Despite the common perception that a new build property will be completed to a high standard, this is not always the reality. It is important for buyers of new builds to be aware of the protections available to them if something goes wrong with their new home.
Where it is not possible to claim against the builder under the missives or on a home insurance policy, buyers may turn to a home warranty scheme.
What is a home warranty scheme?
NHBC is the largest provider in the UK, offering a 10-year "Buildmark" insurance policy to purchasers. Other insurers such as Premier Guarantee, LABC and Checkmate provide similar products. These warranties provide the greatest protection against structural defects that arise in specified parts of the home in the first two years after settlement (the "Builder Warranty Period"). Such defects may include problems due to condensation or drying out and any parts of the home that are unfinished or poorly completed.
Particularly during the initial snagging period, buyers will normally raise any issues with their builder and attempt to resolve these before making a claim under a warranty. For the following eight years after the expiry of the Builder Warranty Period, only major faults are covered by the warranty, such as those with the roof, chimneys, and foundations. Most warranties will also cover risks such as contaminated land or a builder going into liquidation before the house is fully completed.
How do I get a warranty for my new home?
We have previously blogged about the steps involved in a house sale or purchase. One of the key parts of the transaction is agreeing the terms of the sale, or the "missives". Your solicitor will usually include a requirement for an NHBC or similar home warranty in their formal offer to the seller's agent, which will form part of the missives. It is also highly likely that a mortgage lender will insist on such cover being in place before completion of the purchase.
In any case, it is sensible to ask your conveyancer to obtain a copy of the certificate of warranty from the seller along with a copy of the completion certificate from the local authority building control office at completion.
What if I'm buying a new build property, but I'm not the first owner?
Most home warranty schemes are intended to benefit every owner of the home during the policy's lifespan. New owners that are buying a property from the first or subsequent owner following construction should ask the warranty provider to update their records and transfer the policy into your name. This will ensure you are protected during the remainder of the warranty period. Once the purchase has completed, it is sensible to keep your home warranty certificate safe as you may need to produce it if you wish to make a claim.
Following expiry of the warranty, it is still possible to raise a claim against the developer under the Consumer Code for Home Builders or its successor, the New Homes Quality Code.
Brodies can advise you on your options when considering your new build purchase. Please get in touch with your usual Brodies contact for more information.
This article first appeared in the Scottish version of The Times' Bricks & Mortar supplement on 3 June 2022.
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