Tag Archives: Consumer Code for Home Builders

Consumer Code For Home Builders Revised

New homebuyers are short-changed as the latest revision to housebuilders’ ‘non-mandatory’ Consumer Code is published.

A year ago, I wrote an article that I showed the Consumer Code for Home Builders (CCHB) is failing new homebuyers.  The all-party parliamentary group (APPG) Inquiry Into the quality of new homes concluded in its Report that: 

  • “The evidence points to an industry…..which will at times ride rough-shod over dissatisfied buyers”
  • the Code [Consumer Code for Home Builders] does not appear to give homebuyers the safeguards we think they should expect”
  • “it does not appear to us objectively to offer consumers a wholly satisfactory form of redress”
  • “The Consumer Code for Homebuilders is limited in its scope”

Well it’s about to get a whole lot worse!
In September 2015, the CCHB announced a triennial review of  Code, at that time changes were expected to come into effect in 2016 – “to ensure it continues to evolve with the industry and changing consumer needs and as a result of adjudication cases.” It claims “The industry has now made great strides in producing an updated Consumer Code which is fit for purpose in today’s world”   Talk about hype!Changing consumer needs? Fit for purpose?
Consumer CodeLast week the CCHB published the 4th incarnation of their consumer code, which I believe now contains specific revisions which severely diminish the likelihood of a successful claim by new homebuyers seeking redress and justice from errant housebuilders. The changes, place additional restrictions that can best be described as obstructive, the sole purpose of which is to protect the industry from the very few homebuyers that go through the rigmarole of Code’s dispute adjudication process.

The Home Builders Federation (HBF) fingerprints are all over these revisions. The HBF latest Annual Report confirmed the “HBF sits on the Code advisory forum to ensure house builder’s interests are represented. We submitted a response to the ongoing review Consultation and are working to ensure that any changes are workable for the industry.”
Well that’s mission accomplished! 

Code approval and compliance with EU Directive

Revising the Code provided an opportunity for the Code to evolve and attempt to meet the requirements of the Chartered Trading Standards Institute’s (CTSI) Standards for Alternative Dispute Resolution (ADR). Approval by the CTSI is required to comply with EU DIRECTIVE 2013/11/EU (21 May 2013) on ADR for consumer disputes. This requires the ADR to be provided by a certified body to show it meets the principals set out in the Directive and associated regulations. ADR schemes cannot achieve certification unless they meet strict criteria for impartiality and independence.

“In 2014, the Code’s management board took the decision to gain approval through the Chartered Trading Standards Institute (CTSI) Consumer Codes Approval Scheme (CCAS). It was important to show how the Code helps strengthen consumer protection and improve customer service standards by approval of the CTSI under their CCAS. This facilitates self-regulation.” 

Despite the latest revisions, the Consumer Code for Home Builders has not been approved or accredited by the CTSI. Indeed, the now defunct Office of Fair Trading (OFT) withdrew its endorsement of the scheme in 2010 before it was even launched! This was because the Code’s dispute resolution service would only deal with complainant claims below £15,000. The OFT had wanted a cap of £150,000. At the time, Rod MacEachrane, a former NHBC commercial director and chair of the CCHB management board, confirmed that the OFT was:
“no longer part of the equation. It (OFT) said we were not meeting our commitments under the market study” [OFT report in 2008]. MacEachrane told Building magazine that “a cap of £15,000 would deal with 95% of disputes and was vital to ensure it remained a low-cost dispute resolution service.”
Low cost for house builders that is!

To add to the confusion, complaints can be covered by a different and separately operated Code – the Consumer Code for New Homes  (CCNH) – which is not available to buyers with NHBC, LABC or Premier Guarantee warranties. Under the CCNH claims  “are subject to a maximum aggregate award of £50,000 inclusive of VAT and maximum awards for financial loss of 25% of the purchase price of the Home and maximum awards for emotional distress and/or claims for inconvenience of £1,000” –  far more generous than the “protection” buyers allegedly have with the CCHB!

