There are a number of stages to buying a new home. These can include the following:

1. an opportunity for the customer to reserve a particular plot early. This is sometimes called an early bird or plot-option arrangement (see section 2.1).
2. entering into a Reservation Agreement. This is a contract between a customer and the developer, where a home is reserved (see sections 2.2 to 2.5).
3. the developer makes specific information about the proposed purchase (pre-completion information) available to the customer or their legal adviser (see section 2.6).
4. the developer and customer enter into a contract of sale. This is the formal legal document committing both parties to complete the sale unless exceptional circumstances apply (see section 2.7).
5. notice of the completion date is issued. This is the formal notice which tells the customer that their new home will be ready for completion (and for them to move into) from a specific date (see section 2.7a).
6. an opportunity for the customer to visit their new home before completion. They can also arrange for a suitably qualified inspector to carry out a pre-completion inspection, using the template Pre-Completion Inspection Checklist, before the completion date (see section 2.8).
7. completion. This is when ownership of the new home transfers from the developer to the customer and the customer can move into their new home (see section 2.11).

This part of the Code sets out the requirements and expectations that relate to these stages.

2.1 Early bird arrangements

Developers may offer customers an option to be told when a plot (or plots) on a development is available to buy, before it goes on general sale. This is sometimes known as an early bird or plot-option arrangement.

Developers can charge a fee for these arrangements but must meet the following conditions:

1. they must not charge more than £150 (or any future maximum amount that we may set).
2. they must make it clear to the customer, before the customer pays the fee, how long they have to accept the early bird offer and how long they will have to change their mind and still receive a full refund of the fee they have paid (see below).

If a developer charges a fee, they must refund this in full if the customer tells them, within 24 hours of being told the plot is being released for sale (or within a longer period that the developer tells the customer before they pay the fee), that they do not want to go ahead with the purchase. If the customer tells the developer they do not want to go ahead with the purchase after this time, the developer may deduct administration costs from the refund, as long as they explained this to the customer when they paid the fee.

If there is any difference between the rights and expectations customers have regarding early bird arrangements and the information given in this Code, this Code will take priority.

2.2 Reservation Agreements

If a customer wants to reserve a new home, they must enter into a formal Reservation Agreement with the developer.

The customer and the developer must not enter into a Reservation Agreement until all the information outlined in the list below has been provided.

The developer must make sure that the terms of the Reservation Agreement are clear, fair and written in plain language, and that they keep to all relevant legislation.

The developer and the customer must sign the Reservation Agreement (digitally or in person), and the developer must give the customer a copy.

The terms of the Reservation Agreement must include the following details:

1. who the customer is buying their new home from.
2. the amount of the reservation fee.
3. the customer’s right to cancel within the reservation period.
4. the terms under which the reservation fee can be refunded, and any administration fees or similar costs that the developer may deduct from the refund.
5. that there is a 14-day cooling-off period, during which the customer can cancel the agreement and receive a refund of the full reservation fee.
6. how the customer can cancel the Reservation Agreement, including as a result of a major change (as set out in part 2.9).
7. that the sale is ‘subject to contract’ (England, Wales & Northern Ireland only). This means that although the sale has been agreed, it is not legally binding until the contract has been signed.
8. details of the new home, including the type of property, plot number, development name, postal address (if available) and parking arrangements.
9. the purchase price of the new home.
10. how long the price and the Reservation Agreement are valid for.
11. how and when the Reservation Agreement will end.
12. contact details for the provider of any warranty for the new home, together with a summary document of the warranty cover provided.
13. the date by which exchange of contracts (conclusion of missives in Scotland) must take place. This date must be reasonable in the circumstances of the transaction, taking account of when all the information listed in part 2.6 is provided, and not less than six weeks after the reservation date (28 days plus 14 days cooling-off period) unless the customer asks for an earlier date. If exchange and completion take place within the cooling-off period, it must only be with the express consent of the customer.
14. any matters that the sale depends on, for example details of the part exchange (if this applies).
15. details of how the customer can include in the contract of sale any spoken statement that is to be relied on.
16. the estimated yearly cost of any management services (factoring costs in Scotland), together with other costs the customer will have to pay.
17. the tenure of the new home (for example, leasehold, freehold, commonhold and so on) and all costs associated with this, including how these costs may change in the future.
18. any event fees that might apply and how these will be assessed.
19. the process for asking for changes to the new home, and the type of changes the customer can ask for (for example, paint colour, design changes, specification changes).
20. the mechanism by which shared spaces, roads and amenities on the development are to be managed (i.e. local authority, management company, etc.).

