How a new build warranty could protect you from dodgy developers
Many people prefer to buy a newly built home rather than an older pre-used building for lots of reasons. These include the fact that pre-owned homes older than 10 years are unlikely to have a structural warranty, whereas a new build should come with one.
Even if the builder doesn’t make the most of modern technologies and exceed building standards, having the new build warranty included in the property purchase means you’ll be covered against latent structural defects if an issue develops in your new home.
While most new build homes have a structural warranty that promises peace of mind, this isn’t always the case. Unfortunately, the media has been flooded with new build horror stories in recent years – we’re sure you’ve seen a fair few exposés on unscrupulous developers.
So, why is it necessary to have a new build warranty in place before you buy and move in? What happens if you don’t have one? If you have a structural warranty and discover a defect, what should you do to resolve it? We answer all these questions and more in this blog.
Britain’s new build scandal has been widely reported on. According to statistics gathered by This is Money, a shocking 94% of new build homeowners discover at least one defect after completion, while 42% report finding more than ten. The average new build property now comes with around 157 ‘snags’ in varying levels of severity.
Even the biggest developers in the UK have been caught cutting corners, as builders are pressured to complete projects quickly, resulting in rushed and shoddy workmanship compromising the quality and integrity of the structures.
Here are examples of common structural defects found in new build homes across the UK:
As you can see, there are a lot of potential issues that might not be apparent at first glance. Even if you notice something small initially, like hairline cracks in the plaster, it could be a sign of a more serious underlying problem that could get significantly worse over time.
After all, if something as simple and easy as fitting a door hasn’t been done properly, what else might they have bungled or missed completely? Without a chartered surveyor monitoring the build and the ongoing protection of a structural warranty, you could be left to foot the bill for fixing an extensive list of problems like these by yourself.
Yes – as long as there’s a new build warranty in place that specifically covers the buyer in the event of builder insolvency. When this is included in the contract, you should be able to at least recover your deposit if the builder goes out of business without completing your new home.
Depending on the specific terms your policy offers, this stage of a structural warranty should cover ‘reasonable costs’ – including recovering any payments to the builder and the necessary work to complete the remainder of the build to its original specifications.
To make a successful warranty claim if your builder/developer becomes insolvent, you must have had grounds to believe they were able to fulfil the contract. If you had prior knowledge of pending insolvency or doubts at the time of signing the contract, it could invalidate this part of the warranty.
As a back-up for your new build warranty, you should also check that your builder or developer is signed up to the Consumer Code for New Homes or the Consumer Code for Home Builders. This ensures minimum standards of quality, customer service, and after-sales support. It also allows you to access a low-cost independent dispute resolution service to handle complaints impartially.
One of the biggest security nets offered by obtaining a structural warranty at the start is having expert surveyors on your side to identify snags. Even with the best properties and construction teams, you can expect a ‘snagging list’ of some kind.
When the property is finished, you should be invited to look around and point out any issues you want the builder to fix before you move in – but you may not know what you should be looking for. In the case of latent defects, they might not be noticeable until much later.
When your structural warranty provider carries out key stage inspections, they’ll be knowledgeable enough about industry standards to spot even the smallest variations. This means they can notify the builder of things they need to rectify before they go any further.
By contrast, if you wait until after completion, it can cost more and take longer to correct errors. You may also have to pay out of pocket for a post-completion survey to get an official report on the various ‘snags’ present in your supposedly finished property.
When you have a new build structural warranty from the beginning of construction, which the builder or developer should have set up and passed on to you as the buyer, the warranty provider should carry out structural surveys as part of the service.
It’s best to entrust this process to the professionals, who know exactly what to look for inside and out, from walls and roofs to fixtures and fittings. The earlier you do this, the lower the risks should be of serious latent defects developing down the line.
While most new build warranties will also cover the buyer against the builder becoming insolvent during the build, the main part of the 10-year structural warranty kicks in from the date of issue on the property’s completion certificate.
As you may know, the first 2 years are the defects insurance period, wherein the builder is obliged to come and fix any problems with their work if you contact them about outstanding repairs. This may not include cosmetic or decorative issues like tiling or carpeting.
From the end of the second year onwards, the final 8 years are the structural insurance period. During this time, the builder is only responsible for rectifying major structural defects, and the warranty provider usually pays for the repairs when you make a successful claim.
Examples of what a successful structural warranty claim might pay out for include problems with:
On the other hand, these are examples of ‘minor’ issues that your warranty isn’t likely to pay for:
Additionally, there will be a minimum and maximum claim value. The provider will calculate the appropriate expenses for necessary repairs, and usually won’t pay more or less than the exact cost of the required remedial work. Of course, you may have to pay an excess per claim.
This is why it’s important to check the builder’s warranty before they pass it on to you, and request to change providers if their policy doesn’t include the cover that you expect. Always check the terms and conditions and the policy schedule before agreeing to the contract.
If you don’t have a structural warranty, and you find a defect in your home, you have two expensive choices. First, you can save time and sort out repairs yourself with your own money. Second, you can take the builder/developer to court and try to prove they’re at fault for the defects.
Neither of these are attractive options for new homebuyers who have just set up a mortgage. If you did the smart thing and ensured you had a new build warranty, then you can check your paperwork and follow the steps directed in the policy.
If you notice a structural issue within the first 2 years after completion – not 2 years from your move-in date, unless it was the same day as the completion certificate was issued – then you should contact the builder or developer responsible for your property directly.
When you contact them, be sure to keep a record of all communications and agreements. These will provide supporting evidence if the builder refuses to do the work, leaving you to take your complaint to a dispute resolution scheme or your warranty provider.
From the start of the third year, the builder’s responsibilities are reduced, and it can be harder to get them to respond to your complaints in a timely manner, if at all. If the problem has a significant repair cost attached, it’s best to bypass the builder and make a claim with the policy provider.
Unfortunately, once your structural warranty expires at the 10-year mark, you won’t be able to claim on latent defects that appear more than a decade later. You’ll have to rely on your own building insurance policy, which may not offer the same extent of financial protection.
Since a structural warranty isn’t technically a legal requirement, not all builders or developers even bother to get one. You should always check before agreeing to a sale.
If you’re a buyer in need of a new build structural warranty, or you’re building your own home and require a self-build structural warranty, we can help to make sure you aren’t being short-changed by a dodgy deal.
The ABC+ Structural Warranty available from Architects Certificate can be tailored to a range of property types. You can find out more about this kind of policy in our new build warranty guide, or get in touch to discuss our structural warranties with our team.