The majority of new build properties are likely to have the benefit of an NHBC warranty and purchasers are generally familiar with the cover provided by NHBC. The builder is responsible for snagging defects for the first two years, with NHBC being required to remedy defects for the remainder of the NHBC cover period, which is usually 10 years. The cover is set out clearly in the documentation provided by the builder/developer and the NHBC, including procedures for dispute resolution to ensure faults will be corrected under the terms of the warranty.
There are, however, many developments which are not subject to this type of cover but instead rely on a Professional Consultant’s Certificate (formerly referred to as an Architect’s Certificate).
The Certificate is acceptable to mortgage lenders, who specify the required qualifications of the Consultant, together with the format of the Certificate itself.
However, this Certificate is not a warranty. The Certificate is a statement from the Consultant that the construction of the property has been monitored and has been built in accordance with the applicable building regulations and plans, and is completed to a good standard. The Certificate is provided by a substantially qualified professional, whose reputation will depend on the quality of their service and includes confirmation that the consultant has professional indemnity insurance which will be in place during the validity of the Certificate, which is usually a minimum of six years.
For any inspection scheme, the aim is to ensure that the property is built to such a standard that problems do not arise. Unfortunately, there are still cases where defects arise in relation to property covered by NHBC or a Professional Consultant’s Certificate. How this is remedied depends on the cover in place.
Whilst snagging issues will be dealt with by the developer for the first two years where the property has NHBC cover and defects continue to be covered by the NHBC for the remaining 8 years, the position where a property has the benefit of a Professional Consultant’s Certificate is not as clear cut. The developer is normally liable under the contractual terms of the sale/purchase agreement for snagging over a limited period of time. Unlike the NHBC cover, there is no provision should the developer cease trading so issues can arise in these circumstances, either prior to completion or after. Should a structural defect become apparent, a claim against the Consultant (or rather against their insurer) may then be the only appropriate course of action.
The provision of a Professional Consultant’s Certificate, although acceptable to lenders as detailed above, does not therefore provide a similar level of cover nor the certainty of an NHBC warranty. As there will continue to be properties/developments which are not covered by NHBC, it may, however, be the only way to ensure that a new build property is acceptable to future purchasers, their lenders and their solicitors, irrespective of the limitations and restrictions in the cover provided.
For further information contact Susan Robinson on 0191 261 0096 or by email at Susan.Robinson@markswattsmorse.co.uk.