The CCHB annual report (2015)  said:  “Consumer Code is a central part of the core criteria for the Help to Buy schemes in England Scotland and Wales.” Nevertheless many housebuilders regularly breach one or more of the Code’s 19 requirements as can be seen from the Adjudication Case Summaries which show multiple Code requirement breaches in the 57 homebuyers’ claims that succeeded in 2016. Nevertheless, the awards in these successful cases represent less than a fifth of the total amount claimed by new homebuyers. 

So what are the changes to the Consumer Code for Home Builders?

The new CCHB 4th edition April 2017  comes into effect on 1st April 2017, but there is a transitional period and for reservations made before 1 July 2017complaints will be assessed against the previous version (Version 3) of the Code.” 

Re definitions:

Consumer Code with Builder's GuidanceFirstly there are a few re definitions most notably that the “Dispute Resolution Scheme” is now referred to as the “Independent Dispute Resolution Scheme”, no doubt an attempt to give the impression of independence from industry interference and to head off the growing calls for a New Homes Ombudsman  to be appointed by government, which will make the CCHB entirely redundant. The needs of ‘vulnerable customers’ should now be considered at all times. In the absence of any definitive guidelines, we can only presume that housebuilders will have to formulate their own views of defining vulnerable customers. But I doubt naïve first-time buyers will be considered “vulnerable.” 

Scope of the Code

The Code does not apply to investors now defined as buying more than one property on the same development for investment purposes. 

Making the Code available – Code Requirement 1.2

Strikingly, for a Code that so few new homebuyers are aware of, with just 55% being given the Code on Reservation (requirement 1.2) according to responses to Q19 of the HBF survey, the requirement to display the Code and give a copy to anyone who asks for it has been removed. The Code scheme Logo must now be displayed in housebuilders’ and agents’ sales offices and in sales brochures, but the requirement for the housebuilder to inform their customers that further guidance is available and how they can get this has also been removed.

Homebuyers must still be provided with the Code (Code Scheme) with the Reservation agreement “but this can be done by electronic means” – a link to the Code website or an attachment in an e mail presumably. In addition, there is no requirement to provide the version of the Code that contains the ‘House builder guidance’ – essential for those wishing to make a claim using the CCHB Dispute Resolution Scheme. The version with ‘builder guidance’  can be found here but can hardly be considered easily accessible!

Consumer Code for Home Builders LogoI recently visited an 18-month old Barratt sales office and can confirm they were no CCHB logos anywhere to be seen. On mentioning the CCHB to the sales advisor, I was given their only hard copy, a second edition CCHB dated April 2010! However, it was confirmed that the CCHB was given to all buyers with warranty details at reservation. 

Sales and advertising – Code requirement 1.5

High pressure selling techniques are now excluded to meet CTSI requirements. Previous references to the Property Misdescriptions Act 1991 and the Consumer Protection from Unfair Trading Regulations 2008 have been replaced with “comply all relevant legislation” 

Pre purchase information requirement 2.1

All “event fees” such as deferred management charges and fees on re sale must be declared at the Reservation Stage. This is especially relevant to retirement homes, a sector that has been heavily criticised. It will also be relevant to other leasehold new homes especially leasehold new houses.

The requirement to be shown “the layout” has been qualified to now show a “general layout” following adjudication decisions made on historic complaints using the dispute resolution scheme, no doubt designed to reduce the likelihood of a claim succeeding. 

Health and Safety – Code Requirement 2.4

There is a clarification that access to areas under construction may be properly barred or restricted. In other words, you cannot view or inspect your new home until all works are completed. As is often the case, works are ongoing right up to and after buyers legally complete and are given their keys, this has the potential for confusion. No doubt all housebuilders will use this requirement as and when it suits them to do so.

Pre Contract Information – Code Requirement 2.5

It is illegal for a housebuilder to require any homebuyer to use a specified firm of solicitors. Nevertheless, under the Code, buyers can be induced to do so by builders offering incentives such as legal fees paid, part-exchange or stamp duty paid.

