Most conveyancers (and homebuilders) were taken by surprise by the unheralded announcement of the Homeowners Code, which applies from 1 April 2010. In theory, it is not compulsory, but in practice it is – since homebuilders cannot offer National House-Building Council (NHBC), premier guarantee, or Local Authority Board Control (LABC) new home warranties without adopting the Homeowners Code.

In general terms, the idea of the Code is to ensure that homebuyers are treated fairly, are given reliable information, and know what service levels to expect. Thus:

All sales and marketing materials must be clear and truthful (although this probably adds little to obligations under the Property Misdescriptions Act 1991).

There must be a written reservation agreement with an explanation of the home warranty cover, and a description of any management services and organisations (plus an estimate of their costs). This information has to be ready to be handed over in the sales office – which means that service charge estimates and audited accounts for the last three years, as well as the memorandum and articles of association of management companies, and a list of contents (eg white goods, curtains, carpets, etc) need to be available at an early stage.

There should be brochures, or plans, which reliably show the layout, appearance, and plot position of the property.

There must be a person within the homebuilders organisation who will deal with questions (with contact details).

Note that the homebuyer’s choice of legal representative must not be restricted. So, it is arguable that saying to a homebuyer you will only pay their legal costs if they use a particular law firm, will be regarded as restricting their choice, and thus will be in breach of the Code.

The reservation agreement must set out the reservation fee, state what is being sold, the purchase price, the deadline date when the reservation agreement comes to an end, and how long the price remains valid. The agreement needs to be signed by both parties, and after that time the housebuilder must not attempt to sell the property to another buyer within the time period stated in the reservation agreement. Note that the homebuyer has the right to cancel the reservation agreement at any time during the reservation period. The reservation fee must be returned if the reservation agreement is cancelled (so the practice of non-returnable holding deposits must end).

After completion, the homebuilder must provide an accessible after-sale service (including contact details for the first two years of the home warranty period, as well as an explanation of the process for handing emergencies).

Disputes are to be dealt with through dispute resolution (there is a registration fee of £100 + VAT for submitting an application for dispute resolution). See introductory article in [2010] SJ 23 March 16.