National House Building Council ('NHBC') warranty, or 'Buildmark' cover insures newly built or newly converted homes in the UK.
The NHBC introduced this insurance product in 1936 to improve UK house building quality. It now covers about 80% of new homes built each year in the UK.
This article explains NHBC warranties' coverage, benefits, and limitations. You'll discover how this insurance protects your new home purchase during the early years of homeownership.
What does an NHBC warranty cover?
An NHBC warranty protects new-build homes during two periods.
In the first two years, known as the 'builder guarantee phase' or the 'defects period', it protects against defects in workmanship and materials.
In years 3 to 10, it provides insurance cover for structural issues.
This two-period structure offers comprehensive protection for various aspects of new homes.
What protection does the builder warranty period provide?
During the first two years the warranty covers certain defects in new build homes and newly converted homes.
These include issues in your builder's workmanship, foundation defects, problems with walls, floors, and ceilings, defective drainage systems, faulty internal stairs, and problems with external render or cladding. This initial period ensures homes meet NHBC standards.
Builders must repair defects covered by the warranty during this time. If they don't address issues quickly, or if they fail, NHBC will step in.
What does the NHBC insurance cover period include?
From years 3 to 10, NHBC provides insurance cover addressing structural issues and resultant damage.
This protection covers specific components of homes: foundations, load-bearing walls, external render, roof structure, floor structures, chimneys, and retaining walls.
If any of these do not meet NHBC's technical requirements, the insurance pays for repair or replacement costs.
The claim limit for this period is the original purchase price of the home, up to £1 million for most properties. This coverage, sometimes called 'build warranty' or 'build warranties cover', protects against potential structural problems long after moving in.
It acts as a form of financial protection for homeowners. For flats, the warranty also covers shared areas such as foundations and communal staircases.
Who is eligible to be covered by an NHBC warranty?
When you buy a new-build home, you'll probably receive an NHBC warranty automatically. Builders usually obtain this for all new homes, not just those bought by first-time buyers.
You might also benefit from this insurance cover if you buy a recently built property, a newly converted home, or a shared ownership property.
Most commercial properties are not eligible.
What are the benefits of an NHBC warranty?
An NHBC warranty safeguards you financially against structural defects and poor workmanship in new-build homes and new conversions. It provides reassurance during the early years of homeownership, knowing that properties are covered. This cover can maintain (or increase) home value and make your home easier to sell, as it moves to new owners.
If buying off-plan, you'll get pre-completion deposit protection too, adding an extra layer of security to purchases.
NHBC's dispute resolution service helps resolve disagreements with builders. It's free for the first two years and can save time, stress, and potential legal costs. You won't need to handle complex negotiations or legal procedures on your own.
These policies also include contaminated land cover. This secures you if environmental contamination is found on properties.
Standard home insurance policies don't typically offer this unique feature, making NHBC warranties notable and giving comprehensive protection for properties.
What are the limitations of an NHBC warranty?
NHBC warranties don't cover everything in new build homes. They exclude general wear and tear, condensation not caused by a defect (such as from drying laundry in unventilated rooms), minor shrinkage cracks, damage from severe weather conditions, problems from modifications, and problems due to lack of maintenance. Accidental damage, such as a broken window from a stray cricket ball, isn't covered either.
Cosmetic issues, like paint finishes or wallpaper, aren't protected beyond the first two years. You will still require regular property insurance and other cover for contents and non-structural issues.
Some items have limited coverage periods. Triple glazing panes or outside windows, for instance, might only be covered for a specific time.
Generally, the warranties cover what would be the builder's responsibility to get right from the start.
What are the homeowner's responsibilities under the NHBC warranty?
You have several obligations in order to keep your NHBC protection valid.
Regularly maintain your property, promptly report any defects or problems, allow inspectors access for inspections and repairs, keep records of maintenance and reported issues, and don't make significant alterations without consulting NHBC.
'Building work' refers to any changes that might affect the warranty.
If you don't meet these obligations, it could affect your insurance protection. Review your policy paperwork and the maintenance guidelines NHBC provides.