The developer must also provide an Affordability Schedule for any expected costs. This is a list of any costs that are likely to be directly associated with the tenure and management of the new home over the five years following the sale, and which the developer can reasonably be expected to be aware of.

The Affordability Schedule must include the following details:

1. details of any ground rent, including the amount, the payment dates and the formula used to calculate it.
2. estimated amounts of any additional costs that the developer knows or expects will arise directlyfrom the sale. This includes management fees (for example, to maintain the landscaping and highways that the local authority is not responsible for, and so on), event fees and other charges. This information must bring to the customer’s attention any service charges that may increase or be charged in the future as more facilities become available or sinking fund charges that may be introduced for repairs or maintenance. If the developer does not know the actual value of costs or charges, they must give the customer a schedule of costs without including the values.
3. details of known or expected costs or charges for regular maintenance of built-in equipment at the development, such as the shared heating system, equipment which collects grey water (water from sinks, baths, showers and washing machines), air-source heat pumps and so on, if these are not already included in the management fees or event fees (for example, following a change of circumstances). If the developer does not know the actual value of costs or charges, they must give the customer a schedule of costs without including the values.
4. estimated costs for maintaining the property (for example, painting render and so on) and repairing or replacing any fixtures or appliances as necessary during the first five years.

2.3 Cooling-off period

All Reservation Agreements must include a cooling-off period of at least 14 days. If the customer wants to cancel the reservation, for any reason, during the cooling-off period, the developer must refund the full reservation fee.

2.4 If the customer cancels the reservation after the cooling-off period

The Reservation Agreement may set out deductions that will be taken from the refund the customer will receive if they cancel the reservation after the cooling-off period.

The developer must refund the reservation fee, less any deductions set out in the Reservation Agreement, within 14 days of the date of the customer’s notice of cancellation (see section 2.2), subject to compliance with anti-money laundering regulations.

2.5 No right for the developer to cancel the reservation

While the Reservation Agreement remains valid, the developer does not have the right to cancel the reservation and must not enter into a new Reservation Agreement or sale agreement with another customer for the same new home.

Subject to any data protection requirements, at the end of the Reservation Agreement period, the developer must give the home warranty provider full details of the buyer and the home they have reserved, if the provider requires this.

2.6 Pre-contract of sale

The developer must give the customer’s legal adviser suitable and relevant information to help the customer get appropriate advice and make fully informed decisions relating to buying the new home.

In all cases, this information must include the following:

Information about the property and planning matters

1. a written Reservation Agreement.
2. a summary of the cover provided by the home warranty and contact details of the relevant warranty provider.
3. the tenure of the new home (for example, leasehold, freehold, commonhold).
4. the reference number of the planning consent which applies to the new home and details of any future building phases that the developer has planning consent for, and any facilities which the developer may build or pay for on the development, where this is known.
5. a list of contents in the new home that are included in the price (for example, cooker, fridge, washing machine, curtains, carpets, wall tiles, door-entry systems, plug sockets and bathroom fittings).
6. confirmation that the specification of the new home will be as advertised, including the type of materials used for the main structural frame of the building (masonry, timber, steel frame or other).
7. information relating to the standards the new home is being built to, including confirmation that it will meet the building regulations, the relevant home warranty provider’s standards and the manufacturers’ and suppliers’ performance and installation standards.
8. any exceptional restrictions relating to using, living in or the appearance of the new home and its grounds. This does not include standard terms covered in the title deeds, plot transfer of ownership or equivalent document. The developer must recommend that the customer asks their legal adviser about any exceptional restrictions that apply.
9. details of any services, facilities and responsibilities which may not immediately transfer from the developer to the customer on the completion date (for example, responsibility for the water and drainage systems and utilities). If these will transfer to the customer on a later date, the developer must explain this in full and give the customer written details.

