Advice on new build house and dodgy builder

Bexj

My father in law is about to buy a new build house, on a small development.
Theres a few things happened which would have made me run away fast months ago but FIL really wants to pursue. The home is 1 of 3 situated in the developers/builders back garden. It is nearly complete, some issues with the windows, heating system needs to be fitted, lick of paint and general finishing. The other 2 properties are not yet water-tight and the access driveway to all 3 is not finished. There has been no visible progress on any of the properties since August when FIL put his offer in. FIL is a cash buyer, having already sold his own house and living with us.
1) on negotiating the offer, dodgy builder bloke asked for a 10% deposit . He eventually accepted a 2% deposit
2) we googled the company name and discovered a winding up petiton had been lodged against the dodgy builder bloke in march by the building supplies merchant. The winding up order had since been dismissed.
3) we checked companies house, and there was a striking off notice for non-submission of company accounts. When we challenged dodgy builder bloke about this, accounts were coincidentally lodged that evening and the striking off order has now been lifted
4) we have discovered now that the dodgy builder bloke's solicitor is refusing to continue acting on his behalf for, you guessed it, non payment of bills.

So a catalogue of events that indicates the guy is in financial difficulty and struggling to find the money to complete.

If by some miracle it does complete, does the home HAVE to have a Nhbc certificate? If the builder subsequently goes bust, who then is liable to carry out snag repairs or work covered by the nhbc?
What would you do? If my FIL walks away now, he will say goodbye to nearly £4 grand. Is there anything else you woukd advise checking at this stage?
Thanks!

eddddy

Bexj wrote: »

If by some miracle it does complete, does the home HAVE to have a Nhbc certificate? If the builder subsequently goes bust, who then is liable to carry out snag repairs or work covered by the nhbc?

NHBC warranties (and similar warranties from other providers) are essentially insurance policies taken out by builders.

The builder has to take out a policy before the work starts, and the insurance company will probably inspect every stage of the build from the foundations upwards.

Houses without 10 year warranties are generally unmortgageable, so a builder who didn't arrange one would be a very big fool!

Read the terms of the warranty, so you understand exactly what is covered.

Even if your FIL is not looking for a mortgage, he should instruct his solicitor to make checks as though he was - as when your FIL eventually sells it, the buyer may well need a mortgage.

DandelionPatrol

eddddy wrote: »

NHBC warranties (and similar warranties from other providers) are essentially insurance policies taken out by builders.

The builder has to take out a policy before the work starts, and the insurance company will probably inspect every stage of the build from the foundations upwards.

Houses without 10 year warranties are generally unmortgageable, so a builder who didn't arrange one would be a very big fool!

Read the terms of the warranty, so you understand exactly what is covered.

Even if your FIL is not looking for a mortgage, he should instruct his solicitor to make checks as though he was - as when your FIL eventually sells it, the buyer may well need a mortgage.

I would agree. I would go one further and suggest the FiL takes out a small mortgage [with the intention to pay off after a year or so]. A refusal of a mortgage would be an objective reason to pull out.

Bexj

Thank you both, is there any alternative to the NHBC as ive just checked their website and the builder doesnt appear to be registered.

TBeckett100

Premier guarantee is another

TBeckett100

I suspect the builder needs to sell this to finish off the work on the others

Senior_Paper_Monitor

There are many warranty companies, generally acceptable to most lenders - a typical (but not complete) list:

NHBC, Zurich 10, Premier Guarantee ('Private' or 'Completed'), LABC New Home, Buildzone 10 Year, Castle 10 year New Home, FNB New Home, BRAL Construction, Global Home or Q Policy Residential.

Let me echo the warnings above about not continuing unless a warranty is in place (there are potentially several other reasons why you shouldn't anyway).

Warranty issues are becoming a more common problem - have had a handful this year and am currently struggling with one where the developer has a major refurbishment job and no warranty and is struggling big time to get one (two rejects on the basis he is reselling - so it may be necessary for purchaser to obtain and deduct from purchase).

At 'end of build' these can be painfully expensive.

Bexj

Thank you. I will heed your advice, but hoping its another reason to step away from the project.

G_M

I'd be getting out of this purchase.

Fight over return of the 2% deposit later.

Run.

Fast.

Bexj

Haha! Yes, i would be too, but FIL is a bit more stubborn!