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What new home warranties do and don't cover

New Home Warranties – What they do and don’t cover

New home warranties are designed to offer buyers peace of mind that any defects in their home will be put right. But, while 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 any problems that occur. And that’s where building warranties come in. 

What is a building warranty?

A building warranty is essentially an insurance policy for newly built homes. The warranty is taken out by the builder or developer but is in place to protect you, the buyer.

Who provides new build home warranties?

There are three main providers of new home warranties – the National House-Building Council (NHBC), Local Authority Building Control Warranty (LABC) and Premier Guarantee. These operate under the Consumer Code for Home Builders.

The NHBC warranty is the most common, covering 80% of the new build market.

There are also warranty providers operating under different codes of conduct. BLP, for example, adheres to the Code for the Purchase of New Homes. The BLP Warranty is a little different to the three above because the builder does not have to pay a membership fee to purchase a warranty, a BLP warranty can be issued for a property that is already a year old and BLP will step in to fix any defects from day one. NHBC, LABC and Premier will all expect the builder to remedy any defects within the first two years and will only step in if there is a dispute.

The Federation of Master Builders (FMB) also offers a warranty under the new Consumer Code for New Homes (CCNH) while Checkmate warranties operate under the Consumer Code for Builders of Homes for Sale.

How long do warranties last?

Typically, building warranties last for 10 years. 

What do they cover?

If you buy a home off plan (i.e. before it is built) as is often the case with new builds, once you exchange contracts your warranty will cover your deposit against the firm going insolvent. This means if the builder goes bust and doesn’t start or complete the property your warranty provider will reimburse your deposit.

Once the property is built, the warranty is split into two periods – the defects insurance period, which covers the first two years, and the structural insurance period which covers years three to 10.

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 to come and fix them.

During the structural insurance period, 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, including 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 so that you can make a note of when the initial two year period will expire

What don’t they cover?

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 the property 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!)

Be careful of the small print

As all warranty providers are insurers, it’s worth noting that 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 documentation and question anything that doesn’t seem quite right.

What do I do if I spot a defect?

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.

Both the LABC 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

What if the builder won’t honour the warranty?

The three approved providers of warranties in the UK all adhere to the Consumer Code for Homebuilders. The code features a 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.

What if I move house?

If you move, the warranty is transferred to the buyer of your home. Any work you have done on the home yourself – such as loft extensions or conservatories – will not be covered by the warranty. If you are buying a new home from a previous owner it’s also worth noting that the company warranties supplied for such works are not always transferrable. In other words, if the seller had a conservatory installed with a ten year guarantee from the installation firm, when they sell the house to you the guarantee often becomes invalid.

Can warranties affect my mortgage application?

They can do. It’s a condition of most mortgage applications that a warranty must be in place if you’re buying a newly built home.

Should I take out home insurance too?

Yes you should. Aside from the fact your mortgage lender will more than likely require you to have home 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.


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10 Comments

  1. Hi Andrew, is your builder a member of a Trade Association? While a Trade Association membership can’t ensure work will be perfect every time, you should be able to expect any problems will be dealt with fairly, and you can turn to their Association for help with any unresolved issues and complaints. I’m also wondering if you had a contract with the builder and what, if anything this says about warranties.

    Comment by Sara Hind — November 19, 2018 @ 3:55 pm

  2. We employed a builder to build our house working from and architect’s design. Should the builder have provided us with a warranty?

    Comment by Andrew — November 18, 2018 @ 10:05 pm

  3. Very very helpful site

    Comment by Sarah — September 28, 2018 @ 12:17 am

  4. Hi Sandra, if you’d like to consider becoming a member we may be able to help you with this.

    Comment by Sara Hind — June 27, 2018 @ 2:04 pm

  5. Bought David Wilson house and got a 5 year warranty which they now don’t do. The warranty booklet shows and includes roofs but not weather damage. We have since had a workmanship problem with it but they say it is only covered for 2 years. After we questioned them and have done many times they say it isn’t written anywhere it just is. Apparently NHBC doesn’t have it written either it just is. How can you offer people warranties but no where is it written what is excluded or included.
    Can you help in this . We are told the 5 year covers everything and has a page in the booklet about roofs!!!

    Comment by Sandra — June 15, 2018 @ 11:13 am

  6. Hi Richard, it’s usually from the date that the sale was completed.

    Comment by Sara Hind — June 12, 2018 @ 1:12 pm

  7. Hi,

    Could you possibly tell when the warranty starts for a new build purchase?

    Is it from the date the build is finished, or the date the sale is completed?

    It would seem a bit unfair if it was from the build completion if that occurs some months, or years before the owner moves in.

    Thank you,

    Richard

    Comment by Richard Davies — June 8, 2018 @ 4:02 pm

  8. Hi Liz, have you seen our Ask an Expert article on this subject? Take a look, it has some good advice which I hope will help. https://hoa.org.uk/services/ask-an-expert-2/ask-an-expert-i-am-managing/new-build-draft-and-insulation-problems/

    Comment by Sara Hind — April 24, 2018 @ 2:47 pm

  9. I have recently bought a nine and a half year old top floor apartment. The ceilings are high and follow the contours of the roof. I moved in in February and it was extremely cold, whereas the other apartments in the block were fine. I think there must be a defect in the insulation in the roof. Is there anything I can do about it? Hope you can help.
    Regards,
    Liz robson

    Comment by Elisabeth Robson — April 20, 2018 @ 12:17 am

  10. I cannot see any reference to any overall controlling body for warranty providers. If a house owner is unhappy with the way he/she has been treated, whom can he/she refer or complain ?
    For example, my house has a CRL warranty. The policy refers to the fact that the builder must have complied with CRL’s technical requirements. Because of significant problems I have had, I wanted to see a copy of these technical requirements but this was refused. As it is referred to in my policy, I consider it to be part of the policy. Does the Insurance Ombudsman cover this sort of thing?

    Comment by Rod Lewis — April 1, 2018 @ 9:30 pm

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