Property: Is this warranty not worth the paper it's written on?

The NHBC celebrates an anniversary this week; but many homeowners don't feel like celebrating. Penny Jackson examines why the scheme is defective.

Owners of new homes feel they buy peace of mind when it comes with a warranty from the National House-Building Council. Builders' brochures typically claim: "We create homes for people who rightly expect high standards of design and build quality... and we offer the NHBC 10-year warranty." But what does that mean to someone who finds themselves in a home riddled with defects?

As the NHBC celebrates this week the opening of its five millionth home covered by the scheme, so it is engaged in a review of its services after claims last year that it was failing to represent consumers. More than 1,000 people have sought help from the National Association of New Home Owners set up three years ago to represent dissatisfied buyers.

Buyers who thought the warranty was a guarantee found that not to be the case. The warranty says that a house has been built to certain standards, that in the first two years it is the builder's responsibility to sort out any problems and after that it is only obliged to put right major structural faults. It is in fact an insurance policy. Clearly there is a yawning gap between what buyers expect the warranty to mean and the reality of its cover.

The insurance ombudsman's bureau, which has been dealing with complaints, has emphasised that the NHBC warranty is not a guarantee covering all potential problems. Walter Merricks, the insurance ombudsman, is adamant about the responsibility of the insurer. "This is an area with which most people are unfamiliar and insurers must make it clear what a warranty does or doesn't cover".

Given that the small print of the warranty may never have been explained to the purchaser either by a solicitor or by the developer, the discovery that even major building defects are not the responsibility of the council is not surprising. An NHBC survey found that 30 per cent of solicitors have not been passing on full details to clients and it has now brought out a home-buyers guide which, it says, clearly shows what is covered.

But what particularly disturbs those with unresolved problems is how a flawed building can be passed by an NHBC inspector. Nearly two years ago, Timothy Flood moved into his house in Caerphilly three months later than promised and a week after his building society judged it unfit to live in. "The builder did the minimum to meet their requirements. Even so we moved with a 4ft hole in the front of the house and we have had nothing but misery since. The windows still leak, the bath is cracked, the lino was never replaced and the garage where we stored our furniture leaked so badly that everything was ruined."

Jackie Bennett bought her three-bedroom semi in Nuneaton four years ago and now has the prospect of replacing all the windows at her own expense. The builder's snagging period has elapsed and the NHBC warranty doesn't cover windows. "They are so badly fitted that the water from the condensation runs down the inside of the window into the frames which are rotting. They have already been replaced once but now the glazing company has gone bust and the developers say it is not their problem. I was even told `what do you expect for pounds 60,000?' What upsets me is that it was never right from the beginning. Some plumbing was also faulty and a leak caused so much damage that if it hadn't been for the lino my washing machine would have fallen through the floor. How could that have met NHBC standards?

"They are not alone in suspecting a reluctance of the Council to put pressure on dilatory builders even within the first two years when they have a clear obligation. Chris Lorentzen, who founded the Association of New Home Owners and has dealt with thousands of disgruntled owners, believes what is needed is an impartial and accountable body. "The NHBC is funded by the construction industry."

The Council's role as both regulatory and warranty body is seen by some as far from ideal. Gary Sinclair, a consulting structural engineer, says he has seen builders hide behind the NHBC screen if something is queried. "Supervision of detail is a problem because they think they have blanket cover and it tempts them to cut corners. Defective work becomes hidden until eventually it emerges as an insurance claim." Other professionals who work on sites talk of rarely seeing inspectors. They say some inspectors simply accept the word of the site manager that work has been done properly and that if something needs doing will tick it as a job done and take it on trust that the builder will do it.

However, the NHBC says it inspects every new home it registers for warranty purposes on average seven times and where it provides building control services this increases to 11. There are, though, no statutory requirements for site visits. A spokesman for the council says that inspectors make spot checks and all defects should be logged. Warranties are withheld. In April the NHBC says it is bringing in a site manager's accreditation scheme, externally validated, reviewable and based on performance.

Some 1.7 million homes are covered by the warranty and last year, of the 24,000 inquiries made, half received site visits. One third were found valid, another third invalid and a third valid under conciliation procedures. But Stephen Hawksworth knows how badly things can go wrong. Nearly 10 years after moving into his new house in Gloucester it is unsaleable since it could require as much as pounds 60,000 spending on it. After his builder refused to do any more repairs, he says the NHBC encouraged him to go to conciliation rather than take legal action. Now after two unsatisfactory conciliation hearings, he is pinning his hopes on an independent assessor.

An NHBC spokesman says it is familiar with the case. "It is extremely complicated." The matter has been brought to the attention of Nick Raynsford, the construction minister. Perhaps not quite the sort of interest the NHBC has in mind during its five millionth celebrations.