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Thinking of buying a new build home? Ensure you are covered

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Thinking of buying a new home? Ensure you are covered

Buying a new home is often one of the biggest purchases of our lives. It is an exciting yet often worrying time. Most new homes are covered by a builder’s warranty; the most common being the National House Building Control (NHBC).

You may agree to purchase your new home “off plan” which means that building has not even begun. A reservation fee is often paid reserving the plot which you intend to purchase. The legal process begins with the builder’s solicitor sending a contract pack to your solicitor. Once your solicitor has confirmed they are satisfied with the legal matters the exchange of contracts will take place and a deposit of around 10% is paid (unless you have agreed to pay less).

It is often a worry paying over a large sum of money without being able to see the finished product. The builder is responsible for completing the property and the balance of the purchase price and any extras is paid upon completion.

If the builder becomes insolvent between exchange and completion, then NHBC are required to step in and ensure the build is complete as per the contract. This should put your mind at ease in relation to your hard earned funds.

The builder is responsible for putting right anything covered by Buildmark that isn’t built to the NHBC requirements. This part of the cover is called the ‘builder warranty’.

If the builder cannot or will not meet their responsibilities under Buildmark, the NHBC provide a ‘resolution service’. If the builder still doesn’t put things right after the resolution service, NHBC do it on their behalf. This is known as the ‘NHBC guarantee’. So far so good, you may be thinking, and usually it is but there are a few points to note.

The resolution service is designed to resolve disputes that may arise between you and the builder about work to be done. The work needs only to be done to the NHBC technical standard and not necessarily be perfect so you should be mindful of this. The NHBC provide a resolution report confirming the work which is required and then a timescale can be agreed for the work.

If it is not completed within a reasonable time, then NHBC will either do the work on the builder’s behalf, or pay you what it would have cost to get the work done. This is where you need to be aware.

In the first option, the work they complete will be covered by the NHBC and you won’t have the hassle of having to locate contractors and agree what the work should cost.

If the NHBC agree to pay you what the work should have cost to be done, they sometimes will only pay the trade price, i.e. the cost that they could engage contractors for, not a member of the general public. This may leave you with a shortfall and is not a satisfactory resolution. If you accept a cash settlement as a resolution you may not be able to return to NHBC for further funds.

Another point to note is that if you engage your own contractors. This may invalidate the remainder of your NHBC warranty and therefore if there are any further issues within the ten year warranty period, the NHBC will not agree to rectify the same.

If you do wish to accept a cash settlement always ensure that you will obtain sufficient funds prior to agreeing a settlement figure. You can do this by obtaining three quotes for the required work. Then ask NHBC to confirm in writing that by engaging your own contractors this will have no effect on your warranty.

If you are unsatisfied with the way in which the NHBC handle your complaint about the builder, or a part of your home you may be able to complain to the Financial Ombudsman Service (FOS). The FOS was set up by law to provide consumers with a free, independent service for resolving disputes with financial firms.

Please note that the FOS requires you to have given the NHBC a chance to put things right before they’ll consider your complaint. This means you must exhaust the NHBC complaints procedure.

Overall a new home with an NHBC warranty or equivalent (i.e. Premier, Zurich and others) is usually a safe purchase, however if you do experience any issues, please contact our specialist team on 01616 966 229.