New home warranties: what a new build warranty covers and how to claim

A new build warranty is an insurance policy that covers defects in a newly built or converted home, normally for 10 years after completion¹. The best known is the NHBC warranty: Leeds Building Society's glossary describes it as "a 10-year guarantee, provided by the National House Building Council, that the builder will correct any serious defects on a newly built property"². Premier Guarantee, another major provider, describes its equivalent as a 10 year New Homes Warranty under which homes are "insured against a wide range of structural issues that could occur to your home during the 10 years after construction is completed"³. Which? notes that new builds come with a warranty typically lasting 10 years⁴.

The cover does not work the same way in every year of those ten. The Financial Ombudsman Service, which handles disputes about building warranties, explains that policies are split into three main parts: cover before the building is completed, cover for years 0 to 2, and cover for years 3 to 10⁵. In the first two years the builder is responsible for fixing defects; after that the insurer steps in, but only for structural damage caused by a defect. Government guidance on shared ownership homes similarly says the building warranty will usually cover the cost of structural repairs in the first 10 or 12 years for new-build homes⁶.

What a new build warranty is: 10 years of cover for defects

A structural warranty is an insurance policy designed to protect against defects in new buildings, normally for a period of 10 years after completion¹. It is not a guarantee in the everyday sense of a promise by the builder alone: it is underwritten insurance, arranged through a warranty provider, and it sits alongside whatever legal rights you have against the builder under your purchase contract.

The length is broadly consistent across the market. Premier Guarantee's guide for homebuyers describes a 10 year New Homes Warranty³, and the Welsh Government's shared ownership guide refers to "the National House Building Council (NHBC) warranty handbook or equivalent cover for a period of 10 years"⁷. In Scotland, guidance for the Help to Buy scheme states a new home will normally come with a guarantee covering certain defects for up to 10 years after it was built, or 6 years in cases where a professional consultant's certificate is obtained instead of a guarantee⁸. Government guidance on shared ownership homes allows that the period may be 10 or 12 years depending on the policy⁶.

What the warranty responds to changes over time, and this is the single most important thing to understand. In the early years the builder is on the hook for defects; in the later years the insurer covers only serious structural damage. Which? highlights the practical consequence: it is up to you to report defects within the first two years⁴. A problem you leave unreported until year five may fall outside what the policy will pay for, because the cover in the structural period is narrower and subject to a minimum claim value.

The Financial Ombudsman Service sets out the three-part structure plainly: cover before the building is completed, cover for years 0 to 2, and cover for years 3 to 10⁵. Each stage is looked at in detail below.

The developer buys the policy, not you

The warranty is purchased by the builder before construction starts, but it actually protects the homeowner¹. You do not choose the provider, you do not sign the policy, and in most cases you never pay the premium directly: the cost is folded into the price of the home. What you receive is a certificate, usually handed over at or before completion, naming the provider and the dates of cover.

This arrangement has consequences worth knowing. Because the developer completed the proposal form and paid the premium, Premier Guarantee's terms state that the policyholder is not entitled to a refund of premium or any other monies if the cover is cancelled⁹. The warranty follows the home rather than the person: Premier Guarantee's policy is transferable to future owners, provided those owners contact the Scheme Administrator to notify their details⁹. If you buy a shared ownership resale, any remaining period on the building warranty transfers to you⁶.

The certificate matters for your mortgage too. Premier Guarantee describes its New Homes Warranty as accepted by all of the UK's leading lenders¹, and government-backed buying schemes make a warranty a condition of purchase. Help to Buy Wales guidance states: "Your home builders must give you a new home warranty before you complete the purchase"¹⁰. The same requirement appears in the earlier Help to Buy Wales buyer guide¹¹. Lenders and schemes rely on the warranty because it gives them, and you, recourse if the builder has cut corners.

Premier Guarantee is the brand name for a range of structural warranties, including its New Homes Warranty for newly built homes⁹. The brand names to look for on your certificate are providers such as NHBC, Premier Guarantee and LABC Warranty; the policy document itself will name the insurer behind the scheme.

