The main purpose of a new home warranty is to offer buyers peace of mind. Although warranties usually last 10 years, it’s important to know what is and isn’t covered throughout that period. It’s something that isn’t as cut and dry as you may think.
The common train of thought is that by buying a new build property, you’ll run into fewer issues than with an older property. This isn’t strictly true. Should you move into a new build property, you’re going to need assurances that the developer will rectify any problems that occur – enter building warranties.
What is a building warranty?
It’s basically an insurance policy for new build properties. It’s taken out by the developer or builder but is there to protect the buyer (you).
Who provides them?
There are three primary providers; the Local Authority Building Control Warranty (LABC), Premier Guarantee and the National House-Building Council (NHBC) – the most popular, covering 80% of the new build sector. These all act under the Consumer Code for Home Builders.
There are additional providers that operate under different codes of conduct, like BLP, which follows the Code for the Purchase of New Homes. Their warranty differs from the others above since in this case, the builder isn’t required to pay a fee to obtain a warranty. This warranty can be issued for a property that’s already a year old; BLP will intervene and fix any issues right away, whereas LABC, Premier and NHBC will first expect the builder to fix any issues within the first two years, before intervening if need be.
Checkmate warranties operate under the Consumer Code for Builders of Homes for sale, whereas The FMB (Federation of Master Builders) offers a warranty under the new Consumer Code for New Homes (CCNH).
How long do they last?
Building warranties usually last for about 10 years.
What do building warranties cover?
Should you decide to buy a property off plan, something not unusual with new builds, once the contracts are exchanged your warranty will protect your deposit against the developer going bankrupt. Should this occur and the builder neither starts nor completes the property build, your warranty provider will return your deposit.
When the property is finished being built, the warranty gets split into two periods:
- Defects insurance period – covering the first two years
- Structural insurance period – covering the third year to the tenth
Through the first two years, any issues you encounter with the builder’s work should be escalated with them so they can arrange to fix them. Through the structural insurance period, the builder only claims responsibility for large problems to do with the structure of the property, such as foundations, roofs, ceilings and chimneys. Smaller issues like problems with your gutter or fittings are now your responsibility.
Ensure you get crystal clear clarity on when your warranty comes into effect so you can keep a note of when it expires.
What isn’t covered?
It shouldn’t come as surprise that general wear and tear isn’t covered; neither is weather damage or any issues that come as a result of poor property maintenance.
Condensation and damp are only covered should it happen as a result of the builders not complying with the standards of the warranty provider.
Don’t ignore the details
Since warranty providers are insurers, it’s important to remember that it may not always be possible for them to carry out remedial work. This means it’s crucial that you read the small print and question anything that may be of concern.
If defects are spotted, ensure you contact the builder as soon as possible. Keep track of your communication with them and make note of times and dates. This will come in handy if there are problems or delays in getting the issues sorted.
What if I move?
If you move out of the property, the warranty is automatically transferred to the buyer of your home. But remember that any work you’ve carried out yourself, like a new conservatory won’t be covered by the warranty.
Should you buy a new home from a previous owner remember that company warranties supplied for works like this aren’t always able to be transferred. So if the previous owner installed a new conservatory for instance, the installation company’s warranty may become invalid.
Some last things of note:
- Warranties can in fact affect your mortgage application. It’s even a condition of many mortgage applications that a warranty must be in place if you’re purchasing a new property.
- It’s also worth taking out home insurance. Although your mortgage lender will likely require you to have it in place, it’s always worth doing in an effort to protect your investment. The warranty only covers issues that are the builder’s problem. If your home suffers a flood or fire damage you won’t be covered.