Estate agents selling new-builds on behalf of developers could be held liable for claims of up to £50,000 from disgruntled buyers when a new code of conduct launches this week.
The Consumer Code for New Homes (CCNH) is a new body that has been set up with the backing of industry warranty bodies such as Assure Build Ltd, Protek Warranty, Global Home Warranties, FMB Insurance (part of the Federation of Master Builders) and BLP Insurance (Building LifePlans Ltd).
It sets standards that developers have to follow in marketing, building and selling homes, and also provides buyers with access to an independent arbitration process that could order developers to pay up to £50,000 compensation for disputes.
A spokesperson for CCNH said while it is developers who sign up to the code, estate agents acting on their behalf could be held responsible.
She said: “The developer is responsible for actions of all staff and contractors, which would cover the estate agent’s role.
“However, estate agents are also covered by their own code.
“The Property Ombudsman has Chartered Trading Standards Institute Code (CTSI) approval for sales agents plus the Estate Agents Act provides a legislative framework for those engaging in estate agency work.
“We would look at each case and work with The Property Ombudsman to agree the best way to proceed.”
The independent arbitration service is run by the Centre for Effective Dispute Resolution.
A buyer can make a complaint about any breaches of the code by a developer within two years of a new-home purchase. This could mean claims about aspects of the property that weren’t made clear in marketing or at the time of the purchase.
First the buyer must have complained to the developer and wait for a response within 56 days.
If the complaint can’t be resolved then an independent adjudicator will look at the matter.
The adjudication scheme costs a buyer £100 for a case fee, which is refunded if their complaint is upheld.
It can make an award of 25% of the contract price of the new home subject to a maximum award of £50,000 or awards for emotional distress and/or inconvenience, subject to a maximum award of £1,000.
Any developers signed up to the code must provide clear information to buyers about the property such as the standard of construction and leasehold information and costs.
Developers must also provide an after-sales process and details of what buyers have to do to maintain the property.
Those who sign up to the code will receive approval from CTSI, which can then be removed for non-compliance.
The code only applies to developers who sign up, and not all have. A list of members can be viewed here:
Sarah Langley, managing director of CCNH, said “We are thrilled to receive approval from the Chartered Trading Standards Institute. This external accreditation recognises the additional consumer protection measures within the Consumer Code for New Homes framework and our genuine desire to raise standards in the new-build sector.
“We look forward to celebrating its formal launch this week.”
Read the CCNH code: