New Home Warranties - have you checked the small print?


An article in The Guardian of 5th February 2017 highlights payments made by NHBC to housebuilders.  The Guardian reports that the payment takes into account the number of homes registered with NHBC and the cost of claims.  NHBC explains that it recognizes "good claims history" and that this is usual practice in the insurance industry.  Critics question the impartiality of NHBC and accuse NHBC of siding with developers.

Whilst the article reports that NHBC claims to have an 80% share of the warranties market, there are other rated insurers providing new home warranties.  It is worthwhile becoming more informed about the terms of cover and this applies to all of us in this sector - developers themselves, end-users and their legal advisers.  Differentiation in cover can be maximum liability per unit and/or per development, whether cover extends to retained structure which is relevant where the project is to convert existing structure such as offices to flats under Permitted Development rights and technical guidance and the number of inspections offered.  We should all become more informed and more discerning. 

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The organisation that provides warranties for most of the new homes in Britain is paying millions of pounds to the leading housebuilders every year, raising questions about its independence and credibility amid a wave of complaints about the quality of new-build properties. NHBC, the standard-setting body and main home construction warranty provider for new builds in the UK, is paying around £10m to £15m every year to housebuilders through what is effectively a profit-share agreement. The largest firms can receive as much as £2m from the scheme, because it rewards the developers who registered the most homes with NHBC.
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