UK Nationwide professional snagging inspections | Getting the quality you deserve

New Build Defects Rectification: How They Rig the Game

When stepping into the world of property ownership, particularly newly constructed homes, the path is often strewn with the challenges of construction defects. This journey begins with the allure of a pristine home, but behind the glossy façade can lie a myriad of potential issues. As a prospective homeowner, you are faced with a pivotal decision: to follow the procedures laid out by your housebuilder or warranty provider, or to seek professional guidance. The stakes are high; a misstep could lead to exploitation or grossly unfair outcomes.


Article by Wingrove Law. This is not legal advice. You should satisfy yourself in respect of any arrangements you enter into and seek specialist independent legal advice if unsure.


 

Introduction to Developer Purchase Agreements

You’ll buy from the developer on their standard term contract. Before you enter into that contract, they might show you some of what you’ll be getting. Maybe they’ll show you around the property you’re buying. Maybe they’ll show copies of plans and drawings for a property under construction (but won’t let you take copies).

Limitations of Property Inspections

If built already, or when it reaches that stage and they send your conveyancer a notice to complete the purchase, you won’t be able to survey it fully. You might be allowed to do a visual check but not open up to inspect important structural elements.

You’ll be none the wiser if there are defects in parts of the home that you are not allowed to physically inspect. That tends to be where the bigger problems arise, the ones that can cost a lot to put right and seriously adversely affect use, enjoyment or value if left unresolved.

Misleading Expectations on Building Regulations Compliance

If you do view drawings and specifications for a property yet to be completed, it doesn’t follow that they’ll comply with them. They might reassure you that they cannot sell without a Building Control final certificate and infer that it is a quality control mechanism that you can rely on. It is not. At best it comprises a few spot checks to see if major elements look about right. If they bother to inspect at all. Later on in their sale contract they’ll probably commit to building ‘in accordance with building regulations approval’ which they’ll later argue means ‘getting a final certificate from the building control chap’.

So, not a promise to comply with building regulations then, only to get a ‘hmm, that looks about right’ certificate issued following a few spot checks (maybe) by someone who owes you no duty of care and who has no comeback from you if the property isn’t right (short of if they commit a manifest fraud, but if that ends up as your best option for seeking redress then you’ve got real problems). You cannot rely, legally or practically, on a Building Control final certificate as an assurance that the home complies with building regulations.

The Pitfalls of Sale Contract Promises

The sale contract will also typically exclude liability for misrepresentations. These are statements made that induce you to enter into the contract to buy the property. Skilled salespeople will easily find your value and induce you. Maybe they promised high build standards, great customer care, a ‘Five Star Rating’ that proves these claims, peace of mind, modern materials, energy efficiency. Maybe they enticed you with customisations and aspirational fittings and finishes in the show home (which their sale contract may allow them to downgrade in your property…).

Forget all that. It’s not what you’ll be buying according to their contract. If you don’t have copies of all plans and specifications, you’ll just be getting what you’re given, defects and all. You cannot assess if they’ve complied with a contractual obligation to build in accordance with plans or specifications you don’t have. That’s why they don’t want you to have copies.

The Reality of Addressing Construction Issues

So if you cannot check against plans, how do you diagnose defects and assess problems and what should be done about them? Well, once you take ownership, the burden is on you as claimant to prove your claim. In other words, it is up to you to do that. How? Expert evidence, usually, and legal advice on how to get it and what to do with it. But we’ll get to that in a bit.

Before that, their answer – what their contract and or your new home warranty will say, and what you’ll probably expect as it’s what is meant to happen, right? – is to let them know if you’re not happy about something and they’ll come and sort it. As they see fit. Without you having much or any say on the all-important ‘how’. On threat of getting nothing if you refuse access for them to do what they want. Whether it’s adequate or not. Assuming they agree to do anything. Which they might not, especially if it’s a big job. Which are the ones you really need them to address, usually.

But don’t worry, you have a new home warranty to fall back on if they fail or refuse to put things right. Right?

Warranty Claims and Impartiality Concerns

Typically, for the first two years the warranty will say ‘tell your builder, and if they don’t or won’t fix it tell us and we’ll investigate and if we think it needs fixing we’ll tell you builder to sort it. And if they still don’t, we will (or we’ll pay you something and leave you to do it yourself)”.

