Since the Barker Review in 2005, the industry has taken strides to improve customer satisfaction. However, now more than ever before, it is vital to maintain excellent standards of delivery and ensure a high level of customer satisfaction is being achieved across the board. Particularly, it is important that the industry continues to demonstrate its voluntary commitment to these twin objectives. For these reasons, the major industry trade bodies and the Council of Mortgage Lenders (CML) have joined with warranty providers NHBC and Premier Guarantee and LABC New Home Warranties to develop The Consumer Code for Home Builders.

The origins of the Consumer Code go back to March 2005 when Kate Barker conducted a review of the housebuilding industry for the government that addressed key issues such as land supply, planning and customer satisfaction. One of the main recommendations of the review included giving the industry three years in which to improve customer satisfaction and to introduce an Office of Fair Trading (OFT) compliant consumer code; a condition being that the OFT would recommend the introduction of a compulsory Code if there was no notable improvement within those three years. Since then, the industry has vastly improved its customer care and introduced a national Customer Satisfaction Survey with the now achieved aim of increasing satisfaction levels from 56% to 75%.

To assist this process, the HBF and NHBC introduced voluntary Codes of Conduct and a Customer Charter, which satis
ed major parts of the OFT scheme. Two years later, however, the Barker Review was overtaken by the government’s own Callcutt Review and then shortly after, the OFT’s market study which investigated the state of competition and consumer protection in the housebuilding industry. Whilst giving the industry a relatively clean bill of health and providing some extremely valuable insights, the report concluded that there were still areas needing improvement.

These included the sales process and after-sales service, the adequacy and reliability of information provided to customers and the lack of a redress system for matters not covered by the warranty. In its conclusions, the OFT gave the UK housebuilding industry a choice; it should either produce a voluntary code of conduct, or the OFT would recommend the government step in and produce legislation and an industry levy. Strongly supported by the HBF, Federation of Master Builders, House Builders Association, Homes for Scotland, Construction Employers Federation (NI) and the HBF Retirement Housing Group and with the crucial backing of NHBC and Premier, we have held negotiations with the OFT over an 18 month period and developed an industry led Code.

However, last autumn, the OFT announced that it was going to recommend to government that a statutory redress scheme be developed and implemented instead. The exact reasoning for this course of action remains a little unclear; however CLG, to whom the OFT recommendation was handed, has indicated their satisfaction with the direction in which the industry is travelling and progress made, and has indicated a preference for the industry led Code, which will be launched in March 2010 and come into effect on 1st April. Geoff Egginton, NHBC’s regional director for the North East and Consumer Code project manager, says: “An industry led Code is most definitely the best solution in the circumstances and with the in-depth training that will be made available to housebuilding professionals in the new year, the transition for builders to become Code compliant should be a smooth one.

best practice

“Mostly this is about codifying best practice, but there are some new points of principle that we have had to introduce as a result of the OFT market study. “Training will cover how to adopt the Code into your Customer Charter, how to properly train staff to deliver to the requirements of the Code, and how to make sure all information, pre-and post contract, is Code compliant. There will also be advice on how to deal with after sales service and handle complaints.” For housebuilders, this will mean that a Customer Charter will need to be developed, or updated to include information for customers on the provision of delivery dates, rights to terminate contracts, the reimbursement of reservation fees and deposits, and the external redress scheme. Housebuilders may also need to make some minor changes to their Reservation and Contract of Sale documents to maintain transparency with customers. This will involve ensuring documents are amended to cover everything from reliance on any oral statements, to giving clarity in service and management charges. Whilst this will mean changing some documentation and modifying some processes for housebuilders, it is important this Code is implemented sooner rather than later. Not only will it ensure that home owners are as happy as possible with the homebuying process, but it means that the industry can take the lead on its own improvement, rather than being directed by government. The alternative to an industry led scheme could have been much more complex, harder to implement and more costly to administer, so this is a positive move for both the industry and consumers. To help the industry understand the expectations and requirements of the Code, NHBC and Premier will be launching a series of detailed training seminars and workshops for operational staff in the new year. These seminars will also be linked to an e-learning module which will be useful for builder staff training and help ensure the industry is prepared to comply with the Code when it comes into effect in April 2010.

What is the Code?

• A set of 19 requirements and principles that will ensure the industry deals effectively with its customers throughout the entire home buying process
• The Code requirements come into effect on the 1 April 2010 and apply to all new private home buyer reservations from that date
• Where there are disputes about whether a builder has complied with the Code and the home buyer is out of pocket as a result, there is an independent dispute resolution service
• From pre-to post occupation, the Code will help ensure a consistently high level of customer service is maintained by monitoring customer satisfaction and industry compliance
• The Code will be enforced by a change in the rules for NHBC and Premier; gross non-compliance of the Code can end up in the ultimate sanction – being removed from both warranty bodies’ registers;
• Customer satisfaction and industry compliance with the Code will be measured and data on performance reported back to the industry, government and consumer interest bodies.

How does it work?

The Code Scheme will be financed and operated via warranty bodies and led by a Management Board and supported by an Advisory Forum. The Advisory Forum, chaired by Mike Freshney, is the industry wide representative body that represents, consults and advises on Code content, its practical application and operation, through which changes and improvements will be channelled.

When will it be introduced?

Whilst details of the Consumer Code Scheme are still being finalised, the Code is due to be launched by the end of March 2010 and operational from 1 April 2010.

How much does it cost?

The cost of the scheme is likely to be below £5 per unit, including the recovery of set-up costs – hence it should be much more cost effective than a standalone scheme imposed on the industry. Further information regarding the training dates will be available soon.

For more information on the Consumer Code for Home Builders visit www.newhomesconsumercode.com