The National House Building Council are an insurance provider for newly built properties. When you buy a newly built property or a property built within the last 10 years, and the builder is registered with NHBC, NHBC will provide you with cover for certain defects in your property for the 10 years following it being built.
First, the policy provides protection for you if the builder goes out of business between exchange of Contracts and the build being finished. Should this happen, NHBC will either, arrange and pay for the build to be finished or reimburse your deposit paid. There is a limit of 10% of the purchase price or £100,000 which ever is less.
Secondly, NHBC then provide cover against certain defects for the first 2 years after you buy the property. The builder will have to put right the defects, they will also have to pay for reasonable costs of removal, storage and alternative accommodation if you have to move out whilst the work is done in your home.
Some things are not covered by the policy. Each policy differs, but for example, they include things such as wear and tear, damp and condensation not caused by the builders failure, storms, flooding and fire and smoke damage. There are also general exclusions for the whole 10 years cover which are listed below.
If the builder fails to carry out the works needed to bring the property up to the Buildmark standard then NHBC may arrange for the work to be done at their cost or pay you an amount to arrange it.
Thirdly, for years 3 to 10 of the cover NHBC will cover certain physical damage to certain areas of your home. Again each policy differs but things covered include the foundations, walls, external cladding, external render, roofs, ceilings, balconies, flues, chimneys, staircases, double or triple glazing panes for outside windows or doors and below ground drainage which the homeowner is responsible for.
You will also be covered for alternative accommodation costs if you have to move out of your home whilst work is carried out.
Again some things will not be covered by the policy such as general wear and tear, condensation, normal shrinkage, cosmetic damage or damage as a result of the homeowner not maintaining the property.
There are also general exclusions, these include anything previously claimed for, anything which you could claim for under another insurance policy, warranty or guarantee or statutory compensation scheme. Financial loss such as rental income, physical or mental injury and legal costs for advice about making a claim.
The limit to the amount that can be claimed is the original purchase price, with provision to allow for compensation and there is a limit of 10% of the available limit for alternative accommodation costs.
In addition the policy works on a cumulative basis, that is to say, that each time a homeowner makes a claim on the policy anything paid for comes off the amount available for future claims up to the limit.
When you buy a newly built property your solicitor should ask questions about whether the builder is registered with NHBC and if you are buying second hand but within 10 years of the property being built, they will ask for evidence that the property is covered by NHBC insurance.
If you wish to discuss buying a newly built property please contact us for a no obligation chat on 01392 344800 or use our contact us page.