Information about actual and expected costs

1. a description of any management services (and the organisations that will provide them) which the customer will be committed to.
2. an indicative costs schedule. This is a reasonable indication of the costs that are likely to be directly associated with the tenure and management of the new home over the next five years, and which the developer can reasonably be expected to be aware of. This includes any obligation to contribute towards the costs of maintaining or replacing services and facilities. It does not include everyday maintenance and replacement costs for things such as systems, equipment and appliances inside the new home, or utilities.
   The indicative costs schedule must include the following:

1. details of any ground rent, including the amount, the payment dates and the formula used to calculate it.
2. estimated amounts of any additional costs that the developer knows or expects will arise directly from the sale, such as management fees, event fees and other charges. This information must bring to the customer’s attention any service charges that may increase or be charged in the future as more facilities become available or sinking fund charges that may be introduced for repairs or maintenance. If the developer does not know the actual value of costs or charges, they must give the customer an indicative costs schedule without including the values.
3. details of known or expected costs or charges for regular maintenance of built-in equipment at the development, such as the shared heating system, equipment which collects grey water, air-source heat pumps and so on if these are not already included in the management fees or event fees (for example, following a change of circumstances). If the developer does not know the actual value of costs or charges, they must give the customer an indicative costs schedule without including the values.

The developer does not have to tell the customer about the normal costs and charges associated with owning the new home (for example, the cost of utilities, energy bills, and home insurance). The customer should make separate enquiries to find out about these and take steps to consider whether they can afford the new home, taking account of information about additional and expected costs relating to the new home.

The indicative costs schedule does not need to set out estimated possible costs which will depend on decisions made by a management or service company and which are not necessary costs associated with maintaining the new home and its facilities. However, it must clearly show who owns and is responsible for the surrounding land, services and facilities (for example, street lighting, parks, landscaping and so on).

If the new home is not yet completed, the developer must also give the customer:

1. the expected completion date (the developer’s estimate of when the new home will be ready for the customer to move into); and
2. brochure or plan showing the size, specification, general layout, plot position and facing direction of the new home. This must include details of any steep slopes in the garden and grounds of the new home and information on how the surfaces and any fences and or boundary walls will be finished. All outbuildings and garages must be clearly marked and include details of finishes and construction if this will be different to the structure of the new home.

The developer must tell the customer (and their legal advisers), in writing, who to contact (with names and contact numbers) if they have any questions before ownership of the new home transfers to them, and how their questions will be answered.

The developer must keep the customer informed about any additional costs that they know or expect will arise for the new home (as far as is reasonably possible) as well as any restrictions that apply to services (for example, gas, electricity, broadband, water, sewerage or other standard services) and the service providers.

2.7 Contract of sale

The developer must make sure that the terms of the contract of sale are clear, fair and written in plain language, and that they keep to all relevant legislation. The contract of sale must do the following:

1. define the completion notice period (that is, the period from the date the notice to complete is served to the completion date).
2. clearly set out the circumstances in which the customer can cancel the contract of sale. This might include, for example, if there is:

1. a change to the new home that the customer has not agreed to and which affects the size, value or appearance of the new home (including, the size and layout of the rooms); or
2. an excessive or unreasonable delay in completing the construction of the new home and sending the customer notice to complete.

3. clearly explain what will happen if the new home will not be ready for the sale to complete by the date the developer said it would be ready.
4. clearly explain how deposits will be protected.
5. make suitable arrangements to provide a two-year builders’ liability period for the customer. This also applies to any ‘special purpose vehicles’ (see glossary) and other short-term trading arrangements which may be formed to build a specific new home or development.

To avoid disputes over spoken statements, immediately before contracts are exchanged, the developer must make sure that the customer, through their legal representative, states in writing any spoken statements they are relying on when entering into the contract of sale.

2.8 Keeping the customer informed and pre-completion inspection checks

The developer must give the customer the opportunity to undertake a pre-completion inspection of the new home or appoint a suitably qualified inspector to carry out the inspection. Any inspection should take place before the completion date and after the notice to complete (estimated completion date in Northern Ireland) has been served (or earlier if the developer and the customer both agree to this).