What is covered: the builder's defects period, then structural damage

The two working stages of the warranty are the defects period and the structural insurance period. Leading providers of structural warranties include a defects period for the first two years of cover¹. During this period the cover provides protection against non-compliance with the warranty provider's technical manual and may include non-structural issues¹: in plain terms, if the home does not meet the standards the provider set for the builder, the builder has to put it right.

After the defects period expires, the main part of the warranty takes over, covering structural issues¹. The Financial Ombudsman Service explains that in years 3 to 10 you are covered for structural problems where the builder has not complied with technical requirements, described as a "breach of technical requirements"⁵. For a claim in this period to be valid, all of the following must be true: the home has a defect, the builder has breached the technical requirements, and the defect has caused damage⁵.

Before completion there is a third, narrower stage. You are covered if the builder is insolvent or commits fraud and does not complete the build: the insurer should refund your money, part-refund it, or arrange for the building to be finished⁵. Premier Guarantee's policy gives this deposit protection a ceiling of 10% of the original purchase price for the home or £100,000, whichever is the lesser¹³. If the developer fails to complete because of insolvency or fraud, the policyholder should immediately notify the Scheme Administrator¹³.

What counts as structural damage is defined tightly. Premier Guarantee's policy defines Major Damage as a defect in a load bearing element causing damage, a defect in below-ground drainage for which the policyholder is responsible, or a defect in the waterproof envelope causing ingress of water⁹. A crack in plaster or a sticking door is not Major Damage in this sense; a defect in a load bearing wall that has caused damage is.

What a warranty does not cover

The exclusions are extensive, and they are where most disappointment comes from. Premier Guarantee's insurance information document lists what the policy does not cover: legal liabilities to third parties, snagging damage which is purely cosmetic, alterations, lack of maintenance, normal wear and tear, improper use, anything the purchaser knew about before buying, damage caused by fire, smoke or severe weather, loss caused by theft or accidental damage, and reservation fees or other fees payable to the developer other than the deposit¹⁴.

Premier Guarantee's policy adds a long list of its own exclusions, including alterations, settlement, subsidence unless it results from a defect, wear and tear, toxic mould, vermin, war risks, humidity, and anything arising from maintenance and use or that the policyholder knew about beforehand⁹. The policy also excludes loss or damage caused by fire, smoke or severe weather, theft or accidental damage, and purely cosmetic snagging damage¹³.

A 2017 Homeowner Survey found that in reality warranties cover issues that relate to or affect the structure of the home¹⁵, which is a fair summary of the position: the warranty is structural insurance, not a maintenance contract or a snagging guarantee. Two exclusions deserve particular attention:

• Wear and tear and lack of maintenance. The warranty does not take the place of looking after the home¹⁴.
• Prior knowledge. Anything you knew about before buying is excluded¹⁴, which is one reason to have faults fixed before you complete rather than after.

For items not covered by the policy, Premier Guarantee's terms note that assistance may be available under the Consumer Code for Home Builders, with a claim form supplied on request¹⁶. The dedicated guide to complaining about a new build home covers that route.

A warranty is not buildings insurance

A structural warranty and buildings insurance do different jobs, and you need both. A structural warranty "will only protect you against major defects resulting in damage to the actual structure of the building, not general wear and tear"¹. Buildings insurance, by contrast, covers the cost of rebuilding the home if it is damaged by insured events such as fire, storm or flood: if you own your home, your buildings insurance policy should provide cover for damage to the building itself¹⁷.

Buildings insurance is usually compulsory as well as sensible. It must be taken out as a requirement of a mortgage and should cover the full cost of rebuilding the property². Independent guidance is more specific about timing: you must insure your new property from the point you exchange contracts, which is when you become liable for the building¹⁸, though for a new-build property the insurance does not need to come into effect until the day of completion¹⁹. You insure for the amount it would cost to completely rebuild your home, which is usually less than the sale price²⁰.

