New build without warranty

LockdownLarry

Hi, we are going through a purchase of a new build property which has been built by a small developer as a solo project so not part of any big new build site. However, they haven't bought any 10 year warranty, and are saying there will be an architects certificate on completion.
The estate agent had assured us this is very common in the cases of small builds, but our mortgage lender will not lend without some kind of warranty alongside the architects certificate.
on checking it seems to us that to build without a warranty is not as common as th agent has told us, and even if we could find a lender who would issue a mortgage based solely on an architects certificate, it seems risky and may be hard for us to resell within the next10 years
would anyone be able to confirm our fears are well founded, and also, if we were to offer to pay half of the cost for the builder to pay for a retrospective warranty (which the lender says would be acceptable), does that sound like a reasonable compromise, or should we be insisting the builder sorts this at his own costs (we I feel he should do)

both the the builder and the agent seem to think we're making a fuss over nothing so am looking for some perspective from anyone out in the community please!

davidmcn

It's fairly commonplace, and most lenders do accept a suitable architects certificate. These are the answers to the relevant question in the lenders' handbook which shows you the lenders' policies:
https://lendershandbook.ukfinance.org.uk/lenders-handbook/englandandwales/question-list/1919/
You'll see it's a bit less of an issue as the years go on.

eve824

A retrospective warranty may not be possible now the house is finished. We are about to self build so researching this in depth and the warranty inspections are throughout the build process similar to the building control stages. In fact a few warranty companies can cover both the building control and warranty so it's just one third party doing the inspections.

Did the builder always build to sell or did they intend to live in the property originally? Seems a bit short sighted of him to not arrange a warranty as they should have known it would make any potential mortgage application more difficult for prospective buyers.

AdrianC

How much is this "retrospective warranty (which the lender says would be acceptable)"?

pinkteapot

Pretty cheap of the builder and they should have known it may limit the range of mortgage lenders available to buyers. Ours was a single house build (not a big development) and it came with a warranty. 

That being said, all new-build warranties have appalling reviews online so I'm a bit sceptical there's any real point to it, but hey... 

Ours is supplied by Premier and they do offer warranties on houses that are finished, so long as the house is less than ten years old: https://www.premierguarantee.com/our-services/structural-warranties/completed-housing-warranty/ 

If the builder refuses to budge on paying for a warranty, you need to cost up the price of a retrospective warranty vs any increase in your mortgage cost due to having to get a more expensive mortgage (assuming you've chosen your current lender because they're cheapest). 

gld73

I was pretty much in this situation a few years ago, though the house was 2 or 3 years old so I was going to be the second owner rather than buying it new build. My solicitor kept asking for the warranty (equivalent of NHBC?) and the buyer's solicitor kept saying it was on its way. A couple of days before we were due to exchange contracts the last bit of paperwork finally arrived, and it was just the architect's completion certificate rather than a warranty. HSBC withdrew their mortgage offer and I had to pull out of the sale (HSBC were doing a very good rate at the time, I decided to stay with that rather than the house!). I think some lenders may have more flexibility (the vendor I was buying from said his mortgage lender had been satisfied with arrangements when he'd bought it new build, and the other handful of properties on the small development were all occupied), but certainly HSBC wouldn't lend, even when the solicitors made suggestions about purchasing a separate warranty to cover the risk to the bank. 

Seashell517

I'm in the process of buying a house with an architects certificate. Halifax didn't have an issue with it.

JJR45

We looked into it.
Are you prepared to sue the architect if there is a structural issue and can you prove they are negligent to be successful?
Most small developments are done under new limited companies, once they are all sold they shell the company so if you have any issues you have no recourse as there is likely no value in the limited company so you would throw away your legal costs to get nothing.
Also if your mortgage products are reduced so are any potential buyers if you need to sell.
Personally we were not comfortable with it.
No structural warranty means costs have been cut, where else have they cut costs?

justworriedabit

JJR45 said:

We looked into it.
Are you prepared to sue the architect if there is a structural issue and can you prove they are negligent to be successful?
Most small developments are done under new limited companies, once they are all sold they shell the company so if you have any issues you have no recourse as there is likely no value in the limited company so you would throw away your legal costs to get nothing.
Also if your mortgage products are reduced so are any potential buyers if you need to sell.
Personally we were not comfortable with it.
No structural warranty means costs have been cut, where else have they cut costs?

Exactly what I was going to say.
In the last property price crash some conversions  and other new builds never got their certs so always a risk.
However, most houses won't go wrong big style and if you plan to stay 10 years and then sell I can't see a problem but I am prepared to be corrected on this.