Landlords and New Builds - what protections are there?

What protections do landlords have when investing in a new-build property?

From this week those landlords buying a new build home can benefit from increased protections in the event of issues with quality or disputes with their developer. 

This is how the government’s New Homes Quality Board - a new quango - describes its work and how the will benefit landlords and owner occupiers alike. 

A new code of practice will put significantly more requirements on builders in terms of how they treat their customers and deal with any complaints, whilst a new, totally independent Ombudsman service will provide redress for customers in the event of a dispute. 

The New Homes Quality Board will oversee the new Code that puts consumers at the heart of the new build process. 

In the vast majority of cases homebuyers are well served by their developer and are happy with their purchase. But, given the nature of buying a new home, the largest purchase most people will ever make, the impact on the homeowner if it goes wrong can be significant. Current protections do not always go far enough so the NHQB has moved to improve this for customers. 

Over 100 developers are now registered and are working with the NHQB to ready themselves to follow the first builders to go live at the earliest opportunity. The scheme will initially cover England, Wales and Scotland, and ultimately the whole of the UK and those that are signed up to the scheme already will display the NHQB and Ombudsman branding. 

The government has committed to oversee the introduction of a statutory Ombudsman, and through the Building Safety Act, now has the powers to do so.   

Leon Livermore, chief executive of the New Homes Quality Board says: “Buying a new build home is a massive moment in many people’s lives and it ought to be a happy and memorable experience. The vast majority of those buying new build homes are satisfied with their purchase and their builder but in too many instances in the past that has not been the case. This new framework aims to drive up standards of construction and customer service and puts the buyers’ interest at its centre. 

“Whilst we recognise that the process of building and selling a new build home is a complex one and things can go wrong, in those instances we want to ensure builders respond quickly and customers have access to independent redress. 

“I welcome the fact that over 100 developers have already registered with us and encourage those that have yet to do so to get on board now rather than be left behind. Being registered with the NHQB will provide a builder’s customers with confidence in them and their product and I encourage those not yet signed up to do so. 

“Consumers can be assured that where they see our branding that their builder should be working to the new high standards our code demands of them or they can take their case to a strong and independent Ombudsman.  

“I firmly believe that the new framework will drive up standards, improve the experience and increase consumer confidence, providing benefits for consumers and builders alike. 

“Consumers can buy with confidence knowing any issues that do arise will need to be rectified quickly by their builder and that they have the new Ombudsman as a backstop, able to enforce a resolution of the issue if they decide that there has been a breach of the Code.” 

And the New Homes Ombudsman designate, Alison MacDougall, adds: “The New Homes Ombudsman Service (NHOS) will have a strong role to play in ensuring that consumer complaints about the experience of buying a new home are dealt with independently and effectively.  We aim to contribute to the promotion of best practice within the sector, and to identify issues arising from complaints which may merit further consideration across the industry.” 

“Consumers can expect to have their issues investigated efficiently and effectively and a number of redress outcomes are available for cases where the NHOS decides that a developer has not met the requirements of the New Homes Quality Code.  We are encouraged by the initial industry response to the new Code and the establishment of an independent ombudsman and look forward to working constructively with participants to improve the experience of consumers in such a key event in their lives.” 

The new Code ensures that every aspect of a new home purchase, from initial visit to the sales office to the end of their two-year warranty is covered. 

It also requires developers to have an effective after care service in place, one of the biggest gaps in the current arrangements, to deal with any issues as well as a robust complaints process that responds to customers concerns in a timely manner and to their satisfaction. 

The new code:  

- Protects customers, prohibits high pressure selling; requires any deposits the customer pays to their builder to be protected. 

- Requires the developers to provide all relevant information about the home during the sales process – including its tenure and any future management or service charges – allowing them to make an informed decision about their purchase. 

- Sets out requirements for a fair reservation agreement, including a ‘cooling off’ period; and sales contract requirements. 

- Allows customers to engage a professional to carry out a pre-completion inspection of their home on their behalf. 

- Specifies that a home must be ‘complete’, preventing developers paying customers to move into a new home early. 

- Replaces the large number of previous codes, hence simplifying and boosting consumer confidence. 

Stewart Baseley, executive chairman of the Home Builders Federation states: “The requirements of the new code and framework are hugely challenging for businesses, but the industry is absolutely committed to implementing the proposals and the much greater protections they will provide for its customers. 

“HBF initiated the early work that led to the formation of the independent New Homes Quality Board and continues to be supportive of its work.  

“The new arrangements will deliver a step change in the approach by industry and lead to even higher quality new homes and better customer service. 

“Whilst challenging, the new arrangements will provide all parties, in particular our customers with even more confidence in buying a new build home. Allied to the thousands of pounds buyers save on their energy bills, the protection of the robust new consumer code and access to an independent ombudsman make buying new a really attractive option.”

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