As more businesses continue to open back up to the public, we are able to reflect on just how much time we have all spent at home over the last 18 months.

For those of us who have purchased a new build home, we have seen first hand the effects of delays in construction prior to settlement and we have had much more time than we ever would have had before to spot snagging issues or to raise queries/complaints with a developer.

In May 2020, interim appointments were made to the New Homes Quality Board (“NHQB”) which is an independent body created by the UK Government to roll out the introduction of a New Homes Quality Code (“NHQC”) and also a New Homes Ombudsman Service. The goal here is for the NHQB to drive new build quality and strengthen protections for buyers.

The draft NHQC, which has recently been circulated for consultation, is structured with a statement of 10 fundamental principles which developers, who have signed up to the NHQC, will agree to apply to their business followed by an outline of the practical steps to be considered for each stage of a transaction.

This series of articles will take a look at some of the key parts of proposed draft NHQC, highlighting some new additions to the consumer protection landscape and revisiting some more familiar provisions from the Consumer Code for Housebuilders.

The key part of the NHQC which we will touch on in this instalment relates to snagging and inspections.

What is snagging and how should inspections work?

Anyone who has been involved with the process of buying or selling a new build home will be familiar with the term “snagging”.

It is often used as a term of art to refer to minor remedial work which arises given the method of construction of a new home. In the market, it is one of the major reputational elements of a developer’s overall service.

In general, this area relates to the guiding principles in the NHQC of “Quality” and “Independence”:

• Quality, as you would expect, relates to all works being completed to a good quality standard and in accordance with the specification for the new home.
• Independence relates to the customer being aware that they have the option of having an independent pre-completion inspection carried out before settlement.

Despite being a longstanding part of the process, you would struggle to find too many places where there is a definition in black and white telling you exactly what constitutes snagging.

The lack of definition of snagging is a key area that the NHQC seeks to address by providing the following definition in the glossary of terms which accompanies the draft NHQC:

Snag/s or Snagging means a minor imperfection or malfunction in the New Home which does not meet the expected tolerance or finish as set out in the Contract of Sale. Typically, something which is damaged, broken, not fitted properly or looks unfinished and can be categorised as:

(a) Omitted or incomplete work
(b) Faulty or defective work

Snags may be identified during a pre-legal completion inspection by the Customer and/or their representative or Professional Advisor (e.g., an accredited snagging checker). Snags may also be identified post Completion.

Snags/Snagging items brought to the Developers attention are not automatically considered a Complaint. However, failure to resolve within 30 calendar days of the date of the Snag/s being notified to the Developer by the Customer will require any outstanding items to subject to the Developers formal Complaint process.

As definitions go, the above appears to clearly capture the essence of snagging and initial steps towards a standard definition will certainly be welcome.

The one drawback from the perspective of creating a consistent approach to snagging is reference back to the “Contract of Sale”.

This allows for a much wider divergence of different implementations of the general provisions in the NHQC depending on what provisions developers put into their contract, and this could therefore still result in an inconsistent application of the NHQC’s goal.

The lack of benchmark to compare against will make the job of a customer much more difficult if carrying out their own check.

If the NHQB want to be successful in bringing the housebuilding industry on this journey, then they should be consulting with the industry to come up with an indicative framework (building on the checks carried out when obtaining habitation or the new home warranty) which sets out the tolerances which will be generally unacceptable in the market and which would be considered as “Snags”.

When is a snag a snag, and when is it not?

While the definition of a Snag is important, so is a discussion on the timing of when an item should be a Snag.

At present, the draft definition indicates these will be picked up in the pre-inspection check and acknowledges that they may be identified post-completion. There is no mention of how long a Customer should have in order to raise something as a Snag.

The current market practice recognises the need to limit the amount of time that a Customer has to make certain claims. This is a logical position.

The longer a Customer lives in the Property, the higher the likelihood that issues have arisen not due to poor workmanship, but down to poor care and maintenance/wear and tear.

The draft NHQC has presumably left the timing of notification silent on purpose, but this could potentially create more inconsistency than if a guidance period for notification in respect of certain items had been included.

The other fairly fundamental change mentioned in the definition is the fact that a Snag will be deemed to be a complaint if it is not rectified within 30 calendar days. In the current market, this seems quite unreasonable as a blanket timescale for all Snags.

We are still seeing many businesses being affected by members of staff receiving positive COVID-19 tests having to self-isolate and this is coupled with the ongoing materials shortage. It is unlikely that developers will be able to keep to these timescales in the current climate.

Instead, developers should be encouraged to provide clear timescales for rectifying items and if these are not met, it could then perhaps be dealt with as part of the developer’s formal complaint process.

Can pre-completion inspections work?

Alongside the new definition of Snags, the NHQC introduces the requirement for a developer to give a customer the opportunity to carry out a pre-completion inspection (either by themselves or by an accredited professional) after notice has been served that the Property is complete, but within the five calendar days prior to settlement.

In principle, the idea of a pre-completion inspection is welcome as it will allow a customer to raise issues prior to settlement. However, it also raises some issues in respect of how this will work in practice.

While having an “accredited professional” carrying out the works on behalf of the Customer sounds uncontroversial, there is nothing in the NHQC or the accompanying guidance for developers which confirms what this means.

The consultation document for the NHQC makes mention of the person being “suitably qualified” which means someone who is registered with or accredited by the Royal Incorporation of Chartered Surveyors (RICS); the Residential Property Surveyors Association (RPSA) or another appropriate professional body.

At the moment, there are a number of “professional snaggers” available to carry out pre-completion inspections, but from a brief look at the top three websites which come up on a Google search, these companies do not currently seem to be accredited by a professional body.

In order to protect customers and also create consistency for developers, there should be clear guidance in respect of what governing bodies can regulate those carrying out these inspections and also what standards these professionals have to meet when carrying out the checks.

The NHQC also provides for the customer to be able to carry out the inspection themselves.

Given that the majority of customers will not be experienced or qualified to carry this sort of inspection out, then in order to provide consistency it would be sensible for a standard guide along with examples of good and bad practice to be made available to all customers in case they want to carry out their own pre-completion inspection.

Due to the wide range of developers and new home types available across the UK, it may be impossible to produce a guide which is both user-friendly to a customer, but also captures the level of detail required to allow a customer to be able to carry out the pre-completion inspection on their own.

New Homes Quality Code must strike a balance

The proposed NHQC is definitely a welcome addition to the consumer protection landscape in respect of new build properties.

However, there are still some fairly fundamental questions to be resolved in relation to the new provisions on snagging and inspections.

It will be key for the NHQB to continue to seek the input of the industry to find the correct answers.

Ultimately, the NHQC will only apply to developers that sign up to be registered with the NHQB - and a balance between consumer protection and the practical reality of constructing new build properties will have to be reached for it to be a success.

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