Why Legislation?

Many housing consumers have had difficulties with their home builders.

In the past there has been very little assistance for consumers should they be in dispute with a builder. Whilst many builders are good, service oriented companies, the actions of the bad elements has given the building industry a poor reputation.

The Act has been created to provide protection to buyers of new homes against the so-called "fly-by-night" builders. That is, builders who either build to an unacceptable quality standard or builders who refuse to get involved in the rectification of built-in defects in the home. The Act does this through the creation in law of a regulatory body known as the National Home Builders Registration Council (NHBRC). The NHBRC began operating as a regulatory statutory body in March 2001.

How does the Act work?

Currently the NHBRC gets involved with homes in the bonded, cash markets and subsidy sector. All new homes thus fall under the scope of the Act.

The Act ensures that:

• All builders of new homes register with the NHBRC.
• All new homes, no matter what price or demographic area, are provided with a "deemed warranty"
• All new homes are covered by a "deemed warranty" which means, that by law a builder must:
  • Rectify any defects that occur in the first three months after occupation
  • Rectify any roof leaks that occur in the first twelve months after occupation
  • Rectify any major structural defects that occur in the first five years after occupation
  • Enrol all new homes with the NHBRC.
  • Be aware that, neither mortgage loans, nor provincial housing board subsidies, will be granted without the home being enrolled with the NHBRC.

How does the NHBRC assist the consumer?

Having a "deemed warranty" is a major step forward in consumer protection. However if the builder is no longer in business, nor is willing to fix a problem, the housing consumer will have great difficulty in obtaining any form of real satisfaction.

Through the NHBRC enrolment process however, several benefits can be achieved for the consumer:

• All homes must comply with NHBRC’s Home Builders Manual, which sets minimum quality standards.
• The NHBRC must ensure that foundations have been correctly designed to match the existing soil conditions.
• All homes must be inspected by the NHBRC Inspectorate to check that the home builder is actually complying with the NHBRC requirements on site.
• Through these three reasons alone, the NHBRC aims to prevent the most commonly known defects from happening in the first place.

However, the NHBRC Inspectors cannot be on-site all of the time and some serious defects are inevitable.

If a defect happens and the consumer is having difficulty with their home builder, they can contact the NHBRC for assistance. The consumer does not have to employ Lawyers, Architects or Engineers to assist them in the event of a defined structural defect.

The NHBRC will investigate the complaint, and if found valid, will contact the home builder and insist that the problems are attended to within a specific time frame. If the builder does not co-operate, the NHBRC may hold a meeting on site between the consumer and the home builder, which normally results in the builder honoring their warranty obligations. If the builder has already closed his business the NHBRC may use its funds to pay another builder to fix the structural defects.

Additionally, the NHBRC will publish and distribute lists of its registered home builders and any builders who have been de-registered or suspended. These lists (also on the internet) will give the details of the home builder, the number of homes they have built and the number of serious complaints, if any, laid against them. All of this will assist the consumer in the correct choice of their home builder.

Benefits to the home builder

There are many benefits to the home builder.

Registration makes the home builder a "legal" entity in the eyes of the banks and worthy of qualifying for financial assistance during the building process.The Act will oblige banks to ensure that the home builder is registered and the home is enrolled with the NHBRC before any loan can be granted for the construction of a home.

The NHBRC is in the process of developing a grading system whereby a home builder will be awarded a grading for the quality of their work: In this way, home builders will be able to advertise their rating to attract more clients who in turn will have a better idea of the quality of the work and service that can be expected from the home builder. Additionally, the home builder's fees, paid towards the NHBRC, will reduce as the builder's grading status increases.

Builders will benefit from their consumers knowing that the builder has been evaluated by an independent organisation and that they are re-evaluated every year.

Builders will be entitled to use the NHBRC logo on their stationery, vehicles and marketing material to advertise the fact that they are registered and the grading they have.

The NHBRC will also publish regular circulars and technical information sheets to registered home builders to keep them up to date with the latest events and innovations in the home building industry.

The extension of the scheme

The new NHBRC Defects Warranty Scheme extends the protection of home warranties to owners of new homes.

Beneficiaries of the state subsidy scheme will also be covered by the Warranty. Contracts between provincial housing boards and the NHBRC will provide cover for this form of housing whilst significantly reducing administrative processes and costs. New housing above the R250,000 selling price will also be covered whether the building is financed by a bank or built for cash. By covering all homes, the NHBRC is able to provide uniform protection to all South Africans at an affordable price.

Information and education

The NHBRC intends to maintain a wide ranging information campaign aimed at all stakeholders in the home building industry and consumers of new housing products.

Additionally, the NHBRC will extend it’s current contractor training seminar programmes so that more contractors, and specifically historically disadvantaged builders, will learn about the NHBRC and become more proficient in their building practices and customer service activities. 10 Million rands has been allocated to develop this emerging contractor programme so that all registered NHBRC members and their employees can be trained in project management and financial skills.