But is the warranty company impartial when deciding what things need sorting? Can you trust them to be transparent and treat you fairly? Will they tell the builder (and you) how things it says need sorting should be sorted? Do they step in and take over the housebuilder’s liability when the policy says they should? Will they cash settle your claim for what it’ll actually cost you to do the works, in the event they do step in?

No. No. Not usually. Not always. And not usually.

Financial Ombudsman Service: A False Sense of Security

But wait. It says in their policy that you can complain to the Financial Ombudsman Service (“FOS”) if you don’t like that they rejected what you think are obviously legitimate claims. So that’s good, isn’t it? Someone to police the warranty company. Someone who can overturn their decision if they rejected your legitimate claim. Which must make it more likely that the warranty company will behave itself in the first place, right?

Wrong. The Resolution Service or equivalents are not regulated insurance activities. The FOS has no jurisdiction to deal with complaints about legitimate claims that the warranty company rejected in a Resolution Report or equivalent. So they weren’t exactly lying when they said you could refer a complaint to the FOS. They maybe just omitted to mention that it’ll do you no good.

Interpreting Compliance with Warranty Provider’s Standards

Okay, but the housebuilder’s sale contract says they’ll ‘comply with the warranty provider’s requirements’. Doesn’t that mean they’ll comply with their Technical Standards? Won’t they be in breach of contract if they fail to comply, irrespective of what the warranty company says in a Resolution Report or equivalent?

No. They’ll usually interpret this to mean that they’re only obliged to deal with something they’ve already failed or refused to deal with if you refer it to your warranty provider’s Resolution Service or equivalent, and the warranty provider issues a report (but only after they’ve already agreed between themselves what if anything the warranty company will say it accepts), and you accept the report in full (which might reject some legitimate claims, so you’d get nothing for those) but usually with little or nothing to say about the all-important ‘how’, at which point you’ll be handed back to the housebuilder that already refused to deal with those issues, to deal with them. As they see fit.

Without your involvement or agreement on the ‘how’. And if they still don’t do anything, maybe (but not necessarily) the warranty provider will eventually step in and cash settle your claim, probably for less than it’ll cost you to fix it yourself. Based on a scope of work that will probably be inadequate. Although that might be preferable to them ‘arranging’ the works. Which you might be left to project manage yourself. And which still might not fix things.

And that is what ‘complying with the warranty provider’s requirements’ generally means for them. And you.

The above characterises many new build homeowners’ customer journeys in relation to construction defects. Those journeys can take a long time and cause you to suffer untold costs and losses, but yours doesn’t have to.

Back to that expert evidence and legal advice idea…

If you’re ready to learn how to do defects rectification like a pro, read on…

 


 

How to do Defect Rectification Like a Pro

The following assumes you have an NHBC Buildmark policy. If you have a different warranty, speak to your solicitor but most of what follows should still apply. In any event, get legal advice early on as terms in your sale contract could affect some of what follows too.

The Proactive Approach to Defects Rectification

It’s a rigged game, but you can win it if you know how.

This is how you do defects rectification like a pro.

If you’ve yet to buy, see ‘Legal Tips for New Build Buyers‘. If you’ve done those things, great, but if not don’t fret. Most people don’t and can still get what they need out of this process.

Initial Home Inspection and Snagging

Complete the purchase. Move in. Take stock. Look around. Be observant. Check everything you can see or access. Don’t worry if you don’t know what you’re looking for. Trust your instincts. If it’s looks wrong it usually is. Note things down that don’t look right or make sense. Use Excel – great for tracking things as you go. Consider getting a snagging survey done. If you do, the sooner you get this done, the better. Week one of moving in, ideally. You should get a report within one or two working days after the inspection. Send your spreadsheet and snagging report if you got one to the housebuilder and ask them to sort the lot.

