Solicitors/conveyancers: how to navigate new build home warranty protection to support your clients

Most new build homes come with ten-year home warranty insurance protection – one of the main benefits of buying a new home. But not all warranty policies are created equal, and even those considered best in the market differ in what they cover and how they work.

We’ve highlighted below some of the important aspects and key differences to look out for to help you navigate these policies efficiently when developing guidance for your clients.

• First and foremost, check who is the warranty provider and that the warranty has been properly registered. Buyers will struggle to sell their home without a warranty and won’t enjoy the additional protections from the Consumer Code for Home Builders if the warranty is not in place. 

• Check which code of practice the builder is registered with and whether it is an Approved Code under the Chartered Trading Standards Institute’s (CTSI’s) Approved Code Scheme. The Consumer Code for Home Builders (“the Code”) covers approximately 10,000 builders and is an Approved Code. Most approved codes offer similar protection but it’s important your client knows which code of practice applies to them and how to access support if they need it.

• Check whether your client’s lender applies any restrictions on the home warranty provider. Although rare, in some cases lenders may specify which warranty schemes they will accept.

• Remember that home warranty policies differ in what they cover and how they work. Among those that support our Code – NHBC, LABC Warranty, Premier Guarantee and Checkmate policies sold by Lockton – the core structure is the same: two years builder liability and up to 10 years structural warranty. But they work in different ways. For example, some will charge an excess per claim while others operate a minimum claim value exclusion. In some cases, maximum claim values may relate not just to individual claims but could be impacted by claims from the wider development. Exclusions may also vary between providers, so it pays to check what is and isn’t covered. Knowing these details will help you advise your clients about what to expect.

• Some warranty schemes also include protection for your client’s investment should the builder become insolvent. This can include deposit protection if the builder goes out of business, as well as paying for or completing works if a builder becomes insolvent during construction. 

• Leasehold properties add a layer of complexity which can lead to confusion over who is responsible for what. Although there may be pressure to exchange quickly, it’s important to establish the different organisations involved and where structural responsibilities lie.

• It’s not just policies that differ – technical standards do too, which may affect what a builder will class as a defect or snag under its after sales process. Many builders offer a higher standard of finish than that required by their warranty provider, but it’s important to clarify what that means in practice.

• Some home warranties also include a free dispute resolution scheme within their policy which can be invaluable in helping buyers resolve problems with their builder. Typically, these schemes will provide dispute resolution support for issues related to build quality and structural problems, rather than the buying and after sales process which typically falls under a code of practice scheme. For example, consumers covered by our Code have access to free independent redress if they believe their builder has breached our Code. We provide a handy guide to the different types of consumer protection, which includes different sources of redress.

These are just some of the important aspects of home warranty policies and how they differ. Our Code is supported by the four main UK home warranty providers – NHBC, LABC Warranty, Premier Guarantee and Checkmate policies sold by Lockton, all of which offer a high standard of cover to support consumers. This includes setting technical standards which builders must adhere to during construction. Builders must also comply with the Consumer Code for Home Builders unless they opt to join another scheme.

Knowing the main differences to look out for – even among schemes supporting our Code – can help ensure you’re able to give your clients clear information about exactly what is and isn’t covered by their warranty scheme, as well as other sources of support available to them.

For more information about what the Code covers, complete our free online training module for solicitors and licenced conveyancers: Consumer Code for Home Builders online training