New house and new worries

Builders and insurers may pass the buck when it comes to repairs
BUYING a new home in the hope that if anything goes wrong it will be quickly repaired under the builder's guarantee can be a recipe for despair, as hundreds of people discover every year.

Repairs that should be made immediately sometimes take months or even years to carry out, while a refusal by either the National House Building Council - the self-regulating body for the industry - or building insurers to pay for the work can leave many families under tremendous strain.

When the crunch comes, their warranties, underwritten by the NHBC, are often worth far less than the paper on which they are written. But proposals by Justice, the law reform pressure group, could lead to greater protection.

Justice recommends that the 10-year warranty for new homes be made legally compulsory. Any warranty should also be backed by an arbitration scheme for disputes between builders and home-owners, its report said last week.

The move follows disquiet about the administration of existing warranties, 90 per cent of which are underwritten by the NHBC. Building insurers and the NHBC each complain that the other is avoiding paying out on subsidence claims.

Chris Hall, a solicitor, is chairman of the Subsidence Claims Association, which will hold a conference next month on claims problems. Mr Hall said he was worried that home-owners may lose out because of what he regards as conflicts of interest within NHBC. In addition to its role as an insurer, the NHBC is permitted by law to act as the building inspector in place of the local authority.

Mr Hall said there was a risk that the NHBC's inspection section could yield to pressure from builders to issue guarantees in situations where it should demand work be done again. If work was later shown to have gone wrong, he argued that there may be problems in obtaining full disclosure if one section had been critical of another.

This view is shared by Alan Harris, principal of CSC, a claimants adviser, which puts pressure on building insurers and the NHBC until one or other accepts liability for subsidence claims on new properties. In one of Mr Harris's recent cases, a pounds 500,000 development in Maidstone was overseen by the NHBC.

But in the opinion of Mr Harris, the work was substandard. The builder argued that the work was guaranteed by the NHBC while the latter rejected the claim on the grounds that the damage to the property did not meet the criteria for "major structural damage".

"The warranty only covers major problems, which are bloody disasters to the man on the street," said Bob Eaves, a surveyor and director of DTZ Debenham Thorpe.

The floor sank in Mr Eaves's own new home but after six months struggling to persuade the NHBC to foot the bill, he gave up and his building insurer paid. Mr Eaves would now recommend people in comparable situations to put in simultaneous claims to both insurers.

Brian Clancy, a vice-president of the Institute of Structural Engineers, said many home-owners were passed backwards and forwards between the NHBC and building insurers. He nevertheless believes the NHBC has fulfilled an important role in raising building standards.

"Its standards are a credit to the house building industry and contribute to gradual improvement," said Mr Clancy. "It is a competent, well-organised and professional organisation, but it can make mistakes."

Mr Harris said that in practice the NHBC was no more to blame than general insurers, which were minimising their pay-outs on subsidence damage after years of heavy losses.

Some building insurers are privately very critical of NHBC. In turn, the NHBC claims the problem lies with the building insurers.

"We have found a hardening attitude among insurers towards acceptance of subsidence claims in relatively new homes," a spokeswoman said.

"They can be hard to convince that there are sometimes inherent soil features that could cause damage to a new home despite the very best efforts of the builder, engineers and NHBC experts. Our policy has been to accept such claims if it looks like the home owner might become piggy in the middle, and then go back to the household insurer to recover some or all of the money."

The NHBC said that the close involvement of its inspectors enabled it to assess the insured risk properly and intervene early if mistakes were made.