New build disputes: Are negligent builders slipping through the cracks?

In the first instance we generally recommend that people involved in a new build dispute raise a complaint with the NHBC and or the New Build Ombudsman.

New build disputes

Buyers often look at a new build and think, ‘perfect!’ They come with a warranty (usually NHBC Buildmark) and because they are brand new you don’t expect to have any of the issues that blight older properties. It sounds ideal. However, the reality is rather different.

New build properties come with their own list of potential problems. Think of it this way; you are buying a house that nobody has ever lived in and nobody has tested out. It is probably so new it has not completely settled on the ground it is built on. When you move in you are the guinea pig. You will need to see whether the plumbing works and the electrics are functioning. Even the basics need to be tested. We have had cases of door handles not working or being far too low for an average height person. Cracks start to show, literally. Settling cracks are an issue raised in nearly all our new build dispute enquiries we receive. But settling cracks are part of the deal when buying a new house, nevertheless it can be a worry when cracks start appearing on your newly painted walls. Even if it is not a major structural problem it is unsightly and annoying; not dissimilar to a scratch on a brand new car.

So what can you do if a new build dispute arises? What are the obligations of the builder in these situations?

When it comes to legal claims against builders the first two things we consider are:

  1. is it a limited company? and
  2. are they covered by professional indemnity insurance?

The main reason for these questions is that claimants need to consider at the outset whether a legal claim is worth bringing. Limited companies can dissolve and disappear, leaving you with an unenforceable court order. If a builder is not insured, then there is no guarantee that the builder can pay you any compensation and costs awarded to you. This can leave you further out of pocket.

So, what about the warranty? Mortgage companies and home insurance providers like purchasers of new builds to have NHBC Buildmark policies, or similar protection. On the face of it, NHBC have a perfect policy; they provide a warranty, a guarantee and offer dispute resolution services between you and the builder.

However, despite all the guarantees and promises, it is becoming all too common for problems to arise where the NHBC have not been as helpful as the homeowner had hoped. Whilst the NHBC is an independent body, when they side with the builder on a new build dispute frustrated homeowners often turn to us.

If you read the fine print of an NHBC policy there are exclusions that might surprise you. These include:

  • cracking or mortar erosion which does not impair the structural stability;
  • damage to the roof coverings, unless it results in a leak;
  • changes in colour, texture or staining of external finishes, fencing and swimming pools
  • damp, condensation and shrinkage;
  • builder’s failure to obtain planning permission or failing to comply with planning permission; and
  • anything that may potentially be covered by other home insurance.

So, your house could change colour, have condensation causing damp and develop a large unsightly crack, but if the building is structurally sound the NHBC will not get involved.

NHBC and other new build policies encourage homeowners to attempt to resolve disputes through their channels. If you do not make these attempts then liability for your legal costs is limited under most policies.

When the NHBC considers whether to honour its guarantee, they usually conduct their own report. If they deem the builder to be liable for the remedial works under their policy then they will either instruct a builder to complete the works or give you the funds required to undertake the works so you can hire a builder yourself.

If the builder will not take responsibility, the NHBC cannot assist and the New Homes Ombudsman cannot help, and you have exhausted all other avenues for an amicable resolution, the next step may be to pay for legal advice.

However, court action should not be undertaken lightly. Above all, you need to consider your liability for legal costs. Claims that have a value of less than £10,000 are usually referred to the Small Claims Court. It is rare for costs to be awarded to successful parties in the Small Claims Court, so it isn’t usually cost effective to retain a solicitor to handle those cases.

If you would like our assistance in dealing with a new build dispute, then a popular funding arrangement is to set a fee limit of £750 plus VAT to cover some initial work. When that initial fee limit is reached you can, if you wish, set a fresh limit if you would like us to take further action. We will also be happy to consider, at that point, whether the case is suitable for No Win, No Fee funding. However, please note that we are unable to offer No Win, No Fee funding where the value of the claim is under £25,000.

By setting a fee limit you are able to control your budget. It also enables you to focus our efforts on the issues that are of particular importance to you, such as:

  • Identification of the major defects
  • Consideration of the contractual position
  • Review of any guarantees and warranties
  • Correspondence with the builder/developer/NHBC
  • Advancement of settlement proposals on your behalf 

If you are interested in retaining us to deal with your new build dispute on a limited fee basis then call 0333 888 0404 or email us at [email protected].

Picture of Zoe Harker-Smith

Zoe Harker-Smith

Picture of Zoe Harker-Smith

Zoe Harker-Smith

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Call the Slee Blackwell helpline on 0333 888 0404