Maximising the Goodwill Period

You are likely to have about 8 weeks of goodwill from your housebuilder. Use these well. Get them to do what you can to put right anything you can see needs sorting. Don’t postpone anything if you can avoid it. Clear written commitments to specific things in a specific way may be enforceable. Verbal promises won’t be. If they verbally agree to deal with something, send a short friendly email to customer care saying something like ‘thanks for confirming you’ll do [whatever], really appreciate it.’ Maybe do it by adding a brief note to your spreadsheet to record what was agreed, by whom, when. The aim is to create a contemporaneous paper trail of what they said they’d do for you. Don’t grumble or complain or say any more than this in writing. The less you write and the more focused you keep it, the better. Word count should be absolutely minimal. You’ll see why later on.

Dealing with Non-construction Issues

If there’s something wrong with layout, design, size, position of boundaries etc, basically anything that’s not simply unfinished work or a construction defect, don’t tell them yet. Seek legal advice first. You need to know if it’s something worth sorting. If not, drop it and save yourself the trouble. If so, decide with your solicitor when and how to raise it.

Leveraging Your Builder’s Star Rating

About 8 weeks after moving in, you’ll get NHBC’s 8 week survey. The housebuilder will likely care less how you answer it save for one thing. They really want you to tick Yes to ‘would you recommend us to a friend’. Why? It’s what their ‘Star Rating’ is based on. Star Ratings are how they convince many of high construction standards and great customer satisfaction.

They won’t sell many houses without 4 or 5 stars. Your vote is valuable to them, which makes it valuable to you. Leverage this. Ask for written confirmation that they’ll do any outstanding items on your snagging list or whatever. Ask for turf for your garden. Or drainage. Something. Just don’t give it away for free.

Maintaining Control in Communications

After you tick the Yes box (and certainly if you tick the No box), you may start to notice a change in their attitude to fixing things. Don’t panic. Don’t grumble or complain in writing. The more emails you send them the more you’ll lose your power. You’ll see why later on. Those short emails or spreadsheet you’ve been sending to log things they said they’d fix, just do the same for missed or wasted appointments or to log when someone has changed their position from before and is now saying they’re not going to sort something out. And if they are taking an absolute age to sort something, that’s the same as them refusing to do it. Just so you know.

Navigating Post-Goodwill Period Tactics

Avoid getting drawn into arguments or being triggered by things they might say to you in response. They’re trained to get a rise out of you. Don’t take the bait. You don’t have to win any arguments here. Park the issues they’ve failed or refused to deal with and just focus on what they are still prepared to do.

If they’ve not sorted or agreed to sort something within about 3-6 months generally, chances are they’re not going to. But obviously they’re not going to say that to you. Rather, they might string you along for a bit. Rearrange a few times. Investigate again. And again. Don’t rise to it. Just park those issues for now. Mark them down as ‘unresolved’ and leave it at that. We’ll come back to them later on.

You may find they change the personnel you’ve been dealing with over snags and defects from time to time. The more serious and extensive the issues, the more often this might happen. If you get given a new customer care manager, they’ll probably say they want to review anything outstanding or get you to start recounting what you’ve already reported to them or they’ll want to arrange further site visits and investigations to look at things again. And again. Chances are it’s a ruse. It’s a way of running the clock down, wearing you down, getting you to forget or concede on things. The longer you live with problems, the more used to them you get and the less importance you might attach to getting them put right. Basic psychology that they will use against you.

The Six-Month Review

Within about 6 months of moving in they’ll probably have sorted anything they’re going to sort. Discuss with your solicitor if you think things are still moving forward but probably at around this time, the return in your investment of time and effort in getting them to put things right will start to wane.

At that point, you’ll probably need to get a much more thorough and invasive survey done and have a litigation-quality expert report produced giving details of all material defects including elements of the build you haven’t been able to see before now, plus a scope of works and a cost estimate for putting it all right. Your solicitor will draft the instructions to your expert to make sure they do what you need them to. These may include looking at any unresolved issues from your snagging report or spreadsheet.

Proceeding with Warranty Claims

When the expert report lands, your solicitor will discuss with you your options for seeking redress. If there is a fair bit at stake (there probably will be), your solicitor will probably send a Pre Action Protocol letter of claim enclosing your expert report, inviting them to put everything right. Your solicitor will probably propose terms on which this should be done. Fairly and properly, basically.

If or when they refuse to deal with things, you might ask them to agree to refer those disputed items to an independent expert determination procedure. Your solicitor will help to draft the terms of appointment for the expert determination. The expert will be independent of the parties and instructed jointly by them to decide the outcome. If the other side go for it, that is.

If they don’t, you’ll probably need to start court proceedings. In some circumstances you might be advised to claim on your new home warranty first. If so, you’ll send them your expert report. If the warranty provider agrees that some or all of those things need to be dealt with, then you can make your decisions. Maybe they’ll accept some things but not others. Or, maybe you’ll find out the main part of your warranty dealing with issues reported in the first two years is worthless as they take one look at your expert report and say ‘ooh it’s not really suitable for resolution’, meaning ‘you have no warranty cover for issues raised in the first two years beyond anything we (they and the housebuilder, in collusion) deign to give you and we don’t want to (or have been told not to) give you THAT, so you’re on your own. Bye bye.’

Facing the Reality of Warranty Limitations

If the warranty claim draws a blank or you won’t accept the cost of what they refuse as the price for what they say you can have, or you choose not to bother with a warranty claim at all, your solicitor will then get the court papers ready for you. These will generally be based on the unresolved issues in your expert report.

Commencing Legal Proceedings

Now serve the claim and await the housebuilder’s response. They’ll either defend, or challenge the court’s jurisdiction. The latter is unusual and will most likely be bound to fail but will cause a delay. Your solicitor will likely have pre-emoted this or forewarned you if there is something in the sale contract that’s designed to enable them to run the jurisdiction argument.

For their defence, if the warranty provider rejected your claim already, they’ll probably use that against you, just so you know to expect it. ‘A company with whom we have our own separate contract that gives us influence over their decision on whether to accept your claim didn’t accept your claim, so clearly therefore there’s nothing wrong” is what that defence proposition amounts to, so don’t be vexed by it.

The Court Process and Expert Evidence

Once the defence is in, the court will list a case management hearing. That’ll last about an hour and is usually held remotely on MS Teams. You can login and watch it from your armchair if you want.

Case management directions will most likely be for ‘disclosure’ (a time consuming exercise that can be made hugely more expensive if you send thousands of emails – hence don’t do it), then ‘expert evidence by a single joint expert’ (offering expert determination before you issued the claim was intended to be a variation on this theme but without having to spend money going to court), then ‘stay for mediation’, and if it hasn’t settled by that stage, witness statements, trial prep and trial.

Achieving Settlement and Rectifying Defects

The outcome of these kinds of cases generally turn on expert evidence so they usually settle once the expert evidence is in if not before. If not, you’ll keep trying to settle but ultimately the court will decide the outcome at trial if necessary. One way or another, you’ll get a result. The single joint expert’s role will be to review the expert report you had done at the outset. As long as that was sound (your solicitor will help you to ensure it is), you shouldn’t have too much to worry about when the single joint expert comes to review it. Maybe some items will get down-valued, maybe some technical things might fall away depending on what disclosure the housebuilder gives, but most of what you’ll be claiming for will be performance or functional issues and obvious workmanship issues that cannot be denied, so you should get the nod on at least a good chunk of your claim, and if so, you’ve basically won already.

The only things they’ll likely have left to defend against paying out in line with the single joint expert’s evidence will be based on your conduct before proceeding began (hence don’t get drawn into a war of words or lose your temper or send thousands of emails, it’ll just add cost and risk to your claim), or by reference to some contract clause or other that amounts to a proposition that they don’t legally have to build or fix your house properly – and good luck to them getting the judge to agree with that idea at trial. Or selling houses once judgment is handed down showing that they defended the indefensible to trial. There’s a reason there are not many published court judgments involving customers suing housebuilders: it’s not a good look when you’re in the business of selling houses on the promise of high quality builds and great customer care to publicly show your contempt for both.

Settlement in your favour is by far the most likely outcome as long as you see it through. Settlement will normally include enough to deal with at least the big issues that matter to you most (you’ll probably have to make some compromises to get a deal done), plus your costs to the date of settlement. Yes, it’ll cost you to get this outcome but you stand an excellent prospect of getting it all back and then some. And you’ll get the satisfaction of knowing they didn’t just mug you and get away with it.

And so, this is how you do defects rectification like a pro.