The two covers answer different questions after the same incident. Storm damage to a roof is a buildings insurance matter, not a warranty matter, because the warranty excludes damage caused by severe weather¹⁴. A load bearing wall developing cracks because it was badly built is a warranty matter. A survey of insurers' practice notes most household policies are on a new for old basis, where the insurer pays the full cost of repairing damaged items or replaces them if beyond repair²¹. An ombudsman case study on betterment illustrates the principle in buildings insurance: the insurer was only responsible for repairing what was already there, not adding to it²².

If you are building or converting a home yourself, renovation insurance exists for the works themselves, covering renovations, extensions, conversions, new builds, self-builds and restorations, including the existing structure and new works, with public liability²³. The page on self build homes covers warranties for that route.

Cover limits and the excess

Warranty policies have financial limits, and they are not unlimited. Premier Guarantee's policy documents set maximum figures for claims, and different versions of the policy show different amounts, so both sets are given here. One version states limits of £1,000,000 for any newly constructed home and £500,000 for any converted or refurbished home, with a £20,000,000 financial limit for any one new development⁹. Another version states £500,000 for any newly constructed home and £250,000 for any converted or refurbished home under the same sections, with £25,000,000 for all newly constructed homes in one continuous structure¹³. Which applies to your home is set out in your own certificate of insurance.

The limits are not fixed in cash terms. The financial limits and the excess are index linked: they are increased in line with the RICS House Re-Building Index or 10% per annum compound, whichever is the lesser, on each anniversary of the start of the period of insurance¹³. A later document states the same rule but with 12% per annum compound as the alternative figure⁹; the version in your own policy document is the one that governs.

The excess is the amount you pay towards each claim. Premier Guarantee's policy states that the excess for the relevant section is as specified in the initial certificate or certificate of insurance, and that the financial limits are index linked⁹. The figure is not published as a single number because it is specified per policy.

Two further points shape what a claim is worth:

• Claims already made. If you are not the first owner, the financial limits may already have been utilised by a previous owner and you will only be entitled to the remainder¹⁶.
• The NHBC minimum. NHBC will not pay for any claim where a repair costs less than £1,000, and the claim value is index-linked⁵. In the structural period, small repairs are simply outside the cover.

There is also additional cover in some policies for health and safety issues and contaminated land where the insurer carried out building control or building regulations inspections⁵. Premier Guarantee's contaminated land section provides indemnity against remediation expenses incurred in treating, isolating or removing a substance from the policyholder's land in accordance with a statutory notice, during the structural insurance period¹³. Its related building control section applies only where an approved inspector carried out the building control function, and only in England and Wales¹³.

Converted, refurbished and resale homes

Building warranties cover major problems with newly built or converted homes⁵, so a converted flat or a refurbished house can carry the same 10-year structure of cover, with differences. Premier Guarantee's financial limits are lower for converted or refurbished homes than for newly built ones under both versions of its policy⁹. One exclusion is specific to this kind of home: glazed panes that were not newly installed are excluded from cover⁹.

For buyers of resale homes, the warranty travels with the property. If you buy a home through a shared ownership resale, any remaining period on the building warranty transfers to you⁶. Premier Guarantee's policy is transferable to future owners provided they contact the Scheme Administrator to notify their details⁹. Notify the provider after you buy: the transfer is not automatic.

Shared ownership buyers have a separate entitlement in the early years. During the initial repair period you can claim up to £500 a year from the landlord to cover repairing, replacing if faulty, and maintaining fixtures and fittings supplying water, gas or electricity, or heating your home, and if you sell the home the repairs allowance will usually transfer to the new owner⁶. The allowance works on a rolling basis: in the example given in the guidance, £1,000 (£500 plus £500) was claimed in year 2, leaving £250 rolled over to the next year⁶.