How does the NHBC warranty claim procedure work?
The NHBC warranty claim procedure is straightforward.
For the first two years after legal completion, tell builders directly about any issues. If they don't respond or resolve the problem, contact NHBC for assistance.
From years 3 to 10, reach out to this organisation directly to report structural issues.
NHBC will assess claims and may send an inspector to check the issue. If they approve claims, NHBC will either arrange for repairs or provide financial compensation. This will allow you to maintain your home in good condition, ensuring that any covered defects are repaired promptly and effectively.
How much does an NHBC warranty cost?
Builders pay for the NHBC insurance cover cost, adding it to new home purchase prices. As a homeowner, you don't pay for this insurance product directly. The price reflects the comprehensive scope of the years insurance cover provided.
Builders consider several factors when calculating the premium. These include property value, construction type, and builder's track record.
These costs might indirectly affect home purchase prices. While warranty prices change, they constitute a small part of overall home costs, providing valuable protection for investments.
Can an NHBC warranty be transferred to a new owner?
NHBC warranties transfer with properties when you sell them. This insurance cover continues for the rest of the 10-year period, regardless of ownership. This period starts from the date of legal completion, not from when you sell the property.
This process occurs automatically. Neither sellers nor buyers need to take action. Buildmark cover passes to new owners along with properties. As a buyer, you should get warranty documents from previous owners.
This transfer feature of the warranty and insurance cover can make properties more appealing to future buyers.
How does the NHBC warranty compare to other new home warranties?
The NHBC warranty is prominent in the UK's market. It competes with other providers like Premier Guarantee and LABC Warranty. These warranties all protect newly built homes, but they differ in key areas.
The NHBC insurance product covers properties for 10 years after completion. It includes a two-year builder warranty period, followed by eight years of insurance protection. Premier Guarantee and LABC Warranty offer similar 10-year structures. However, NHBC's dispute resolution service and builder requirements often distinguish it.
The National House Building Council has operated since 1936 and covers about 80% of newly built properties in the UK. This established reputation and large market share make NHBC the industry standard. While alternative insurance products may offer similar coverage, NHBC's widespread acceptance often gives it an advantage.
The organisation's building standards are typically more comprehensive than those of competing companies. These cover various aspects of construction, from foundations to roofing. Construction companies must adhere to these standards to offer this cover, which can result in higher quality homes. More stringent building standards can mean fewer defects in properties. NHBC also checks compliance with building regulations. This dual role as both warranty provider and building control body differentiates it from other warranty providers and contributes to the overall quality assurance of new homes.
Claim limits and processes also differ between providers. NHBC's maximum claim limit is typically the original purchase price of the home, up to £1 million. Other providers may have different limits or structures. Examine these details carefully when comparing warranties.
While NHBC, Premier Guarantee, and LABC Warranty all offer robust protection, NHBC's extensive history and thorough approach often make it the preferred choice for many builders and homebuyers.
However, the most suitable warranty will depend on specific needs and circumstances.
Frequently asked questions
This section addresses some common questions about these warranties.
What happens if my builder goes out of business during the first two years?
NHBC provides insurance protection if builders become bankrupt (called 'builder's insolvency'). They'll complete necessary repairs or give compensation if construction companies can't meet their obligations due to financial insolvency. This protects investments and ensures homes are finished.
Can I claim for alternative accommodation if my home becomes uninhabitable?
Yes, NHBC warranties generally cover the cost of alternative accommodation if a defect covered by the warranty renders homes uninhabitable. However, there are limits to how much you can claim. Most policies set a maximum duration and cost for this temporary housing. Refer to policy details for specific terms.
What should I do if I disagree with NHBC's decision on a claim?
If you're dissatisfied with NHBC's decision, you can appeal. First, use NHBC's internal complaints procedure. Tell them why you disagree and give them any additional evidence. If the issue remains unresolved, you can refer your case to the Financial Ombudsman Service. They'll review claims independently and make a final decision.