New home build warranties are designed to offer buyers peace of mind that any defects in their new build home will be put right. But, while new home warranties typically last 10 years, what’s covered in that period is not as straightforward as you might think.
Buying a new build home should mean you encounter fewer problems than you would with an older property. Unfortunately that’s not always the case. If you move into a newly built property, you’re going to want reassurance that the developer will fix problems with your new build home that occur. And if the problems happen later or the developer isn’t cooperating, that’s where new build warranties can help.
A building or structural warranty is essentially an insurance policy for newly built homes. It’s almost impossible to sell a home without one as all mortgage lenders require a 10 year structural warranty. Although it’s taken out by the builder or developer it is there to protect you, the buyer (and your mortgage lender). The type of warranty typically covers you for defects that arise due to faults in the design, workmanship or materials that remain undiscovered at the time of practical completion on your new build.
These policies are referred to by many different names, including New Home Warranties, New Build Warranties, Structural Warranties, Latent Defects Insurance and Inherent Defects Insurance.
The most common new home warranty in the UK is the National House-Building Council (NHBC)’s Buildmark Warranty. There are around a dozen other warranty providers and these include Local Authority Building Control (LABC), Premier Guarantee, Checkmate, Buildsafe, Protek and Global.
Nearly all warranty providers require developers to sign up to a consumer code, which is there to protect consumers during the sales process and offers a dispute resolution service when things go wrong during the first two years.
The three main codes are:
Like warranties, you don’t get to choose which code your new build is covered by. See our guide to the New Homes Ombudsman and Consumer codes for more detail on the codes and how complaints are handled.
The NHBC Buildmark warranty is by far the most common, covering 70-80% of the new build market. If you are the first owner, you will be covered from the date of exchange of contracts.
Once the property is built, the warranty is usually (but not always) split into two periods:
In the majority of cases, during your first two years in the home, if there are issues with the work the builder has done, such as the windows letting in rain because they’re not sealed properly or the heating not working because the pipes are faulty, the builder is obliged by the warranty provider to come and fix them. Make sure you get your conveyancer to check this carefully as some warranty providers may not cover the two-year liability period.
During the structural insurance period years 3-10, the builder is only responsible for major problems with the structure of the house. This includes foundations, the external render, roofs, ceilings, chimneys and load-bearing parts of the floors.
Smaller ‘defects’ are now your own responsibility. This includes non-structural defects such as problems with your gutters or fixtures and fittings.
It’s important you are clear on when your warranty kicks in. Make a note of when the initial two year period expires and keep an up to date snagging list.
Get a New Build Snagging SurveyA snagging survey is there to spot problems with your new build home. We can connect you with an independent on-site snagging inspector today.
Get a snagging survey quoteTypically, building warranties for new homes in the UK last for 10 years but this can be increased to 12 or even 15 years in certain cases and by certain providers. They usually start on the day of practical completion of the property but not always. It’s best to check your paperwork.
Understandably, natural wear and tear isn’t covered by a new home warranty. Neither is weather damage or any problems resulting from you not maintaining your home adequately.
Damp and condensation may be covered but only if they have occurred as a result of the builder’s failure to comply with the warranty provider’s standards (in other words, if it’s the builder’s fault!).
You may also be required to pay an excess payment to make a claim. NHBC’s Buidmark Warranty does not have an excess for an accepted claim, whereas Premier Guarantee, LABC and Build-Zone all have a £1000 excess payment.
Also, some warranty providers that aren’t signed up to the three main codes above may only offer cover on a development up to a set financial limit, for example this might be £2 million. So if your problems are some of the first in the development to occur you may be covered. But if your problems occur after this financial limit has been reached, you may not be covered. So check the small print carefully.
As all warranty providers are acting on behalf of insurers, they may not always be as willing to carry out (and pay for) remedial work. As is always the case with insurance, the small print is key. Make sure you read all of the warranty documentation and question anything that doesn’t seem quite right.
Insurance providers are rated according to their financial stability and ability to honour their claims. As a structural warranty is for 10 years, it is even more important to know the rating of your insurer. You should only use ‘A’ rated or higher.
In 2018, the popular but unrated insurer Alpha, went into liquidation, leaving thousands of customers without valid warranties. This meant they were in breach of their mortgage terms as well as finding it difficult and expensive to get a replacement warranty. Several unrated insurers are now offering new build warranties so it’s essential to check the rating of the insurer that is backing your warranty. Zurich and BLP have also stopped selling new build warranties but continue to honour existing customers.
