From January 2022, housebuilders and developers who build new homes will be expected to register with the New Homes Quality Board (“NHQB”).
Registered Developers agree to follow the New Homes Quality Code (the “Code”) and to be subject to a New Homes Ombudsman Scheme.
The new Code includes several requirements which will be relevant on developments where there are freehold service charges for estate items such as public open space, play areas or SUDS. Requirements include:
- When describing the new home, developers must properly inform and not mislead Customers, providing information about any management services and service charges. (1.2 I & j)
- Reservation agreementsmust include ‘the nature and annual estimated cost of any management services, or in Scotland, Factoring Costs, together with other costs that a customer must pay’. (2.2p)
- In relation to the pre-contract of sale, the developer must give a customer’s legal adviser suitable and relevant information to help the customer to make fully informed purchasing decisions and take the actual and anticipated costs associated with the property. (2.6(ii))
o This will include a description of any management services and organisations to which a customer will be committed.
o An indicative costs schedule associated with the tenure and management of the new home is also required, although it does not need to set out estimated possible costs which will arise and depend on decisions of a Management or Service Company that fall outside the scope of necessary costs associated with the maintenance and upkeep of the New Home, including any facilities. However, the extent of any such landholdings and obligations must be set out clearly, for example where it extends to street lighting, parks, landscaping or other such matters.
- At legal completion the developer must provide a customer with a statement of incomplete worksas part of the development under the relevant planning consent, and indicative timescales for their completion. This applies to, for example, roads, open spaces, recreational areas and landscaping. The developer should ensure that the customer is kept informed of progress in fulfilling commitments in the relevant planning consent. (2.12)
- The developer must advise a customer of known future phases of workon the development committed to by the developer. As construction work is undertaken, the developer should identify and consider reasonable steps to mitigate any significant adverse impact on the customer. (2.12)
- Where known, the developer should endeavour to keep the customer informed of the design and impactof any utility boxes or other estate infrastructure (such as lamp posts, bins and bike shelters) installed after legal completion which could materially impact the new home. (2.12)
The requirements will ensure that all customers receive a lot more information up front about service charges on new developments and help to create greater consistency at the point of sale. Developers will need to share their forward plans with customers and be clear about the management charge from the outset. Forward planning to get the necessary information in place and the management arrangements set up legally will also be needed. Better communication all round will be critical to the successful application of the Code.
Further details can be found here: https://www.nhqb.org.uk/new-homes-quality-code-published/