Whenever a new home is bought, it is usually the start of something exciting and new for a lot of buyers.
However, there are a lot of risks that come with the purchase of a home like this too including the property coming with construction defects, design flaws, and material defects.
This can all lead to costly repairs and maintenance down the line but not if you have a new build warranty. This warranty is where a snagging inspection is conducted for free within a property within a certain time period.
In this article, we will be going over what a new build warranty is, what kinds of defects a warranty like this covers and if a new build warranty covers more serious repairs like structural issues.
The ins and outs of new build warranties will be explored in detail and will also include what they cover, how they work, and why a new build warranty is essential for homeowners.
So, Whether you are buying a home for the first time or you’ve been in the property space for quite a while, understanding new build warranties will serve you well as you’ll be able to make an informed decision and protect your investment.
What is the duration of the warranty for a newly constructed property?
Whenever you’re purchasing a new build, the builder or whoever is selling a home should have already established a structural warranty for you as the buyer. This warranty should be ten years.
This means that putting aside the ten year period where there is cover, the policy should also protect the deposit of a homebuyer in the event that contractors go bankrupt before completing the construction.
You should therefore find a list of any of the snagging issues (sometimes referred to as a snag list) that need to be resolved before moving in, ensuring that everything is ready for you to settle in before you move in to a property.
On top of this, making a list of the issues you notice as you begin to live in a new build property is essential to make the most of this snagging period.
A typical new build warranty provides 10 years of insurance coverage for the completed property, beginning from the date indicated on the completion certificate.
Nonetheless, some policies consist of a two-year initial period covering defects and an eight-year period for the remaining coverage for example this policy.
The difference between the two and eight years being that fixtures and fittings are only protected during the first two years, so it is important to keep track of each period’s expiration date.
If you are purchasing a property that is less than ten years old or are curious about what happens to the policy if you sell your new build and move before the coverage expires, there is no need to be concerned.
The structural warranty remains with the property for ten years from the official completion date, so if someone buys the property during that period, the policy is transferred to them. Having said this, it does not reset or renew for another ten years from that point and only applies for the remainder of the existing term.
A new build requires a structural warranty?
Although it is not an absolute requirement, it is highly probable that a newly built property should have a structural warranty in place when applying for a mortgage.
As lenders are investing in the property upfront, they want to safeguard their funds against potential losses and devaluation just like a homeowner would want to.
In the rare case that a lender agrees to provide a mortgage without a new build warranty, they may only lend a smaller percentage of the property value, and the monthly payments may be higher.
However, this is not an ideal scenario for most buyers and nor is it advisable.
Before applying for a mortgage, it is crucial to verify the mortgage provider’s definition of a new build, as they may have some exclusions on what falls into this category.
Also, when purchasing off-plan (before the house has completed construction like seen here), avoid applying for a mortgage too soon.
A mortgage valuation is dependent on the building specifications, and the mortgage offer has a time limit.
What is exactly included in a new build warranty?
To ensure that you are fully aware of what you can claim for during the warranty period, it is essential to comprehend what the new build warranty covers as some buyers get confused here.
The 10 year policy is divided into two parts, with the initial two years referred to as the defects insurance period and the remaining eight years still being insured but only covering more serious defects.
During the first two years, the builder is accountable for any issues with the work completed, and should they arise, such as faulty electricity work or windows that need sealing, the builder is required to come and fix them without any charge.
After these two years are up, the warranty only covers structural elements, such as the foundations, roof, ceilings, chimney, etc. and signifies a major defect in a property.
If this is at all confusing, the terms of the agreement between a homeowner and building contractor should be laid out as part of one of the property documents given when the home is built.
Nonetheless, you should carefully read your policy documents to understand when each period applies and what you can claim for during that time.
What does a new build warranty protect or guarantee?
In simple terms, a new build warranty guarantees that a homeowner is able to get the defects that crop up in the first two years of property ownership covered cost free.
After these two years, the process is harder as some defects are simply just seen as due to general wear and tear but major structural problems in a property are still covered.
This is a massive incentive for those purchasing new builds as it means they aren’t at the mercy of contractors who have a poor reputation for producing homes with a cheap build quality.
What actions should I take if the builder does not comply with the new build warranty?
In the UK, all newly constructed houses come with a warranty provided by a warranty provider to ensure that significant defects in the property will be addressed.
The largest warranty provider in the UK is the NHBC’s Buildmark warranty, which covers roughly 80% of all newly built homes. This warranty also covers the rectification of snags.
As a result, if a builder does not comply with this warranty, then the NHBC will cover costs but this is not to say that there won’t be a legal process first through a dispute resolution. The NHBC will reach out to the builder to determine whether they will complete the job or if there is a disagreement about if the defects are actually their responsibility.
If there is a disagreement, an NHBC Claims Investigator will meet with you and the builder at the property to try and resolve the issue and a solution will be given to the builder and homeowner within four days.
If the work is not completed within the given timeframe by the claim investigator then the NHBC will hire contractors to complete the job and the contractor will be fined.
It is in the best interest of a contractor to stay away from fines, even if they think the fine is less than the cost of doing repairs as multiple offences could cause the NHBC to revoke the contractor’s right to construct any more new build properties.
How can I obtain a warranty for my newly constructed house?
Obtaining a new build warranty from a provider is generally a straightforward process, but it’s important to note that larger providers are generally better suited for larger properties and vice versa.
So, it may be better to go with a smaller provider if the value of your home isn’t that much.
This is because providers tend to favour the representation of the contractor, rather than the developer or buyer, and may not intervene if works have already begun on site.
By bypassing middlemen and going directly to accredited specialists, you can be confident in the quality of the services you receive and have peace of mind knowing that you have a dependable new home warranty.
If I sell my new build property, what happens to the warranty?
The warranty for a new build property is tied to the property itself and not the owner or policyholder so the warranty will just be transferred to the new owner.
This can be an appealing feature to potential buyers, especially if you plan on convincing future buyers that a new build hasn’t lost value.
Either way, keep your Buildmark certificate in a safe place and take note of the policy number, which is located on the certificate. This could be useful to prove to future buyers that the warranty is valid.
In summary
When looking at the broad topic of new build warranties, it is a very important process of buying a new build and it is clear that if a buyer isn’t familiar with how they work they can end up worse off in their property deal.
It is important for a buyer to understand how to take full advantage of it as contractors can be known to produce new builds that come with a lot of defects.
On the other hand, a developer should also know their rights and feel like they can contest any appeals for defects that do not align with the terms of a warranty.
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