How to claim on a new build warranty

Which stage you are in determines who you claim from. In the defects period, years 0 to 2, you report the defect to the builder or developer. Premier Guarantee's conditions are precise: concerns must be notified to the developer in writing before the expiry of the defects insurance period, and if the developer does not respond, the defects must be notified to the Scheme Administrator in writing within 6 months of the expiry of that period²⁴. The underwriter will have no liability if all matters are not notified within these time frames²⁴. In the structural period, years 3 to 10, you claim from the warranty provider or its scheme administrator directly.

The practical steps, drawn from the policy conditions and independent claims guidance, are:

1. Check your certificate and policy document to confirm which stage of cover applies and what the excess is⁹.
2. Report the defect in writing to the developer within the defects period, and keep a copy with the date²⁴.
3. If the developer does not respond, notify the scheme administrator in writing within 6 months of the expiry of the defects insurance period²⁴.
4. Contact the provider's claims team. Premier Guarantee states that claims are notified to its scheme administrator by post, email or telephone, at enquiries@premierguarantee.co.uk or 0151 650 4343⁹.
5. Quote the part of the policy that covers the work, ask for written reasons if the claim is refused, and keep a record of all communications, sending photographs and detail²⁵. This advice comes from warranty claiming generally, but it applies equally here.
6. If the builder is insolvent or has committed fraud and the build is not finished, notify the scheme administrator immediately¹³.

Independent guidance on warranty disputes recommends quoting the section of the policy document that makes clear the work you need is covered, and asking for written reasons for any refusal²⁵. Photographs, dates and copies of letters are what turn a disagreement into a documented claim.

Checks before completion

Because the defects period starts at completion and the builder's obligation to fix things is strongest then, the checks you do before you complete matter. Which? notes that it is up to you to report defects within the first two years⁴, and the warranty excludes anything you knew about before purchasing the home¹⁴. A fault you spotted and accepted before completion may be uninsurable under the policy even if it later worsens.

Government-backed schemes underline the point. The First Homes Fund guidance for Scotland tells buyers to check the Home Report before buying, because you will need to pay for any repairs it flags²⁶. Help to Buy Wales requires builders to give you a new home warranty before you complete the purchase¹⁰, so the certificate should be in your hands, or at least in your conveyancer's, by then.

A snagging inspection is the usual tool: an independent inspection that lists defects before you move in, which you hand to the builder in writing. The page on snagging a new build home covers what to check and when. Reporting in writing, with dates, also protects your position under the notification deadlines in the policy: defects notified late can leave the underwriter with no liability²⁴.

Complaints: the provider first, then the Financial Ombudsman

If the warranty provider refuses a claim or the builder will not act, the complaint process has a set order. The Financial Ombudsman Service is clear that the complaint goes to the company involved first, and that it cannot get involved until that has been done²⁷. The firm must investigate the complaint and give a clear answer within eight weeks²⁸. If it does not send a final response within eight weeks, or the response is not satisfactory, the complaint can be brought to the ombudsman²⁷. As its own guidance puts it: "You need to do this first, or we can't get involved"¹².

Before that, the provider's own dispute routes are worth using. Premier Guarantee's policy details its complaints options in section 8, with contact on 08444 120 888 or customerservices@premierguarantee.co.uk¹⁶. It also offers a conciliation service, though if the value of the dispute is less than the excess, the conciliation service is not appropriate²⁴. For larger disputes, the policy provides for an independent expert or an arbitrator, appointed by the President for the time being of the Royal Institution of Chartered Surveyors²⁴. The costs are borne by the parties to the dispute and not the underwriter: each party would be expected to pay their own costs and half the independent expert's fee²⁴. An arbitrator's decision is governed by the Arbitration Act 1996 and is final and binding, subject to very limited rights of appeal to the High Court; an independent expert's decision is final and binding²⁴.

The ombudsman is the final step for an eligible complainant, and Premier Guarantee's policy confirms the right to refer an unresolved complaint to the Financial Ombudsman Service⁹. The service is free to use. For complaints about the builder rather than the warranty provider, the Consumer Code for Home Builders route and the page on complaining when buying a home set out the options.