House Builders - Builder bankrupt prior to completion

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If the builder goes bankrupt after exchange of contracts and prior to completion your monies should be protected as long as the builder is an NHBC member

You should know
  • This information is for new-build private homes only
  • If the builder is a member of the National House Building Council (NHBC) then you should be covered for defects discovered for the first 10 years after the homes completion.
  • During years one and two after completion, the builder is responsible for any repairs; from years three to 10 you are covered by an insurance policy provided by the NHBC.
  • Use Resolver to keep a complete record of all your communications with your builder or the NHBC.

Most owners of brand new homes find there are snags with the properties they move into that require action. These are often quick and simple issues that can be swiftly addressed with your builder.

This information is based on new build private homes, up to 10 years after the home was built. All new homes have to meet a minimum standard called Building Control.

The main scheme for guaranteeing new builds is the National House Building Council (NHBC). All members of NHBC have to meet a minimum set of standards that is enforced to ensure the quality of homes built by their members.

The scheme operates the Buildmark scheme, which covers all homes built by its members for 10 years.

NHBC Exclusions

NHBC is unable to assist with such as financial disputes or contractual issues. The NHBC is there to assist with building defect issues.

In addition these are outside of the NHBC scope:

  • Amendments or extensions to the property
  • Damage caused by storms
  • Accidental or negligent damage
  • Abuse of the property or its appliances

Looking after your home

In order to keep a warranty valid, you will need to keep up a regular maintenance programme to protect your home.

Remember that any warranty will not cover damage caused by extreme weather such as storms. However, if damage from extreme weather was caused by a property defect then it is reasonable that any damages caused should be covered as part of your warranty.

New home typical issues

A new home can suffer from a number of settling in issues and these should not cause any concerns. These include:

  • Dry out: during the first few months as the property dries out you may find fine cracks in plaster and woodwork.
  • White marks: if external brickwork becomes covered in white marks do not worry this is called efflorescence. This is salts within bricks drying on the surface as moisture in the bricks dry out
  • Condensation: you may find that your home suffers from condensation as the building dries out

Issues from completion to the end of year two

In the first two years after the home is completed you should go to the builder who is responsible for putting right any defects. If the issue cannot be resolved then the NHBC can provide a dispute resolution service.

They will contact the builder and determine if they are willing to complete the works or if there is a dispute. If there is a dispute then a NHBC Claims Investigator will meet with you and the builder at the property to try and resolve the dispute.

After the meeting the NHBC will aim to issue a report within four days that details its recommendations and timescales for any remedial works to be completion, if remedial works are applicable.

If the works are not completed within the defined timescales then the NHBC can arrange for contractors to complete the works.

If you agree with the outcome of the report then you can look at taking other remedial action such as arbitration or court action.

Issues from years three to 10

After the end of year two the NHBC provides an insurance policy to deal with any defects. As part of the process ensure you keep your NHBC certificate in a safe place.

You should contact the NHBC with any issues during this period. The NHBC has a minimum claim value. As long as your claim is accepted and is above the minimum value you will not have to pay any additional charges for the remedial work.

The minimum value of the claim is set out in your NHBC certificate.

Complaint about the NHBC

If you have a claim about the NHBC then you can escalate your issue to the Consumer Affairs team, they will investigate and report back within 20 days. If they cannot complete the report within 20 days they will give guidance as to why not and when they intend to deliver the feedback.

Unresolved claims & complaints

If your issue is not resolved after eight weeks, you can take your case for independent assessment by the Financial Ombudsman Service. As the NHBC policy is an insurance policy, any unresolved case can be taken to the Financial Ombudsman Service.

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