Buying a property is an exciting process, especially if it’s going to be your family’s ‘forever’ home. However, to prevent your dream from becoming a financial nightmare down the line, your home will need a structural warranty. Even new builds aren’t exempt from the risks of structural defects.
If you’re planning to buy a new build home, and researching the warranties it should have, then you’ve come to the right place. This blog explains everything you’ll need to know about new build properties and structural warranties, so you can protect your investment for the next 10 years.
A ‘new build’ is a new building which has been constructed within the previous two years and has never been lived in. Some new build properties may have been rented or owned once before, but the term usually refers to a brand new house or flat that a developer is selling for the first time.
New builds are extremely popular among first-time homebuyers, because they can get an equity loan from the government through the Help to Buy Scheme. New build homes often come with fittings and fixtures like carpets and white goods, but these depend on the particular developer.
There is also the benefit of newer constructions following the latest standards and regulations, meaning that new builds tend to be more energy efficient. The sales process is often faster, too – unless you’re buying off-plan, in which case construction work might not even have started yet.
Every new build purchase should include a new build structural warranty. This should protect you financially if you find any structural defects within the first 10 years after completion. However, if you carry out any major refurbishments during this period, you may need to get a new warranty.
This type of new home warranty is a 10-year structural warranty taken out by the developer or builder. The policy is designed to protect the buyer of the new build against the cost of repairing structural defects from faults in the design, materials, workmanship, installation, or construction.
A new build home is likely to have fewer problems than an older building, but this doesn’t mean that latent structural issues are impossible. When buying a new build, you should always review the structural warranty before completing the sale. While it’s not a legal requirement, it gives buyers peace of mind, and most mortgage lenders will also expect there to be a valid warranty in place.
When you buy a property off-plan, the builder or developer should already have a structural warranty in place. Once you exchange contracts, this warranty should protect your deposit – so you can get still that money back if the company goes insolvent before completing the construction.
After the building is complete, the 10-year warranty is split into different insurance periods. The first 2 years are the defects insurance period, during which the builder or developer will be responsible for fixing structural defects. For example, they’d be obligated to fix faulty pipes or window seals.
From the third year onwards, the warranty only holds the developer or builder responsible for major structural problems. This is the structural insurance period, which covers issues with foundations, roofs, chimneys, ceilings, and floors. Smaller defects relating to fixtures and fittings will now be the homeowner’s responsibility to fix. Make sure you’re aware of the date that this period takes effect.
Different providers and warranties may include different conditions, so it’s important to read the policy information thoroughly before finalising a sale. You should be completely clear on what the policy does and doesn’t cover, and discuss anything extra you think it should include with the seller.
Usually, a new build warranty will not cover damage due to weather or natural wear and tear over time. This type of policy also won’t pay out for damage resulting from lack of adequate maintenance on the homeowner’s part. For issues like condensation and damp, the warranty will only cover them if they result from the builder or developer failing to comply with the conditions of the warranty.
Be sure to check the small print carefully to understand everything that’s included and excluded. Don’t be afraid to question something that doesn’t seem right. It’s always a good idea to have a ‘snagging list’ provision in there to ensure they’ll take care of any smaller defects after completion before you move in. A snag could be anything that looks poorly fitted, unfinished, or damaged.
Yes, structural warranties can affect mortgage applications. The majority of lenders will require a structural warranty for a new build home to protect the funds they’re investing into the property.
The qualifying definition of a new build might vary slightly from one lender to another, so check this with the mortgage provider before applying. The mortgage process is generally the same regardless of whether the property is a new build or previously owned, but the loan amount might be lower.
This is because banks tend to tier the loan-to-value ratio (LTV) for new builds to protect themselves against the property’s gradual devaluation. If you buy off-plan, the mortgage valuation will depend on the building specifications, and the mortgage offer may expire during construction – so don’t apply too early in the process, or request an extension if the offer won’t last longer than 6 months.
If you notice signs of a structural defect within two years of completion, you should contact the builder or developer. Keep a record of the times, dates, and topics of your communications until they rectify the problem. If they refuse to uphold their obligations for any reason, contact the warranty provider.
Once the defects insurance period expires after two years from the date on the completion certificate, you can no longer contact the developer or builder about a structural problem. During the structural insurance period from years 3 to 10, you’ll have to get in touch with the warranty provider directly.
If you need to make a claim on your new build warranty, check the defects specified in the policy document and the excess you’ll have to pay first. The warranty provider can also tell you whether the policy covers your particular structural issue or not if you contact them to request more details.
A structural warranty stays with the property. This means that if you end up moving out and selling the property during those 10 years after its completion, then the warranty will transfer to whoever purchases it from you. The insurance period still applies from completion of the build, so it won’t refresh for the new buyer. If you don’t sell until more than 10 years later, the warranty will expire.
However, if you carry out any renovations during that time, the original warranty may no longer be valid. Refurbishments that affect the structure, such as loft conversions, extensions, or knocking through walls, will require upgrading to a new structural warranty if you still want that cover. Any company guarantees for this type of work won’t transfer, so an updated structural warranty is best.
A new build structural warranty isn’t the same as home insurance, and the two policy types don’t cover the same things. This is why it’s essential to have both, ensuring your property has the highest level of protection possible. The structural warranty only covers the integrity of the main structure, and defects that the original contractors are responsible for (e.g. architects, builders, developers).
Home insurance is a separate type of insurance that can cover property damage due to fire, floods, or accidents, which the structural warranty doesn’t. Specifically, building insurance protects the property itself, while contents insurance protects your possessions in the event of damage or theft. Neither type of home insurance will cover issues relating to defective construction or materials.
Some banks or building societies will also expect you to have home insurance before accepting a mortgage application. You’ll only need building insurance, as the bank is investing in the building and not your belongings. It’s fine to wait to get contents insurance until you actually move in.
Here at Architects Certificate, we offer our ABC+ Structural Warranty for a range of property types. Whether you need a new build warranty as a seller, a build-to-rent warranty as a developer, or a self-build warranty for your own design, we can help. We can even assist with a complete house warranty if you need to secure a structural warranty after the construction is already complete.
Simply contact us by calling 0161 928 8804 or emailing firstname.lastname@example.org to discuss your structural warranty requirements. Alternatively, fill out our quotation request form to receive a quick quote for your building project. You can find out more about our policies by browsing our dedicated policy pages, including the list of approved lenders who accept our structural warranties.
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