NHBC - Builder gone bankrupt

If a builder goes bankrupt after exchange of contracts but prior to completion, and they are an NHBC member, your money should be protected.

You should know

• These rights are for new-build private homes
• If the builder is a member of the National House Building Council (NHBC), you should be covered for defects found up to 10 years after completion. 
• For the first two years after completion, the builder is responsible for the repairs. From three to 10 years after completion, you are covered by an insurance policy provided by the NHBC.
• You can use Resolver to keep a complete record of your communications with the builder or the NHBC.

More than 90% of new-home owners discover that there are snags with the property that they have moved into. These are often simple issues that can be swiftly addressed with the builder. However, if you are having trouble with the builder in the two years following completion, or have noticed any defects from three to 10 years after completion, you can use Resolver to help manage and sort the issues.

The following rights are based on new-build private homes, up to 10 years after completion of the purchase by the first owner. All new homes have to meet a minimum standard called Building Control. 

The main scheme covering the guarantee of 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 them. The Buildmark scheme covers all homes built by members, for 10 years after completion.

NHBC exclusions

The NHBC assists with building-defect issues; it is unable to deal with matters such as financial disputes or contractual problems. 

Also outside of the NHBC’s scope are:

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

Looking after your home

In order to maintain your warranty, you need to take care of 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, it is reasonable to expect the damage to be covered by the warranty. 

Typical new-home issues

A new home can suffer from a number of settling-in issues, and these should not cause any concern. They include:

• Dry-out. During the first few months you might discover fine cracks in plaster and woodwork as the property dries out.
• White marks. Do not worry if the external brickwork becomes covered in white marks: this is called efflorescence. This occurs as the bricks, and the salts within them, dry out.
• Condensation. You might find that your home suffers from condensation as the building dries out.

Completion to the end of Year Two

In the two years following the completion on a new house, you should contact the builder responsible for putting right any defects. If the issue cannot be resolved, the NHBC can provide a dispute-resolution service. 

It will contact the builder to determine whether they are willing to complete the works, or if there is a dispute. If there is a dispute, an NHBC Claims Investigator will meet with you and the builder at the property to try to 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 (if applicable) to be completed. If the works are not completed within the defined timescales, the NHBC can arrange for contractors to finish them.

If you disagree with the outcome of the report, you can refer your dispute with the builder to (for example) arbitration or the courts.

Defects from Years Three to 10

From two years after completion, the NHBC provides an insurance policy to deal with any defects. You should ensure that you keep your NHBC Certificate in a safe place during this time.

If you have any issues from years three to 10, contact the NHBC. The NHBC operates a minimum claim value, set out in your NHBC certificate. As long as your claim is accepted, and is over that minimum value, you will not have to pay any additional charges for the remedial work. 

Complaints about the NHBC

If you have a complaint about the NHBC, you can escalate your issue to the Consumer Affairs team; it will investigate and report back within 20 days. If a report cannot be completed within 20 days, you will receive guidance as to why this is, and when it intends to deliver the feedback.

Unresolved claims and complaints

If your issues are not resolved after eight weeks, you can take your case to the Financial Ombudsman Service for independent assessment. 

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