Consternation amongst developers

THE new Code of Conduct for Home Builders published by The National Home Builders Registration Council (NHBRC) is aimed at the smaller home builder, against whom most protection is needed. But it is also applicable to larger residential developers developing and selling residential dwellings whether freehold or sectional title. This is causing much consternation amongst bigger role players.

“The aim of the Code is the protection of the housing consumer which is clearly needed, and if the Code is strictly adhered to, there is no doubt that consumers will be far better off. The Code is comprehensive and in seeking to address a vast number of issues, contains many quite onerous provisions for the home builder to comply with,” says David Warmback of Shepstone & Wylie Attorneys.

However, he cautions that in an industry which historically has a poor reputation for protecting consumers, particularly in the lower end of the market, it is anticipated that it will take some time before the industry is able to properly embrace the good intentions behind the Code, which came into effect recently.

He highlights some of the significant provisions in the new Code as follows:

• home building contracts may now only be concluded once the housing consumer has had 30 calendar days to view the contract;

• restrictions on clauses in contracts which have the effect of taking away consumers common law or statutory rights;

• restricting deposits to no more than 10% of a contract price of a fixed cost building contract;

• minimum clauses that must be included in a building contract, and an obligation that a home builder must retain a copy of the contract and all records relating thereto, for a period of at least six years;

• a home builder may not accept final payment under a building contract unless the bank, NHBRC or competent person has certified in writing that the work has been completed according to NHBRC’s prescribed minimum standards and guidelines.

In summary, the Code is intended to provide minimum standards to be maintained by all NHBRC home builders when contracting with consumers, says Warmback.

“Banks are not allowed under the Act to lend money to consumers against the security of a mortgage bond registered over a home for the purchase of a home from a home builder,” explains Warmback. “That is, unless the bank is satisfied that the home builder is registered in terms of the Act, that the home is or will be enrolled with the NHBRC and that the prescribed fees have been paid.” (Read More...)

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