Reservation – Code requirement 2.6

Various clarifications including how long the price is valid and the likely range of monetary deductions from the reservation fee, if the sale is cancelled. Most important to note is that due to “a high number of adjudications have been found against home builders”, the guidance now suggests that “appendices and schedules be attached to the reservation agreement” evidenced by both the housebuilder and the homebuyer in recognition of them having been seen and received and to act as proof “that the home and its specification was agreed and explained at the point of reservation.”

The Contract – Code requirement 3.1

Reference to specific legislation has been removed. Namely the Unfair Terms in Consumer Contracts Regulations 1999. No doubt to make it more difficult for buyers to find out how they have been wronged.

Timing of construction – Code Requirement 3.2

Due to issues surrounding “completeness” of the home at handover, guidance has been extended to suggest that the housebuilder should explain to the homebuyer that there may be “minor items outstanding.” No doubt if there is a written record, this may head off claims from buyers moving into incomplete homes. The definition of “minor items” was not clarified. Builders are guided to inform buyers that they should “give reliable and realistic information when construction of the home may finish”, but housebuilders should “make it clear that they cannot be precise.” So how can it be reliable?

Health and Safety for homebuyers- Code requirement 4.2

Reference to specific legislation, namely the Construction Design and Management Regulations 2007, has been removed. Too many pesky new homebuyers were no doubt using the legislation to report contraventions to the HSE.

Changes to the Dispute Resolution Scheme

The most shocking changes concern the so-called “Independent Dispute Resolution Scheme.”    From April 2017, a claim cannot be brought until 56 days has passed since first raising it with the housebuilder and no later than 12 months after the housebuilder’s final response. Previously homebuyers had just three months to do this. These changes bring the Code in line with the timeframes set out in the Alternative Dispute Resolution Directive.

The award for “Inconvenience” can no longer be claimed by homebuyers! Considering that in 34 of the 57 successful cases in 2016, the £250 maximum payment was all they were awarded, this is certainly a retrograde step, designed to reduce the payments housebuilders are required to make. The very inconvenience of making a claim using the CCHB is enough on its own to justify the payment. However the good news is from 1st July 2017 the maximum for inconvenience is to be doubled to £500, in line with current best practice in other IDRS. The bad news is any “awards will be made by the adjudicator at their own discretion and consideration and where a breach of the Code has been identified.” Worse, a buyer cannot receive an award for “emotional upset and stress, as awards are to be judged as a matter of fact and on the resulting financial loss caused.” Strangely 4.6 of the guidance states that “home buyers may not receive an award for inconvenience alone” but the case summaries would indicate the opposite!

Finally the onus is now on homebuyers to correctly identify which Code requirement has been breached when making an application for dispute resolution, apparently “to avoid generalised complaints which may have little or no specific relevance to the Code.”

Once the homebuyer accepts an award decision, in writing, the housebuilder must pay the award in full, within 20 working days of the adjudicator’s notification.

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Annual Report 2015/16 – Consumer Code for Home Builders

The first  Annual Report by the Consumer Code for Home Builders since April 2014, was finally published this month.

In May 2014, I asked the question, Is the Consumer Code for Home Builders (CCHB) fit for purpose? In March this year I wrote that the Consumer Code for Home Builders is failing new homebuyers. This voluntary code was launched in April 2010 and has been inadequate and failing new homebuyers ever since.

In July, a report published by the APPG Inquiry Into Quality of New Homes found that:

  • “The Code [Consumer Code for Home Builders] does not appear to give homebuyers the safeguards we think they should expect.
  • It does not appear to us objectively to offer consumers a wholly satisfactory form of redress.
  • The Consumer Code for Homebuilders is limited in its scope.”
APPG Inquiry Report Publication 13 July 2016

APPG Inquiry recognises a government-appointed New Homes Ombudsman should be set up.

