Mon. Jun 17th, 2024
new build warrantynew build warranty

Buying a home is a big investment. Even for new build homes, which buyers expect to have no issues, things can still go wrong with contractors or the construction itself. So, why wouldn’t you want the extra safety net of a structural building warranty?

Having a new build warranty helps to minimise risks by providing financial protection against latent structural defects. This means that if a structural problem does pop up at some point during the warranty period, you won’t have to worry about repair costs.

While they aren’t a legal requirement, structural warranties offer a unique level of cover to relieve your financial liability for defects. Let’s look at what exactly new build warranties are and why you should make sure to get one for your new build property.

What does a new build warranty cover?

The term ‘new build’ usually refers to a house or flat that is a brand new construction, typically built within the last 2 years and never lived in before. The builder or developer selling the new build is likely to have taken out a structural warranty to cover the property.

Unlike buying a second-hand home, you can expect the purchase of a new build to come with a 10-year structural warranty in effect from the property’s date of completion. It makes the sale more attractive to buyers because the extra protection offers peace of mind.

When you buy an off-plan new build before construction is finished or has even started, it’s even more important to have such a warranty. In this case, the policy will prevent you from losing your deposit if the builder or developer goes bust without completing your home.

A new build warranty should cover the associated costs of structural defect repairs resulting from faulty design, materials, or construction. They tend to be broken down like this:

  • First 2 years (defects insurance period) – the builder/developer is obligated to rectify any structural faults you report to them during this time
  • Remaining 8 years (structural insurance period) – the warranty now only covers major structural elements, and the policy provider is responsible for claims

This is the standard for structural warranties because most issues will arise within the first couple of years after completion. The additional years of cover allow for the site to settle and any serious latent defects to become apparent, such as a shifting foundation.

Remember to always read the small print, so you know exactly what coverage you’re getting and when it applies. Policy conditions can vary between providers, so look for the best deal and discuss including a snag list clause with the seller to address any small immediate fixes.

Do I still need home insurance?

Yes, you do. A structural warranty is not the same thing as a home insurance policy. Rather than the seller, the homeowner is responsible for taking out an insurance policy covering the building and its contents for their own financial protection in the event of damage or theft.

While a new build structural warranty holds the builder accountable for major structural defects, your home insurance won’t cover those things. Similarly, structural warranties don’t cover damage due to weather, fire, flooding, or accidents – which home insurance does.

So, if you want the best possible level of protection, covering the integrity of the building and the condition of everything inside it, then you’ll want to have both policies in place. Home insurance policies can include building insurance and contents insurance, or just one of them.

You’re likely to find it easier to apply for a mortgage or equity loan if you have a structural warranty and building insurance. These policies reassure the lender that this investment isn’t high-risk and their money is protected, making them more likely to accept your mortgage application.

What should I do if my new build has a structural defect?

During the defects insurance period, which covers the first 2 years after completion, you should contact the developer or builder to report any structural problems. This could be an issue with drainage, window sealing, or unfinished fixtures and fittings. Structural warranties generally don’t cover superficial damage, wear and tear, or poor maintenance.

If they refuse to take responsibility, you can file a complaint with the company and then request a referral to an independent resolution scheme if you’re not happy with their response. This can take some time though, so you may prefer to contact the warranty provider directly instead.

From years 3 – 10, the structural insurance period covers only major defects relating to elements such as the roof, walls, foundations, and window glazing. The warranty provider takes over full responsibility from the builder or developer, so you should make a claim through them.

When you reach the third year and the initial defects insurance runs out, you’ll become responsible for fixing smaller issues yourself, so pay attention to that date. A standard structural warranty will expire 10 years from the date on the building completion certificate, so keep a note of that, too.

Why should I get a new build structural warranty?

Ultimately, the purpose of a structural warranty is to protect your financial investment into the property. The last thing anyone wants is to find structural defects in their new dream home, but if this does happen, you can rest assured that the builder will address them quickly if you have a structural warranty in place.

Most builders and developers will take pride in their work and want to provide the best service, but this unfortunately isn’t true for everyone. Without a warranty, they’ll have no obligation to sort out repairs for you, leaving you to either take them to court or pay out of pocket.

If your new build isn’t actually your ‘forever home’ and you end up moving within the next 10 years, then having the ongoing structural warranty can be a selling point. The warranty will stay with the property and transfer to the next owner, giving them the same peace of mind.

Just as you’ll improve your chances of a successful mortgage application with a structural warranty, so will potential buyers. Whether you intend to live in the property, rent it out, or sell it on, having a structural defects warranty tailored to your property type will always be beneficial.

Remember that further construction work on the property could invalidate the original warranty. If you end up carrying out a conversion, adding an extension, or knocking through a wall while you’re refurbishing your living space, you might want to contact your provider to discuss upgrading your policy. You may be able to get a new warranty as if it was a new property again.

By admin

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