Section 144 of the Building Safety Act 2022 ('the BSA') makes it a legal requirement for a developer of a new build home in England to provide a warranty for the benefit of the buyer. The warranty period must be for a minimum of 15 years to align with the extended period under the Defective Premises Act 1972 and is to meet minimum standards to be set out in regulations. The regulations will also specify the period during which the developer remains responsible for rectifying defects.
New build home warranties that are currently in existence, for example those provided by NBHC and ICW, are a form of insurance against construction defects. They currently last for 10 years and are often required by mortgage lenders.
The BSA will now make such warranties a mandatory requirement for all new build homes whether they be flats, houses or maisonettes and penalties can be imposed on developers who fail to provide compliant warranties without a reasonable excuse. The amount of the penalty will also be set out in the regulations but the maximum penalty that can be imposed will be the greater of £10,000 or 10% of the sale price. The extension of the warranty period will be an additional cost to developers and due consideration should be given when planning new sites and selling existing ones.
The benefit of the policy will also be transferable within the policy period when the property is sold.
The Government intends to consult on the minimum standards to be set in the regulations and is delaying commencement of section 144 to give the industry time to consider the outcome of the consultation and make the warranties available.
This blog is part of a series published by Howard Kennedy LLP on the Building Safety Act. For more information please contact Najma Dunnett, Sharon Stark or Stuart Duffy. For other blogs, please click here.
Want to hear more from us? 