Developers must inform customers who wish to undertake the inspection themselves that there is a standard checklist that must be used for the inspection (NHQB Pre-Completion Inspection Checklist – available on the NHQB website). The checklist includes guidance on how to conduct the inspection (for example, internal walls must be inspected in natural daylight from a minimum distance of two metres and not shining a light on the surface). If a customer intends to undertake the inspection themselves, developers must inform them that the inspection was designed to be carried out by a professional and so they may miss or interpret differently some of the requirements or the standards with which the builder is required to adhere.

If issues are identified that breach the warranty technical standards, then the developer is responsible for addressing these, ideally before legal completion or within 30 days if this is not possible. The inspection must be carried out and recorded in line with the Pre-Completion Inspection Checklist. The checklist can be reproduced in an electronic or digital format.
However, they must carry out the checks shown on the original template.

In the event that a customer elects to engage a third-party to undertake this inspection on their behalf, then this must be a suitably qualified inspector. Any suitably qualified inspector must:

1. be a member of a recognised professional association experienced with undertaking surveying services in the residential housing sector (e.g. CABE, CIOB, ICWCI, RICS, RPSA etc.).
2. hold relevant professional indemnity insurance.
3. only work within their competency.
4. only use the standard template Pre-Completion Inspection Checklist.

The completion notice period is usually expected to be at least 14 calendar days (unless the developer and the customer agree otherwise). This is to make sure there is enough time for all the necessary legal requirements to be met and for the pre-completion inspection to be carried out.

To avoid doubt, the Pre-Completion Inspection Checklist is not intended to delay or prevent completion happening in line with the notice to complete, but the developer must respond to the results of the inspection in line with the requirements set out in part 3.

The developer must explain the process for keeping the customer up to date on the timetable for when the new home is likely to be ready and give them updates at appropriate times.

The developer must make sure that their sites meet all relevant health and safety legislation and give appropriate guidance to visitors.

The developer must tell the customer about the health and safety precautions they must take if they are allowed to visit a construction site before the work is finished. The developer can refuse to give the customer (or any representative, inspector or professional acting on their behalf) access if they do not take any health and safety precautions the developer has told them they must take.

2.9 Changes, agreeing to major changes, and the customer’s right to cancel

The developer must tell the customer about their right to cancel the Reservation Agreement and contract of sale, and the specific circumstances when they can exercise this right in the event of a major change. The developer must tell the customer in writing if there is a major change to the details shown in the Reservation Agreement or contract of sale after the customer enters into the Reservation Agreement.

A major change is any change that the developer is responsible for, that can be reasonably considered as significantly and substantially affecting the size, appearance or value of the home (including the internal layout) from what the customer was shown in the Reservation Agreement or contract of sale.

The developer must tell the customer that they should ask their professional legal adviser for advice.

If the customer finds the major changes unacceptable, they have the right to cancel the Reservation Agreement or contract of sale and receive a full refund of their contract deposit, reservation fee and any other payments they have made, as long as they cancel within 14 days of receiving written details of the major change. The notice to complete cannot be served during the 14-day cancellation period.

The developer must keep the customer informed of changes to the design, construction or materials of the new home which are not major changes. The customer does not have the right to cancel the Reservation Agreement or contract of sale following changes such as these, and they do not have to formally agree to them. However, they still have the right to complain about any snags even if they have not agreed to the changes.

If the developer has agreed to do extra work for the customer which will change the timescale for finishing the new home, the anticipated completion date may need to be delayed, and other amendments may need to be made to the Reservation Agreement or contract of sale (or both). The developer must tell the customer they should get legal advice about the extra work and any changes this may lead to.

In Scotland, if the developer changes the materials that will be used in the new home, they must make sure that the new materials still meet the relevant building warrant. Nothing in this section relating to discussions with the customer takes away this legal obligation.

2.10 Complete new home

Legal completion (and occupation) can only take place on a complete new home which meets the building regulations and all building safety requirements that apply. Legal completion must not take place on a new home that is not a complete new home, and the developer must not offer the customer an incentive (financial or otherwise) to move into, or complete the purchase of, a new home that is not a complete new home.

A complete new home is one that has evidence that a new home warranty insurance is in place and meets the following further conditions.

Further conditions for houses

If the new home is a house, it is a complete new home if all rooms, spaces and facilities are in a finished condition for the purpose they were designed and intended for, the property has a safe entrance and emergency exit routes, and any further work needed:

1. is just decorative or to correct any faults;
2. relates to shared areas; or
3. relates to moving from temporary to permanent utilities and services; and this does not affect the owner’s ability to live safely in the house and will not cause significant disruption or inconvenience.