The APPG Inquiry “Key recommendation” is the setting up of a government-appointed New Homes Ombudsman.  It said that the Ombudsman:  would need to be completely independent and replace the dispute resolution service offered as part of the Consumer Code for Home Builders.”

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APPG Inquiry – ten recommendations to improve the quality of new homes

The All Party Parliamentary Group Inquiry Into the Quality of New Homes In England has made ten recommendations and says house builders should be “upping their game and putting consumers at the heart of the business model. Alongside this, Government should use its influence to promote quality at every opportunity.” The cross party committee of MPs and construction experts called on the Government [DCLG] to set up a New Homes Ombudsman to mediate in disputes between homebuyers and housebuilders. This is the number one “key recommendation” of 10 recommendations setting out measures to improve the quality of workmanship in new homes and provide consumers with easier and cheaper forms of redress, to get defects and problems fixed. 

APPG Inquiry Report Recommendations:

Recommendation 1: DCLG should initiate steps to set up a New Homes Ombudsman.

APPG Inquiry Report Recommendations“The role would include mediating disputes between consumers and their builders or warranty providers to offer a quick resolution procedure paid for by a housebuilders’ levy. We see this is as the key recommendation to provide more effective consumer redress, if things go wrong, and a good way of applying pressure on housebuilders and warranty providers to deliver a better quality service. Our view is that the new service should be funded by a levy on the sector, but it would need to be completely independent and replace the dispute resolution service offered as part of the Consumer Code for Home Builders. Our recommendation picks up on one made by the Office of Fair Trading, in its 2008 market study into the house building industry, which suggested that, if the industry failed to make satisfactory progress, it would recommend further intervention in the form of a statutory redress mechanism for new homebuyers funded by a levy on the industry.  

Although funded by the construction industry [housebuilders] it should be a public body not under the industry’s control. It should provide a cheap, quick and effective system of redress and have power to enforce standards and award compensation. This would put pressure on housebuilders to up their game in the first place and spur them on to improve workmanship and increase levels of service.” 

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More homes – Fewer complaints : APPG Inquiry Report

APPG Inquiry ReportMPs call for the DCLG to set up a New Homes Ombudsman in APPG Inquiry Report published on 13 July 2016.

At long last seven months after the last evidence session on 14 December 2015, the All Party Parliamentary Group for Excellence in the Built Environment (APPGEBE) has finally published the findings and recommendations in the report following its: “Inquiry Into the Quality of New Build Housing in England”

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Builders shares crash as Britain votes to leave the EU

It would appear that the house builders’ share price rise since the financial crash of 2008, has been built on the same dodgy foundations as some of their houses are. A business model built on selling sub-standard houses to sub-prime borrowers.

This was illustrated during the first two days of trading following the UK’s historic vote leave the EU. Worst hit in the initial market panic were Banks and shares in the listed house builders. Despite this, some ever-greedy directors used the Friday crash to buy more shares on the cheap, known as “catching a falling knife” and promptly lost another 15%! Taylor Wimpey Non-Exec director Dame Kate Barker, 59, who produced the Barker Review on housing supply in 2004 – which resulted in the industry setting up the HBF Customer Satisfaction Survey two years later, but has failed to have any impact on improving either supply or quality – bought 20,000 Taylor Wimpey shares for £26,953 but the shares closed down 15% leaving her with a paper loss of £3,800.

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Reasons why new homebuyers should never use the house builder’s choice of solicitor

It can be tempting to use the solicitor that the house builder’s helpful, friendly sales advisor suggests. Buyers could be moving to a new area or they may never have needed a solicitor before. Whilst it is not generally a good idea to choose a conveyancing solicitor on the basis of cost, it is essential that all new homebuyers choose solicitors that are completely independent of the house builder, one that will act solely in the buyer’s best interests.

