you have paid areservation fee, this will be returnedwithin 14 days, but we may have todeduct to pay for expenses.3.3. We will explain how we protect yourcontract deposit and how we deal withany other pre-payments.3.4. We will strive to give you reliableinformation about the timing ofconstruction, legal completion andhandover of the property. Once acompletion date is set, we will ensurethat:• the transfer of ownership takesplace; and• the functions and facilities of theproperty are demonstrated to you.4. Information During Occupation4.1. We will tell you about the after-sale andemergency services that we willprovide and an explanation as to whatthis service includes.4.2. We will give you health and safetyadvice to reduce, as far as possible,the risk of danger on an activeconstruction site during the use of yourhome.5. Complaints & Disputes5.1. We will tell you about our proceduresfor dealing with customer complaints,including the availability of independentdispute resolution services provided bythe Home Warranty Body.5.2. We will co-operate with appropriatelyqualified professional advisors youhave appointed to help resolvedisputes should they arise.D RAFT 8.1 – 6 JANUARY 2009 P AGE 18 OF 20

CONSUMER C ODE OF P RACTICE5.3. If, despite our best efforts to resolvedisputes, you still remain dissatisfied, thematter may be referred to the WarrantyBody for appropriate action under theircomplaints handling procedures.5.4. Where, in the opinion of the WarrantyBody or an external DisputesResolution service, you have sufferedSignificant Detriment, a financialpayment shall be made by us as part ofthe redress process.Our commitments under the Consumer Code do not affect your statutory rights.We confirm our commitment to satisfy the relevant provisions of the Data Protection Act.D RAFT 6 – D ECEMBER 2008 PAGE 19 OF 20

C ONSUMER C ODE FOR H OME B UILDERSD RAFT 8.1 – 6 JANUARY 2009 P AGE 20 OF 20