What are New Homes Warranties?

A New Homes Warranty is designed to protect homeowners of newly built, converted or refurbished properties from structural defect in the first 10 years.

If the property has been built or converted within the past ten years, or is to be occupied for the first time, you must ensure that it was built or converted under a scheme acceptable to your mortgage lender.

What is a building warranty?

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

Who provides new build home warranties?

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

There are also warranty providers operating under different codes of conduct

How long do warranties last?

Building warranties usually last for 10 years.

What do they cover?

On exchange contracts your warranty will cover your deposit against the Developer going insolvent. This means if the builder goes bust and doesn’t start or complete the property your warranty provider will reimburse your deposit. Not all warranty providers include this cover, so do check the position with your Lawyer for your particular Property.

Once the property is built, the warranty is split into two periods: –

Year 1 and 2 – defects insurance period.

Year 3 to 10 – the structural insurance period.

During the first two years 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’ become your own responsibility, including non-structural defects such as problems with your gutters or fixtures and fittings.

What is not covered?

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!)

How do I notify a defect?

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.

Some warranty policies have an excess, which means you will pay an initial excess for each claim made under the warranty

What happens if the builder won’t honour the warranty?

If the Builder conforms 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.

Does the warranty remain valid if I move house?

The warranty is attached to the Property and is transferred to your buyer. Any work you have done on the property yourself (extension and alterations such as loft conversions or conservatories) will not be covered by the warranty.

Can warranties affect my mortgage application?

Yes. It is usually 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. Aside from the fact your mortgage lender will require you to have buildings insurance in place, it is sensible 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.

For advice and assistance in purchasing a new home, please do not hesitate to contact our New Homes team on 01604 828205 for Marie Bevan / 01604 828219 for Kris Raca or email newhomes@franklins-sols.co.uk.