How to avoid using the builder’s pet solicitor

It is a good idea for new homebuyers to ask for the house builders’ list of “preferred” solicitors. They can then be certain not to choose one of those firms and know that the solicitor they do use definitely does not have any conflict of interests. I frequently come across new homebuyers who have problems that occur or are made worse, not least because they have been coerced or financially incentivised into using the house builder’s choice, suggested, preferred or “nominated” solicitor. 

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No Regulator or Ombudsman for complaints about house builders

It is not just house building that has dissatisfied customers. However,  most other industries have an Ombudsman and official Regulator.

If you bought a new home in the last ten years, the following statements will have a familiar ring to them. After all, the house building industry has a dreadful reputation for both quality and customer service, yet makes every effort to smokescreen and spin the opposite.

  • “Stop solving problems…just make the customer happy”
  • “staff are under pressure to bat away complaints and instead focus on appeasing callers to boost satisfaction ratings”
  • “persuading customers to believe all is fine is more important than getting to the bottom of their problems”
  • “All [the company] care about right now is the net promoter score. Staff are rated on this survey it sends out after a call or web chat. Well actually, on the first question only, “How would you rate [the company] to a friend?”
  • “one of the advisors I spoke to made promises they didn’t deliver. I wonder if this is the way they are trained – to reassure the customer but actually not to do anything.”
  • “other support departments are unhelpful and more interested in their own KPI, pretending they care about customers, but the reality is they are treating them appallingly”

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The Consumer Code For Home Builders Is Failing New Homebuyers

PrintClose examination of the 2015 published case studies for Consumer Code for Home Builders Adjudication Scheme (CCHBAS) shows exactly what is wrong with the house building industry. It is now time for a New Homes Ombudsman to independently deal with homebuyers complaints and award justifiable and fair levels of compensation. At present, the maximum new homebuyers can claim using the CCHBAS is £15,000. The maximum compensation for “inconvenience” is just £250 – this being all that was awarded to a quarter (27%) of the successful claimants in 2015.

A total of 47 complaints made by new homebuyers were adjudicated in 2015. Of these, 41 were successful or successful ‘in part’ due to a total of 110 violations over 17 different Code requirements. Only one Code requirement (3.4) was not mentioned in any of the case studies.

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HBF mislead the public with misinformation, spin and ignorance on BBC Radio 4 “You and Yours”

“There are lies damned lies and statistics”…Mark Twain

HBF logo 1A spokesman for the Home Builders Federation (HBF) made some exaggerated, misleading and  untrue statements regarding homebuyers’ satisfaction and protection when interviewed for the BBC Radio 4 “You and Yours” programme on new-build homes aired on 2 March 2016. These merit detailed clarification and rebuttle.

The BBC reporter said that “the house building industry says that only around 1% of complaints are around serious issues, structural faults for example and that generally standards are very high.”  Even if true, it would still indicate that out of the 143,560 new homes built in 2015, “around” 1,435 will have structural faults that cannot be “guaranteed” not to crack, creak, crumble or fall down, requiring major remedial works. Often this means the new homeowner has to move into temporary accommodation as is the case with Evelyn Lallo who has been in ‘temporary’ accommodation since June last year whilst Taylor Wimpey carry out extensive remedial structural work.

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Interview For BBC Radio 4 “You and Yours” On New-Build Homes

BBC Radio 4Broadcast on Wednesday 2 March 12.15pm

Can we start by you telling our listeners a little about yourself?

I worked in construction management for 35 years. Having retired; I now provide help, advice and information for UK new homebuyers through my website brand-newhomes.co.uk. I have been campaigning for better quality new homes for over 10 years and I am currently lobbying Parliament for the introduction of a New Homes Ombudsman.

I’m really interested in the point you make about the rush for house builders to complete before the year-end. Are there certain times of year to avoid completing on a new build?

Yes. Avoid buying any new home that is due to be completed in May or June and November or December. This is the time when most of the plc house builders have their financial year-end or half-year either being best avoided at all costs, especially if the home is not plastered at least five weeks before the anticipated Legal Completion date.

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