You can find the rating of an insurer on the websites of the main rating agencies, A.M Best, Fitch, Moody’s and S&P.
If you are building your own home you might need to look at specialist new build warranty providers, as NHBC, Premier Guarantee and LABC do not offer products to self-builders. A self-builder should make sure they have an all risk policy or site insurance during the build and a 10-year structural warranty issued on completion.
Self-build Zone is one of the largest providers of site insurance and structural warranties for self-builders. Other providers include Self-Build UK, Build Store and ProAktive. It’s important to arrange your warranty provision before you start on site as you will struggle to find an A rated warranty provider retrospectively.
And when you’re taking out a self-build warranty, read all the small print carefully, especially any exclusions.
Make sure you contact the builder as soon as possible. Keep a record of all communication including dates and times of telephone calls. This will be needed if there are problems with getting your builder to address the issue.
LABC, Build-Zone and Premier Guarantee warranty policies have a £1,000 excess. This means you’ll pay the first £1,000 of each claim made under the warranty.
It is also important to not wait and let a defect get worse. You could be in breach of the warranty or result in an unsuccessful claim if you spot a defect and let it get worse and cause more damage. This is because the problem could have been resolved earlier at less cost and damage to the property.
A snagging survey could help apply pressure on your builder to sort defects. Get in touch with our professional snagging inspectors today
The various consumer codes listed above and the New Homes Ombudsman are there to ensure consumers are protected from undesirable trading practices when buying a newly built home. All of these codes offer an independent dispute resolution scheme which you can use during the first two years if the builder won’t carry out the necessary remedial work.
Remember, the builder will only be liable for problems detailed in the contract. We’d always advise buyers to make sure there is a “snagging” provision to allow you to get little issues sorted – such as doors catching on carpets – directly with the developer.
If you are unhappy with how your warranty provider has handled your case, you can complain to the Financial Ombudsman Service. But first you must make a formal complaint to your warranty provider.
If you sell your home, the warranty transfers to the buyer of your home. Any work you do on the home yourself – such as loft conversions or conservatories – will not be covered by the warranty and could invalidate your existing warranty. If you are buying a new home from a previous owner, it’s also worth noting that company warranties supplied for such works are not always transferable. If the seller installed a conservatory with a ten year guarantee from the installation firm, when they sell the house to you, the guarantee often becomes invalid.
This is a tricky situation. You could try to see if you have any protection under the Financial Services Compensation Scheme and/or contact another home warranty company to see if they would be prepared to take on the liability. Although you will need to pay for this and the longer you wait the less likely the new provider will take the property on because of the risk involved.
New build warranties can affect your mortgage application. It is a requirement of most lenders in the UK to have a structural warranty on all new build properties, converted properties, or residential properties less than 10 years old.
You should take out home insurance on your new build property. Aside from the fact your mortgage lender will more than likely require you to have buildings insurance in place, it’s just good sense to protect your investment. The new home warranty only covers problems that are the builder’s fault. If your home floods because of bad weather or is damaged in a fire, you won’t be covered.
An architect’s certificate is issued by a chartered architect or surveyor on a new build property or converted property and it’s valid for 6 years. The official name is now ‘the CML Professional Consultants Certificate’, although the term architect’s certificate is still widely used.
Smaller builders and self-builders may favour an architect’s certificate as they are often much cheaper than getting a NHBC warranty and are widely accepted by banks and building societies.
But an architect’s certificate is not a latent defects policy. It’s only a warranty in that the professional issuing it undertakes that the property is built in accordance with the approved plans, complies with building regulations and is to a good standard. These certificates only give the homeowner the right to sue the consultant if they negligently issued the certificate, which can be hard to prove. There will not be any provision for defects found in the first two years.
While a mortgage lender may require a warranty if you’re buying a new build, if you’re a cash buyer it’s still very important to get a warranty because of the protection it should offer you if there are defects with the property. Also, if you sell the property within the next 10 years, buyers – and their lenders – are likely to expect a warranty to be in place. It’s also important to check this if you’re buying a converted property, such as an office that has been converted into residential property.
Yes – a new build warranty stays with the property regardless of who owns it. So if you buy a property less than 10 years old, it should still be covered by the warranty, as long as they haven’t made any major alterations. But make sure the seller’s solicitor gives you the policy details and certificate.
