The New Homes Quality Board has recently launched the second edition of the New Homes Quality Code.
The New Homes Quality Code Version 2, which applies to customers who reserve a home on or after 2 March 2026, follows a review undertaken by an independent Code Council, which consulted with consumer groups and other stakeholders.
In this article, we set out the key changes developers need to be aware of when dealing with customers to whom Version 2 of the Code applies.
Updated exclusions
Version 2 of the Code includes an updated list of claims to which the Code does not apply.
Version 1 of the Code excluded claims for loss of value, blight, personal injury or claims not covered by the scheme rules of the New Homes Ombudsman.
Version 2 of the Code clarifies that claims for loss of value are only excluded where the cause of loss of value is market conditions or other factors outside the control of the developer. Where a loss of value is caused by a breach of the Code that is within the control of the developer, the New Homes Ombudsman has discretion to consider the claim.
In addition, Version 2 of the Code excludes claims for issues that could be dealt with through the structural warranty and claims related to the tenure or occupancy status of other properties. This would appear to include claims relating to the location of affordable housing in a development, which the New Homes Ombudsman has considered in the past.
Specific requirements for measurements
Version 1 of the Code required developers to properly inform customers about the size of the new home on offer, and specifically the room and plot dimensions. However, it did not impose any restrictions on the units or method of measurement used for this purpose.
Version 2 of the Code imposes specific requirements on the size information which is to be provided to customers and used in marketing materials. Developers must set out the size of each room and the size of the whole home in either m2 or sq ft. The dimensions must be calculated on a gross internal area basis and in accordance with the RICS Code of Measuring Practice.
Prohibition on ‘drip pricing’
Both versions of the Code prohibit developers from employing certain high-pressure selling techniques.
Version 2 of the Code adds a new prohibition on ‘drip pricing’, where the advertised price for a new home does not reflect the true price once all elements are included. Developers should take care that their advertised prices include all of the elements that customers would reasonably expect to be included.
Time-limited incentives
Version 1 of the Code prohibited developers from offering customers a financial incentive in return for an immediate decision to reserve or buy a new home.
Version 2 of the Code expands on this prohibition and sets out specific requirements for “time-bound events” such as launch weekends. Where a developer offers an incentive during a time-bound event, customers who attend the event must be given at least seven days to consider the purchase before the incentive ceases to apply.
Developers should note however, that they are not required to ensure that a home remains available for the customer during the seven-day period. Sales teams should tell customers that if they take additional time to consider their decision then the home could still be sold to another buyer.
Pre-completion inspections
Under Version 1 of the Code, customers were entitled to appoint a “suitably qualified inspector” to carry out a pre-completion inspection. Version 2 of the Code extends this right to allow customers to carry out their own inspection.
Where a customer wishes to undertake the inspection themselves, developers must inform them:
- that they must use the NHQB Pre-Completion Inspection Checklist for the inspection; and
- that the inspection was designed to be carried out by a professional, so the customer may miss or interpret differently some of the requirements or the standards to which the builder is required to adhere.
Disclosure of fees, commission and rewards for professional adviser referrals
Where a developer receives a fee, commission, reward or advantage for referring a customer to a particular professional adviser or recommending certain products or services, Version 1 of the Code requires the developer to disclose this fact – but not the nature or amount of the reward or commission – to the customer. The customer does not need to be informed in writing; the information can be communicated verbally, though this may make it more difficult for developers to prove they have complied with their obligations.
Version 2 of the Code places developers under more onerous obligations regarding professional adviser referrals. Developers must disclose in writing:
- the nature of the reward
- the expected amount of the reward
- who will receive it; and
- for what activity the reward will be given.
Next steps for developers
Developers should ensure that their sales teams are familiar with the new version of the Code and the changes it introduces. Sales teams should take care to refer customers to the correct version of the Code depending on the date of their reservation.
For specific advice on the New Homes Quality Code or any other aspect of development, developers can get in touch with our Real Estate Litigation team or their usual contact in the Brodies Living team.
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