New Build Warranties – know what you’re buying into!
Most people will have heard of the National House Building Council (NHBC) and their 10 year Build Mark warranty for new homes (including newly built or converted/refurbished properties).
Although NHBC remains the main player, new providers continue to come into the market and with them, bring a host of varying products and approaches to new build warranties, some of which may be more favourable to home owners than others. Of particular interest is whether a warranty provider requires that the builder subscribes to the Consumer Code for Home Builders (for which please visit https://consumercode.co.uk/ ), which affords additional protections to home buyers, or whether they subscribe to a different scheme, if any at all. When buying a new home, you should take note of the terms of the warranty product being offered and whether the provider requires your builder to subscribe to a code of conduct.
Whilst the underlying purpose of a new build warranty is to provide cover for defects in the structure of the building and a process for ensuring that these are put right, not every eventuality is catered for.
The failure of Alpha Insurance in 2018, the underwriter for warranty provider CRL, warns that owners of new homes could be left without warranty cover should their provider fail during the 10 year warranty period, left with the option of paying another premium to a new provider or considering suing the original builder for negligence (neither option being cheap). Such cases highlight the fact that a new build warranty is not a guarantee that nothing can go wrong.
Even with insurance backed warranties that are resilient in the market, home buyers should be aware that the policies they offer do not cover everything you think they might – disputes between home owners and warranty providers which have ended up in court attest to this. With the plethora of new products available to builders when deciding on which warranty to offer to their buyers, different warranties will contain different exclusions and some will be more restrictive than others.
There are some issues which are not covered under new build warranties across nearly all providers. For example, condensation, damp and shrinkage which is not the result of the builder failing to meet the warranty provider’s standards is not generally covered. Similarly, any aesthetic issues which are not associated with the structure of the building will not be covered under most warranties. Most warranty providers will also set financial limits (and excess charges) in respect of claims. It’s important for buyers of new homes to be clued up about just what they’re covered for with the warranty being offered and what options they have for redress if things go wrong.
Where you are buying a new home or a home that has been built within the past 10 years Rix & Kay will check on your behalf:
• What type of warranty is being provided and whether it is acceptable to your mortgage lender;
• The basic terms of the policy being offered (in particular whether they differ from the standard 2 year – builder responsibility; 8 year – warranty provider responsibility structure, as followed by NHBC);
• (for new properties) That the builder is registered with the warranty provider under the correct name prior to exchange of contracts;
• (for new properties) That cover is activated from exchange of contracts and finalized on completion of your purchase;
• That the financial cover limit is adequate compared to the price of the home you are buying;
• Exclusions on the individual policy documentation. We will also draw your attention to where you can find a full list of what is and is not covered under your policy;
• (for new properties) That a snagging list is included within your contract, to cover the little things that might need putting right as you move in to your new home and which are not covered under the new build warranty.
When buying a new build property, as with buying property of any age, problems can arise. You can minimize later disappointment however, when buying a new property, by ensuring that you are familiar with the terms of any warranty cover offered by the builder and appointing a lawyer who will assist you in doing this.