Understanding New Build Home Warranties and Guarantees

If you’re buying a new build home, then you might take comfort from the written reassurance you’re given by the people who’ll be building it. This can take many forms, including insurance-backed warranties and guarantees. But before you commit to the purchase, it’s worth taking the time to establish what these products really amount to, and how they’re regulated.

What Is a New Build Home Warranty?

All mortgage lenders require what’s called a ‘structural’ warranty of at least a decade. This is something that’s designed to pay out when the building itself fails. When this occurs, it’s typically because of faults in the design and construction of the building itself.

By providing a warranty, builders can offer reassurance to buyers, and to the lenders behind them.

Key Types of Warranties and What They Cover

We’ve already mentioned the role played by structural warranties – which might also be referred to as New Home Warranties, or Latent Defects Insurance.

However, this isn’t the only kind of warranty on offer. You might also find workmanship warranties, which are offered by specific contractors to cover specific jobs, and appliance cover, which is there to make sure that the fridge, cooker, and boiler are all working properly.

In the case of structural insurance, there’s usually a short ‘defects’ period of around two years, during which minor details can be raised and corrected. After this, only major structural issues, like the external render, brickwork, and foundations, are covered.

During the initial period, homeowners might want to keep an eye out for a few specific problems, including poorly-installed weep vents, doors that don’t close properly, and shabby paintwork.

Provider Standards and Consumer Protections

Warranties can be provided by many different organisations. These include Premier Guarantee, LABC, and the National House-Building Council, whose ‘Buildmark’ warranty is the most popular in the country. Seek out a major, reputable warranty provider that requires developers to sign up to a consumer code, like the New Homes Quality Code.

If you think that your case has been mishandled, then you can take the matter to the Financial Ombudsman Service, or take legal action. The latter option, however, can introduce considerable extra costs, and should only be considered as a measure of last resort.

Recent Legal Changes and What Buyers Need to Know

Under part five of the Building Safety Act, new homes will need to be protected with a fifteen-year warranty, rather than a mere ten-year one. This will be mandatory only in England, however. Where the developer fails to provide the required protection, they’ll need to pay a fine of around £10,000, or 10% of the property’s total value (whichever is greater).