A blog written by Elliott Mutlow, Paralegal with MJP Conveyancing
Purchasing a new-build property is an exciting milestone, but it presents its own set of challenges. One of the most important aspects to consider is the warranty and insurance coverage that accompanies newly built or converted properties. Among the various options available in the United Kingdom, the NHBC’s Buildmark Warranty is the most widely used. This guide will help conveyancers and homeowners understand the purpose, structure, and responsibilities tied to the NHBC Buildmark Warranty, enabling them to make informed decisions.
What Is the NHBC Buildmark Warranty?
The Buildmark Warranty is a ten-year warranty and insurance policy offered by the National House Building Council (NHBC). It provides crucial protection to buyers of new-build or newly converted homes. Beyond offering peace of mind, this warranty protects against financial losses arising from defects, builder insolvency before completion, and other construction-related issues.
NHBC provides three types of Buildmark Warranties, tailored to different property types:
- Buildmark: This is the standard warranty for newly built homes intended for private sale.
- Buildmark Choice: Developed for landlords and long leaseholders of newly built or converted homes.
- Buildmark Connect: Specifically designed for newly built commercial properties within mixed-use developments.
While the warranties vary slightly depending on the type of property, their core structure and benefits remain consistent.
The Stages of Buildmark Coverage
The Buildmark Warranty is divided into three distinct stages, each offering essential protections:
1. Insolvency Cover (Before Completion)
- This stage begins from the date of the buyer’s exchange of contracts and concludes at the legal completion of the property purchase.
- It protects buyers from financial loss if the builder becomes insolvent before completing the home. For instance, the NHBC could either reimburse the deposit paid or cover reasonable costs required to finish the construction.
2. Builder Warranty (Years 0-2 After Completion)
- During the first two years after the property’s completion, responsibility lies with the builder. They are obligated to rectify any defects that arise due to their failure to meet NHBC’s strict building standards.
- Key benefits include:
- The builder is required to address qualifying issues within a reasonable time frame.
- If the issue disrupts access to kitchen or bathroom facilities, the builder may need to arrange temporary accommodations for the homeowner.
- If the builder does not comply, NHBC provides a resolution service to step in, when necessary.
3. Insurance Cover (Years 3-10 After Completion)
- During the remaining eight years, the NHBC provides insurance coverage for specific structural issues and defects.
- Examples of coverage include:
- Repairs for damage caused by failure to meet NHBC standards in critical areas, such as foundations or roofing.
- Costs of temporary accommodations if the homeowner needs to leave the property during major repairs.
- Improvements to the condition of contaminated land if statutory notices are issued.
Note: Claims under this stage must meet the minimum claim value specified in the policy documents to be processed.
What Is Not Covered by the Buildmark Warranty?
Although comprehensive, the Buildmark Warranty has certain limitations. It typically does not cover:
- Gradual wear and tear or neglect.
- Issues caused by severe weather, fire, or theft.
- Modifications or extensions added after NHBC’s final inspection.
- Items covered under separate policies, such as home contents or boiler warranties.
These exclusions highlight the importance of proper maintenance and supplementary insurance policies for homeowners.
Why the Buildmark Warranty Matters
Home defects and construction-related problems can lead to significant financial strain if left unaddressed. For homeowners, the Buildmark Warranty represents a safety net, ensuring remedial action is taken with minimal financial risk. For conveyancers, understanding the nuances of this warranty helps protect clients’ investments and strengthens client trust.
The Role of the Conveyancer
When managing the legal aspects of a new home purchase, the conveyancer plays a crucial role in ensuring the Buildmark Warranty is valid and that their client fully understands its implications. Their responsibilities typically include:
1. Verifying Warranty Documentation
- Reviewing contract terms to confirm NHBC coverage is included.
- Accessing and inspecting relevant documents on the NHBC Conveyancing Portal.
- Ensuring that the builder is registered with NHBC.
2. Providing Clear Communication
- Explaining the warranty’s limitations and benefits during every stage.
- Supplying clients with all essential NHBC documents, such as policy booklets, summary certificates, and insurance documentation.
- Recommending independent legal advice for matters outside their expertise.
3. Informing Clients on How to Make a Claim
- Claims during the insolvency and insurance stages require direct communication with NHBC, typically through an online form or by phone.
- During the builder warranty stage, clients must first contact the builder, document all interactions, and escalate unresolved issues to NHBC only when necessary.
- Ensuring clients retain critical documents, such as title deeds and their policy number, for claim purposes.
Proactive involvement by conveyancers ensures a smoother claims process for clients, reducing the risks associated with misunderstandings or missed deadlines.
Steps Homeowners Should Take
To maximise the benefits of the Buildmark Warranty, homeowners should:
- Carefully read the policy documents to fully understand what is covered.
- Keep important documents, including contracts, warranty certificates, and builder contact details, organised and accessible.
- Conduct regular property maintenance to avoid exclusions based on neglect.
- Act promptly to address issues within the builder warranty period.
Summary
For homeowners, the NHBC Buildmark Warranty offers essential peace of mind when investing in a new-build property. For conveyancers, it is a key resource to protect their clients’ interests. With its clearly defined stages, extensive coverage, and support mechanisms, Buildmark provides robust safeguards for resolving defects and managing financial risks.
By understanding the warranty’s scope, limitations, and claims processes, conveyancers can guide their clients effectively, ensuring they are well-informed and protected throughout their homeownership experience.
Whether you are buying, selling, or advising on a new-build property, the NHBC Buildmark Warranty is an integral aspect of the process. For further insights and resources, visit the NHBC website or consult with a registered NHBC conveyancer.