Further conditions for apartment and flats

If the new home is an apartment or a flat, it is a complete new home if all rooms, spaces and facilities within the specific apartment or flat are in a finished condition for the purpose they were designed and intended for, the building has a safe entrance and emergency exit routes, and any further work needed:

1. is just decorative or to correct any faults;
2. relates to shared areas and facilities; or
3. relates to moving from temporary to permanent utilities and services;

and this does not affect the owner’s ability to live safely in the apartment or flat and will not cause significant disruption or inconvenience.

Further conditions for all new homes in Scotland

In Scotland only, a new home is a complete new home if the local authority (building control) has confirmed the property is ready to be lived in.

2.11 Completion

At the point of completion, the developer must have done the following:

1. completed the construction of the new home to the standards agreed.
2. carried out a developer’s final quality assurance inspection of the new home and given the customer a Schedule of Incomplete Work (Home), and a statement explaining the timescales for completing the work or putting right the defects, and that they will need access to the home at suitable times to do the work.
3. confirmed that the relevant local authority has inspected the new home and passed as being habitable and fit for occupation (Scotland only).
4. given the customer the opportunity to inspect the new home or appoint a suitably qualified inspector to carry out a pre-completion inspection (see 2.8 above).
5. provided an appointment for a home demonstration, including an explanation of how to use any appliances that are included with the new home. This can take place at the same time as the pre-completion inspection.
6. provided full details of any guarantees and warranties that apply to the new home and any appliances.
7. provided, or arranged for the home warranty provider to provide, confirmation of cover or the new home warranty cover note or insurance certificate and policy documentation, and to give clear details of the cover provided by the new home warranty, giving the customer details of any exceptions, exclusions, limits, excesses or conditions that apply to the new home warranty cover.
8. given the customer a copy of their complaints procedure.
9. provided a health and safety file for the new home in line with relevant legislation. For apartments, the health and safety file must be given to the managing agent or management company.
10. given the customer:
    1. a copy of the building regulation control inspection records if they ask for this (England, Wales & Northern Ireland); or
    2. confirmation that the relevant local authority has inspected the new home and confirmed it is ready to be lived in (Scotland).
11. provided the building regulation completion certificate (or confirmation that the relevant local authority has inspected the new home and passed as being habitable and fit for occupation in Scotland) if this is available. If the certificate is not available, the developer must tell the customer that it will not be available until after completion (for example, if the new home is an apartment, the certificate may not be issued until the whole apartment block is completed), or signpost the customer to the organisation that can provide it.

2.12 Incomplete and additional work

At the point of completion, the developer must give the customer a Schedule of Incomplete Work (Development) with the best available information on future phases under the relevant planning consent, and estimated timescales for when the work is expected to be completed (where this is known).

The developer must tell the customer of any future phases of work on the development that they are committed to do. As construction work is carried out, the developer must identify and consider reasonable steps to reduce any significant negative effect on the customer.

The developer must try to keep the customer informed of the design and impact of any utility boxes or other estate infrastructure (such as lamp posts, bins and bike shelters) that will be installed after completion and could have a significant effect on the new home.

2.13 Repaying deposits and fees

The developer must have in place adequate arrangements to protect deposits, reservation fees and other fees. This may include:

1. insuring the full contract deposit through the new home warranty;
2. putting the contract deposit, the reservation fee and any other payments the customer has made in a suitable client account designed for holding customers’ money (the money must be held in a separate account from the one used for the developer’s cash flow and assets, and the developer must not be able to withdraw it until the completion date); or
3. any other legal arrangement within the developer’s course of business which they can reasonably use to repay the above amounts if necessary. This must apply to the whole of the contract deposit or any uninsured amounts (if the developer has arranged insurance in line with a above).

If the customer has paid extra money for adaptations or upgrades but then cancels the contract, the developer must refund the payments less any costs they have had to pay in connection with the adaptations or upgrades.

If the developer changes or cancels the contract of sale, they must give the customer accurate information so that they can assess whether the customer is entitled to any compensation.

The developer must refund the contract deposit and pay any other amounts due to the customer within 28 days of the contract being cancelled.