"New Build" no Warranty BUT...

MarkDHammond

Hi All,

So I am in the process of selling my home and buying a new home. Today the survey for the new home went ahead and it was found out that the property does not have NHBC warranty. The surveyor told the owners of the house I am buying that my lender would likely not lend the money on the property without this in place.

The house I am buying was built by the current owner around 5 years ago and he has lived in it since it was built. I have read that "new builds" are houses that have been built or modified in the last 2 years, with this house being over 5 years old and having had people live in it already will this be classed as a new build and will it still need the NHBC warranty? Is there any way around this issue? Is it possible for the owner to still get the warranty cover? Would an indemnity policy suffice or is that just to cover myself and not the mortgage lenders?

Any advice / guidance would be greatly appreciated.

Best Regards,
Mark.

74jax

Is this a new build from a national builder? - Barratt / Persimmon etc ? 

user1977

Are they offering anything at all? Bit daft of them not to have thought about this. If no warranty then many/most lenders will accept a certificate from the supervising architect, and they might be less fussy by the time you get to 6-7 years, but I would generally expect more to be required to make it mortgageable if it's only 5 years old. I think there are retrospective warranties available.

Also - what else haven't they bothered doing properly? Everything ok from a planning and building regulations point of view? Did the surveyor spot any actual problems?

MarkDHammond

74jax said:

Is this a new build from a national builder? - Barratt / Persimmon etc ? 

Hi,

The current owner built the house himself, he is a builder so it was not build by a national builder unfortunately.

MarkDHammond

user1977 said:

Are they offering anything at all? Bit daft of them not to have thought about this. If no warranty then many/most lenders will accept a certificate from the supervising architect, and they might be less fussy by the time you get to 6-7 years, but I would generally expect more to be required to make it mortgageable if it's only 5 years old. I think there are retrospective warranties available.

Also - what else haven't they bothered doing properly? Everything ok from a planning and building regulations point of view? Did the surveyor spot any actual problems?

They have an indemnity policy in place, but that's all I've been told so far. I've been told that the owners were going to stay in the house long term so decided not to get the warranty, but have now decided to move away. I haven't heard anything back from the surveyor yet, the owners rang the estate agents after the surveyor had left panicking that they didn't have this in place which is why they rang me and they were telling me I might need to find a new lender...

They told me it would cost the owners around £5k to get the warranty, but if I have to move mortgage company it will cost me £4k in early repayments and then also likely a higher interest rate due to the mortgage being 'riskier' nightmare.

user1977

An indemnity policy covering what? That sounds like planning and/or building regs weren't signed off and/or complied with in some way. It doesn't provide the same sort of protection as a warranty about the quality of work etc, just against the relevant council taking enforcement action.

K_S

MarkDHammond said:

Hi All,

So I am in the process of selling my home and buying a new home. Today the survey for the new home went ahead and it was found out that the property does not have NHBC warranty. The surveyor told the owners of the house I am buying that my lender would likely not lend the money on the property without this in place.

The house I am buying was built by the current owner around 5 years ago and he has lived in it since it was built. I have read that "new builds" are houses that have been built or modified in the last 2 years, with this house being over 5 years old and having had people live in it already will this be classed as a new build and will it still need the NHBC warranty? Is there any way around this issue? Is it possible for the owner to still get the warranty cover? Would an indemnity policy suffice or is that just to cover myself and not the mortgage lenders?

Any advice / guidance would be greatly appreciated.

Best Regards,
Mark.

@markdhammond It depends on the lender. The problem is that this will be the first sale by the "builder", or the first sale after the house was constructed, so some lenders will still define it as a new-build on that basis. If it is classed as a new-build, the warranty will be an issue.

On the face of it, I don't think that this is unplaceable but you/broker needs to run the specifics past the lender prior to putting in a full application. Once you buy it and it's time to sell at a future point in time, you won't have this issue.

ProDave

A waranty only runs for 10 years anyway.  Perhaps they thought they would not sell it so soon so did not consider it worth the expense.

chanz4

NHBC warranty is as much use as a choc teapot, we tried to claim on 2 things and they get around things so much

Thrugelmir

chanz4 said:

NHBC warranty is as much use as a choc teapot, we tried to claim on 2 things and they get around things so much

It's the lenders money that's at risk should there be a major issue. 

eddddy

chanz4 said:

NHBC warranty is as much use as a choc teapot, we tried to claim on 2 things and they get around things so much

A big part of the benefit of an NHBC warranty is that NHBC have fairly rigorous build quality standards that a builder must adhere to and NHBC inspectors inspect the houses while they're being built, to make sure everything is done to NHBC standards.

I believe that NHBC inspections are carried at at the following stages

• Foundations - after excavation
• Drainage 
• Superstructure - the brickwork, floors and roof
• First fix - before plastering or drylining
• Pre-handover

Maybe some problems still get missed in those inspections, but it's probably still better than a builder who isn't following build quality standards, and isn't having the build quality inspected.


Building control inspectors should still have inspected - assuming the house has a building regs completion certificate. But if there's talk on indemnity insurance, maybe the house hasn't even got that.