Why do you need a New Home Warranty or Latent Defects Insurance?
Simply put, if you want to build and sell a residential property that the purchaser will need a mortgage for, then you will need to secure a 10 or 12 year new home warranty or latent defect insurance policy.*
Pretty much every single mortgage provider in the UK will require some form of cover before lending on a new build home; the vast majority will also require cover for converted properties too.
The Consumer Code™ is an industry led code of conduct for builders, which was developed to make the home buying process fairer and more transparent for purchasers. Many mortgage providers require housebuilders to adhere to the rules of the code (or alternatives), via membership of a New Home Warranty scheme, before agreeing to provide a mortgage on a property.
Builders looking to act as Main Contractor for Housing Associations will need to provide a new home warranty or latent defects insurance policy as part of the “Employers Requirements”.
Developers wishing to sell properties “off-plan” and who plan to use those deposits to help fund construction, will need to secure “Loss of Deposit” cover. This cover is included within a new home warranty.
Homebuyers and their solicitors will also expect some form of cover to be in place against damage arising from defects inherent within the design and build of a property. This type of cover is for a period of either 10 or 12 years from completion of the building.
*New Home Warranties or Latent Defects Insurance is known under many different names and references eg Structural Warranties, Building Guarantees, Building Defects Cover, Building Warranties, Inherent Defec ts Insurance, Property Defects Cover etc.