A glance at the NHBC Buildmark Warranty

The NHBC Buildmark Warranty is one of a number of New Home Warranties available on the UK market.

A new home warranty is an insurance policy obtained by a house builder in favour of a new owner.  It protects the first and subsequent owners in the event that certain specified (mainly structural) defects arise in a newly constructed or converted/renovated home.

The NHBC Buildmark is a popular option and we set out below some of the key elements of this policy:

1. Between exchange and completion, NHBC will protect a purchaser from the builder's insolvency or fraud, up to a limit of the lower of 10% of the purchase price and £100,000.00.
2. For the first two years from legal completion of the sale, the builder is required to repair physical damage which results from its failure to meet the NHBC Requirements.  It must also cover the reasonable cost of removal/storage of your possessions and alternative accommodation.
   Should the builder fail to meet its responsibilities, the NHBC will meet them instead.
3. From years three to ten after legal completion of the sale (NHBC Period), the NHBC will cover physical damage to the home that is the result of the builder failing to build certain specified parts to meet the NHBC Requirements.  Those parts are listed in the Buildmark Policy, and do not cover all elements of the home.
4. During the NHBC Period, a minimum claim value applies, such that the cost of repairing an item must be over a specified amount in order to be covered.  Under the 2018 Buildmark Policy, the minimum claim value will be £1700, increasing by £50 each year.
5. There are certain defects that are excluded during the NHBC Period.   They are listed in the Buildmark Policy and include damage to the roof covering where there is no water ingress, and damage only affecting floor coverings.
6. There is an aggregate financial cap on the cost of defects that NHBC will cover, whenever they arise.  The cap is equivalent to the purchase price, up to a maximum of £1,000,000.00 for a new build and £500,000 for a conversion.  This cap will be used up by previous claims, although each year it increases by 5% of the original limit.
7. There are certain items which are completely excluded throughout the duration of the policy from years 0 – 10, including damage resulting from storms/severe weather and damage to lifts.

Dan is an associate in our Construction team.