NHBC and what to do if your development hits problems

October 16th 2018

NHBC (The National House Building Council) Buildmark cover has become synonymous with quality, and homebuyers can be confident that homes built by an NHBC registered housebuilder will have met stringent quality levels.  But what is the management company’s position if defects are detected and what approach should the directors take to achieve a commensurate outcome for residents at the scheme?

By way of background, NHBC is a non-profit distributing organisation, independent of Government and housebuilders.  It is the UK’s leading standard-setting body and provider of warranty and insurance for new homes.  NHBC works with UK housebuilders to help drive up construction standards and to offer warranty and insurance protection for homeowners.  NHBC’s warranty and insurance product, Buildmark, provides protection to homebuyers by covering new-build homes from exchange of contracts until 10 years after the first legal completion date, with different levels of cover depending whether the building is pre-completion, 0-2 or 3-10 years old.   Registered builders have to satisfy NHBC’s standards covering financial stability and technical competence, and abide to the NHBC rules and standards of construction.

 Whilst defects are thankfully a rare occurrence at the new builds we manage, in the last 12 months Pennycuick Collins has handled major claims on behalf of directors and tenants at two blocks where we are retained as managing agents. By sheer coincidence, both schemes were seven years old when the defects were identified, so fall well within NHBC’s period of cover.  Both developments are situated in prestigious, gated and landscaped settings, one being a 20 unit scheme, the other a 37-unit scheme in a newly converted grade 2* listed building.

The problems identified at both of the schemes related to rain water which caused water to leak into the walkways and through the parapets and balconies of the residences whenever it rained.  This was causing distress to the occupants and we were alerted to the problems at an early stage of being engaged as managing agents.

Having checked the lease responsibility for the areas concerned and the cover provided by NHBC Buildmark, we advised the directors of both management companies to consider making a claim to the NHBC and were instructed to approach the organisation on their behalf.  There began a lengthy and time consuming process of working with the NHBC to establish liability and secure a settlement which would allow the Directors to make good the building and return it to the pre-intended condition. 

On both claims the management companies and residents were requested throughout the process to keep clear and stringent records of when the leakage occurred and to provide evidence of the problems they were experiencing, to include photos and video evidence.  This was passed onto the property manager who put our in-house building consultancy team on notice and a building surveyor was appointed to undertake a full investigative survey to diagnose the problem.  

Our property management team lodged matters with NHBC and once compiled, submitted the investigative report demonstrating the problems encountered and that the area of responsibility to rectify fell with NHBC.  Upon receipt of the claim, further investigations were undertaken onsite by the NHBC claims handler and their contractors, the property manager and building surveyor.  This involved various building pathology inspections which included opening up of the structure in various places to aid in diagnosis of  sourcing the leaks and how water penetration had affected the building internally.  The preliminary diagnostic was that the problems were caused by a defective building structure which did not adequately protect the buildings from the weather. 

 From this thorough investigative report and diligent approach we were able to get both claims accepted by NHBC.  One claim involved NHBC’s appointed contractors undertaking the work, but the schedule of works was reviewed by the appointed building surveyor and questions raised where necessary to ensure that the proposed works were the correct solution for the building.  On the other claim, a cash settlement was agreed as the management company did not want either the developer or NHBC’s appointed contractors to undertake the works. 

This process involved Pennycuick Collins submitting a building report which included a detailed outline of the issues and a comprehensive analysis of the costs required to rectify damage and to put right the issues.  However, it is important to note when calculating a cash settlement NHBC will base this on contractor rates that they are able to negotiate.  For the cash settlement to be accepted we were required to obtain signed authorities from each member of the management company.  Our building surveyor was actively involved in agreeing the schedule of works required to remedy the defects and make good the damaged areas of the property internally.

Thankfully we were able to secure successful claims in both instances, but this was time consuming and required detailed technical knowledge to present to NHBC and it is important to be aware of the policy in place and the threshold limits for a successful claim.

 In conclusion, our advice to management companies of new build schemes is to make sure you are keeping full records of any problems you encounter and alert your managing agents as soon as you can.  Firms like ours with the added advantage of in-house building surveyors have usually experienced a broad range of issues on site and so you will benefit from our knowledge of having dealt with problems. With our early involvement we can assist you in the process with a view to a successful claim.

If you would like further information on this area please contact david.baker@pennycuick.co.uk or lyndsey.cannon-leach@pennycuick.co.uk