What is a New Build Warranty?
A new build or new home warranty is a 10-year insurance policy for newly built or converted properties. Even though they protect buyers of new build homes from structural defects, they are actually taken out by the builder or developer. During the first 2 years of the buyer living within the property, the warranty ensures that the developer is responsible for remedying any defects found.
Whilst you’d expect a new build property to have fewer issues than an older building, it doesn’t mean that you won’t encounter any problems during your first few years living there. When buying a new build home, the developer should arrange the new build warranty before completing the sale.
Here at Compare My Move, we work alongside a number of property and finance experts to create helpful, easy-to-read guides that will aid you through the moving process. In this article, we will explain what a new home warranty covers, why it’s needed and who the main providers are in the UK.
- Who Provides New Home Warranties?
- What Does a New Build Warranty Cover?
- What Don’t New Build Warranties Cover?
- What Do You Do if Defects Are Uncovered?
- What if the Developer Doesn’t Honour the Warranty?
- What if You Move to a New House?
- Will the New Build Warranty Affect Your Mortgage Application?
- How Does a New Build Warranty Differ From Home Insurance?
Who Provides New Home Warranties?
There are currently 3 main providers of new home warranties in the UK:
- The National House-Building Council (NHBC)
- Local Authority Building Control Warranty (LABC)
- Premier Guarantee
The NHBC warranty is the most common with more than 1.5 million homes in the UK currently protected by it. The NHBC has more than 80 years of experience and is the UK’s leading independent provider of warranty and insurance for new build properties.
However, despite these 3 being the main providers and the ones you’ll most likely encounter, there are also other warranty providers who operate under different codes of conduct. For example, Building LifePlans Ltd (BLP) adheres to the Consumer Code for New Homes (CCNH), whilst Premier Guarantee operates under the Consumer Code for Home Builders (CCHB). Unlike the others mentioned above, however, a builder will not have to pay a membership fee when purchasing a BLP warranty.
Another example is The Federation of Master Builders (FMB) who also adheres to the CCNH and Checkmate which operates under the Consumer Code for Builders of Homes for Sale. It’s vital you research the provider’s code of conduct as it will be essential should a dispute arise.
When reviewing the new build warranty, it’s advised you ask the developer who the provider is and if it operates under other regulators or codes of conduct. Research the provider yourself and check reviews to see how it has previously dealt with disputes and complaints. You should also hire a new build solicitor who is able to give you advice and communicate with the developer on your behalf.
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What Does a New Build Warranty Cover?
New build properties have been increasing in popularity over the years with approximately 159,617 new homes registered in 2018 and 123,151 more registered in 2020. Of those registered, 115,455 were completed by the end of 2020. However, despite the building’s age, some new build homeowners will still encounter defects and will require their new build warranty to remedy them. Most new home warranties will last 10 years.
When buying a new build property or buying off-plan, the first thing your warranty will cover is your deposit. Once contracts have been exchanged, it should cover your deposit against the firm going insolvent. This means that if the builder or developer shuts down and doesn’t complete the home, your warranty provider will reimburse your deposit.
After the property is completed, the warranty will then be split into 2 periods:
- The Defects Insurance Period (first 2 years)
- The Structural Insurance Period (years 3-10)
During your first 2 years of owning the home, the developer will be required to solve any issues and fix any defects such as problems with the heating or poorly sealed windows. This is what’s known as the Defects Insurance Period. During this period, it’s advised you highlight any problems found during the snagging list.
Next is the Structural Insurance Period which will begin during your third year in the home. Throughout this period, the builder or developer will only be responsible for major structural problems, such as problems with the chimney, foundations, roof or ceilings. Smaller issues should be remedied by the buyer. This includes all non-structural defects and any issues with fixtures and fittings.
It would be wise to thoroughly read through your warranty before the sale is complete and to note specifically when your warranty will kick in. You should also make a note of when your 2-year Defects Insurance Period will end. Whilst most new home warranties will last for 10-years, it’s still vital to double-check the expiry date.
Different warranties will include different clauses and conditions, however, so it’s essential you are completely clear on what is included before the sale is finalised. Some providers will include the removal of debris or contaminated land cover during the Structural Insurance Period.
What Don’t New Build Warranties Cover?
Typically, weather damage and natural degrading or wear and tear will not be covered by a new build warranty. Any issues that resulted from you not adequately maintaining the property will also not be covered throughout the 10-year warranty.
Some damp or condensation issues may be covered but it depends on the provider. However, most damp and condensation problems will only be included if they occur as a result of the developer failing to comply with the warranty provider’s standards.
Carefully read through your new home warranty before agreeing to the sale as different providers will cover different factors.
What Do You Do if Defects Are Uncovered?
A number of issues or defects could arise after purchasing a new build property as the building begins to settle and dry out. Condensation is often a common problem for example but, sometimes, issues are found as a result of the home not being built to the standards required by the warranty provider. These types of defects should be remedied by your developer within the first 2 years of owning the property.
If you uncover a defect in your new home, structural or otherwise, you should contact your builder or developer immediately. Keep a record of all communication you have with them regarding this problem, including the dates and times of phone calls and emails. These documents will serve as evidence should you encounter a problem further down the line when getting your builder to address the issues highlighted.
Once you’ve contacted your builder, it should take the correct steps to remedy the defects. It would also be wise to check the excess on your warranty policy whilst this is being arranged.
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What if the Developer Doesn’t Honour the Warranty?
Many UK providers, such as NHBC, LABC and Premier Guarantee, will adhere to the Consumer Code for Homebuilders. This will include a ‘dispute resolution scheme’ that homeowners can use during the first 2 years of the buyer living in the home. If your builder or developer refuses to complete the necessary work, you can use this scheme to raise a dispute.
Some providers may also have a separate resolution scheme in addition to this, so it’s worth researching your provider before making your complaint. If you contact your provider’s Claims Team, it will assess the situation and advise you on the best course of action. But remember, the developer will only be liable for issues detailed in your contract.
One way to help you avoid a dispute is to organise a snagging list before the purchase is complete. This will ensure obvious defects are remedied before you move in, reducing the chances of further problems. You can resolve these issues directly with the developer rather than with the warranty provider.
What if You Move to a New House?
If you decide to move house before the 10-year new home warranty expires, it will transfer to the new buyer once the sale is complete. However, if you’ve had work done on the home during your stay there, such as a loft conversion, it will not be covered by the warranty. You should make this known to the buyer.
It’s also worth noting that any guarantees you obtained for the work completed will likely not be transferable. For example, if you completed a loft conversion within the home and the installation came with a 10-year guarantee, this will likely expire once you move. Some may be transferable but it all depends on the provider.
Will the New Build Warranty Affect Your Mortgage Application?
Many mortgage lenders will require you to have a warranty in place when purchasing a new build home. They will also request a mortgage valuation which can be based on the building’s plans and specifications should you buy off-plan.
It can be difficult to obtain a mortgage for a new build home, so it’s recommended that you speak to a mortgage broker. They should be able to explain what deals are available to you and your property type.
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How Does a New Build Warranty Differ From Home Insurance?
A new home warranty does not cover everything a traditional home insurance policy would. A new build warranty will only cover problems that are the developer’s fault and for a limited period of time. It does not cover you for weather or fire damage, for example.
Home insurance covers risks that could damage your property, protecting both the building and its contents. Every home should be insurable but the cost will vary significantly depending on the type of property and the company you’re insured with. However, as with a new home warranty, the structural integrity of the home will be the most vital component of the insurance policy.
If you’re applying for a mortgage to purchase the home, your lender will likely require you to have buildings insurance in place, so it’s worth organising in advance.
