Nightmare of a dream home: Vivien Goldsmith talks to one man touched by MMI's problems

TIM MADDISON and his wife thought they were building a dream house.

They bought six acres in Leicestershire and planned a four- bedroomed house and stable block using the stones from a tumble- down barn.

They paid around pounds 100,000 for the plot and reckoned on pounds 120,000 for a fixed- price building contract.

They moved into the nearly completed house in February, but had to move out again in April. The original builder had gone out of business, and it was clear that the house had been so badly built that thousands of pounds of work was needed to put it right.

'There was no earthing on the electricity, we had four water bursts in the first week, and the floor was not laid straight,' said Mr Maddison.

The house had to be almost gutted back to a shell.

The builder had insurance with Foundation 15 - a rival to the 10-year National House Building Council guarantee. This normally covers homes for building defects from the third year after building to the 15th year, but will step in when a builder fails financially.

The Maddisons moved into a rented flat in East Haddon, 30 miles away in Northamptonshire, prepared to sit it out while the doors and windows were replaced and the floor relaid. 'We originally thought it would be for four weeks,' said Mr Maddison, who had taken redundancy from British Aerospace and had spent the money on the property, where he planned to keep horses.

The furniture was put in store and a new team of 15 builders moved onto the site. They withdrew temporarily recently as the flow of payments was too slow, but have now returned. Mr Maddison is becoming increasingly worried about when he will be able to move back into his home.

But to cap it all, Foundation 15 is part of MMI. When it stopped paying claims last week, Mr Maddison was terrified that his rent would not be paid and his house would be left half-finished, leaving him with nowhere to live and an uninhabitable house.

Last Tuesday MMI said that it was resuming claims payments. But the next day Mr Maddison was told that there was no-one senior enough at the company to authorise further payments immediately.

Foundation 15 was launched in 1989 and covers 2,500 to 3,000 builders. It has been covering 12,000 homes over the past year.

It had already paid out pounds 2,000 to Mr Maddison for rent and travelling expenses to the site until 27 November.

It had also paid around pounds 150,000 for building work and Mr Maddison estimates that a further pounds 70,000 is needed to complete the job.

This will double the eventual cost of the project from pounds 220,000 to pounds 440,000. 'It is always much more expensive to put things right than building from scratch,' said Mr Maddison.

Foundation 15 is using loss adjusters McLarens of Leeds to supervise the work. Alan Atwood of McLarens refused to comment on the case.

Meanwhile, MMI has accepted that the individual parts of the insurance company will be sold separately.

Brian Wright, group chief executive, said: 'We took the decision to suspend payment of claims temporarily, while we took stock of the situation. We have been concerned throughout to proceed cautiously and in the best interests of all our policyholders.'

MMI says it has potential buyers for Foundation 15 as well as the household, motor, health, life, pensions and unit trust businesses.

(Photograph omitted)