Understanding new home warranties: What homeowners need to know before making a claim

Buying a brand-new home is an exciting milestone, but what happens if something goes wrong after you move in? William Marlow, solicitor in our construction team, breaks down the key features of a new home warranty, including the protection it offers against certain defects for up to 10 years and how to make a claim.

What does a new home warranty cover?

The specific terms of a home warranty depend on the provider, with policies normally providing coverage over a 10-year period, divided into different phases:

Pre-completion cover (before you move in)

Once you’ve exchanged contracts but before you complete the purchase, your warranty protects you if the builder becomes insolvent and cannot complete your home.

This means you won’t be left out of pocket if your home isn’t finished due to financial issues with the developer.

Years 0-2: Builder warranty period

For the first two years after completion, your builder is responsible for fixing any defects that result from poor workmanship or failure to meet the warranty provider’s standards. This includes:

• Physical damage caused by construction defects.
• Issues with land contamination if the builder didn’t follow environmental requirements.
• Alternative accommodation costs if you need to move out while repairs are carried out.

If you spot a problem, you must contact the builder directly. If they fail to respond or refuse to fix the issue, the warranty provider will often provide a resolution service and a guarantee to ensure necessary repairs are carried out.

Years 3-10: Structural insurance period

From year three to year ten, the warranty commonly covers major structural defects that arise because the builder did not comply with their standards. This includes:

• Foundations, roofs, and external walls
• Ceilings, balconies, and chimneys
• Load-bearing floors and staircases

However, this period does not cover minor issues such as shrinkage cracks, damp, or general wear and tear.

How to make a claim under your warranty

If you discover a problem with your home, it’s important to act quickly and follow the right steps to make a claim under your warranty.

Identify which period you’re in

• Years 0-2: Contact the builder first. If they don’t respond or refuse to fix the issue, escalate your claim to the warranty provider.
• Years 3-10: Contact the warranty provider directly if the issue is a major structural defect.

Gather evidence

• Take photos and videos of the defect.
• Keep copies of any emails, letters, or reports exchanged with the builder.
• If possible, obtain an independent surveyor’s report to support your claim.

Contact the warranty provider

• If the builder doesn’t fix the problem (in years 0-2), or if you’re in years 3-10, the warranty provider may step in to arrange repairs or provide financial compensation.
• The warranty provider may send out an inspector to assess the issue and confirm whether it’s covered under the warranty.

Understand your options

• If the warranty provider accepts your claim, they may either organise repairs or offer a financial settlement.
• If your claim is rejected, you may be able to appeal or seek legal advice.

Acting quickly and keeping thorough records can improve your chances of a successful claim.

What’s not covered by the warranty?

While new home warranties offer valuable protection, they also come with exclusions and limitations that homeowners should be aware of.

Common exclusions:

• Issues that the homeowner knew about before buying
• Wear and tear, damp, condensation, and shrinkage (unless caused by failure to meet standards).
• Flooding and changes in the water table.
• Defects caused by modifications or work done after the home was completed.
• Planning permission issues if the builder failed to secure the correct approvals.
• If you choose to carry out repairs or registration works yourself it is essential that the contractor you use is registered and approved by the provider, as a failure to do so is a common reason for cover to be withdrawn.

Financial limits on claims:

• Policies set financial caps on how much can be claimed.
• Some policies increase limits annually to account for inflation.
• If shared parts of a building (e.g. roofs or walls in a block of flats) have already had claims made against them, this may reduce the amount available for new claims.

A notable case, Zagora Management Ltd v Zurich Insurance plc [2019], highlighted the importance of claim limits. Leaseholders were awarded compensation for serious defects in their building, but their claim was capped at the total purchase price of the properties, leaving them with £3.6 million less than the full cost of repairs.

Key takeaways for homeowners

Understanding your new home warranty is crucial to ensuring that you get the protection you’re entitled to.

Here are the key points to remember:

• Your warranty lasts 10 years, with different responsibilities in years 0-2 (builder) and 3-10 (provider).
• Report defects as soon as possible, gathering evidence to support your claim.
• Not everything is covered. Be aware of exclusions and financial limits.
• If your builder fails to fix an issue, the provider may offer a resolution service.
• If your claim is rejected or capped, legal advice may help you explore further options.

If you’re uncertain about your rights under a new home warranty, a solicitor with expertise in property or construction law can provide guidance and help you understand your options.

If you would like to speak with one of our lawyers, then please get in touch with our construction team on 01772 258321.