National House Building Council (NHBC) · DRN-6254261

The complaint Mr S, taking the lead with this complaint for himself and Miss C, complains that National House Building Council (NHBC) has poorly handled the claim made under their building guarantee insurance. What happened Mr S complained to NHBC following the action it took to address a number of issues with Mr S and Miss C’s property. The policy cover commenced on 9 April 2021, any issues identified in years 0-2, would be considered under Section 2 of the policy – the builder warranty period. Any issue identified after the builder warranty period, would be considered under Section 3 – Cover for damage resulting from a defect. In March 2022, Mr S reported multiple issues with the home to NHBC. Due to the age of the property and when these issues were raised, this was considered under Section 2 with the builder warranty period. Section 2 of the warranty requires the builder to rectify any defects and physical damage to the property. If the builder doesn’t do this or is unable to, NHBC is required to guarantee the builders obligations and provide cover for any items identified where work is required. A resolution report was completed in line with the warranty expectations in September 2023 and this set out a number of areas where the builder was required to complete work to rectify defects, but the builder didn’t complete these works. Under the terms of the policy and Section 2, NHBC took over the responsibility of the claim and offered to cash settle the works. Mr S explained he could not find contractors to complete the works and NHBC agreed to appoint its contractor to do this. Mr S had concerns with the repair work proposed for the items relating to the work set out under Item 5 of the resolution report. This related to works required to the bay window of the property and the lead flashing. Mr S said the appointed builder said the cavity tray had not been installed correctly and in line with the technical standard. He said there was structural issues which could result in long term structural or water ingress problems. • The cavity tray is running out by 20mm across the width of the bay window. • Brickwork had been pushed back, reducing the cavity width and both perp and bed joints are visibly compromised. • Weep holes are incorrectly positioned upwards. • Cracking has appeared above the bay window. Mr S complained that the repair set out within the resolution report was not sufficient to address these concerns and would result in a cosmetic fix only. Leaving the property at risk

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of future damage with the underlying issues not being rectified. NHBC said its responsibility under Section 2 of the policy only extends to work included within the resolution report. Based on this, it didn’t think it needed to do anything else and the repair offered was fair and in line with the policy and the cover provided through the warranty. Our investigator looked at this complaint and didn’t think NHBC needed to do anything else. They said this Service can only consider complaints about regulated activities and while NHBC is a financially regulated business, the resolution service is not a regulated activity. So, we cannot comment on whether the defects which were not identified in the report. Section 2 of the policy places an obligation on NHBC to take over the claim when the builder has failed to do the works set out in the resolution report. But its liability is limited to the work set out within this report. The investigator was satisfied NHBC had done what it needed to under the policy and any issues now identified would need to be considered under Section 3. This required NHBC to cover physical damage resulting from a defect and doesn’t require it to take preventative action when there is no physical damage. Our investigator also said some of Mr S’s complaint points were new and had not been made to NHBC, so we couldn’t comment on a complaint it hadn’t had the opportunity to consider previously. Mr S didn’t agree with the investigators outcome. He said the NHBC appointed builder highlighted there was a defect with the cavity tray, so this is an established fact. It isn’t fair to say this doesn’t need to be rectified now because the defect hasn’t caused physical damage. The defect couldn’t have been identified earlier from the visual inspection and it is only when the appointed builder has assessed the work needed to complete the repair to the lead flashing that this underlying issue was identified. So, he feels this should be included in the work now. Mr S also felt his other complaint points should be considered with this complaint as they are linked to the actions of NHBC now and to ignore these isn’t fair. Our investigator said their opinion remained unchanged. The complaints we can consider are set out in the Financial Conduct Authority (FCA) Dispute Resolution (DISP) Rules. And we cannot consider a complaint until the business has had the opportunity to investigate these, so the complaint remained focused on what we could consider only. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. I’ve decided not to uphold this complaint, I appreciate Mr S and Miss C will be disappointed by this, but I’ll explain why I think NHBC has made a fair offer to settle this claim, based on its obligations under the policy. The crux of this complaint is whether NHBC has provided a fair schedule of works to repair the issues identified in the resolution report. When the initial schedule was set out with the details of the repair to the lead flashing, the initial fix proposed was to correct the render above it, over removing and replacing this. Mr S later wanted NHBC to confirm whether the cavity trays behind the lead flashing had been correctly installed. But it is whether the repair as directed by the resolution report, can

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be affected without the need to complete the additional work. If it cannot, it would be fair to expect NHBC to complete this as the builder, who it has now assumed responsibility for under Section 2 would have needed to do this to comply with the resolution report. The question or a concern about the cavity trays was not raised with the builder or considered with the resolution report and it is only if this needs to be done to complete the repairs set out, that it would be fair to ask NHBC to do this now. This is because, although it is now known there is a defect, this only became apparent during Section 3 of the policy. For NHBC to be liable to repair the defect under this section it needs to be shown that physical damage has resulted from the defect. NHBC has said there was no evidence of water ingress to the property, so nothing to demonstrate the cavity trays were not performing as they should, despite not being level – nor is there damage resulting from it. But its investigation supported the render bead above the flashing was the bigger issue and repairs were proposed in this area. NHBC agreed to replace the lead flashing with new and treat this with patination oil as well as replace the unevenly sized/fitted hip tiles and the weep vents. It wanted to do this while leaving the render bead in place but would have needed to remove a narrow area of bead which would need to be re-rendered. This work commenced but it was at this point the appointed contractor said the work couldn’t be completed as the lead work was attached to the cavity trays and these are out of level. A solution was proposed by NHBC which would have resulted in a more invasive fix with the removal of block work and more roof tiles with new tray installations before the reinstatement of everything. NHBC felt this was excessive to complete the repair to the lead flashing which was predominately a cosmetic issue. Following this another option was provided. It was less invasive and would have allowed the new lead flashing to be installed without the need to replace the cavity trays. Having considered the options put forward by NHBC to comply with the repair for item 5 of the resolution report, I think it has made a fair claim decision and offer. The cavity tray and issue with this is not something which was set out as needing to be repaired within the report and while I accept that Mr S has said this isn’t something which would have been known based on the visual inspection, it doesn’t change the fact that it wasn’t something raised as an issue with the builder. NHBC and the repairs it has agreed to complete or cash settle are based on what the builder was liable to do. Its liability is to the work highlighted as needing to be completed by the resolution report and with this service not being a regulated activity, I cannot say the work should have been included. The lead flashing repair has been evidenced as something NHBC’s appointed builder can do without the need to replace the cavity trays. Because of this, and the limit of liability for NHBC with what it needs to do here, I cannot say its offer to complete the work is unfair or unreasonable. And while Mr S feels it has opted for the option which is the cheapest, I feel it will do what it is required to do. Section 3 of the policy provides cover where damage has resulted from a defect. But as has been set out by the inspections to date, I cannot see damage has been caused and so NHBC does not need to consider the defect under Section 3. I understand the frustration with this and why Mr S feels this is unfair, but the defect with the cavity tray was not identified in the first two years of the policy and because of this, NHBC doesn’t need to provide cover based on the policy terms.

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Mr S has raised some other concerns, some of which NHBC hasn’t had sight of before, so I cannot comment on these. I understand he feels some of these are linked to his complaint here but I cannot comment on something that NHBC hasn’t had the chance to respond to. And I am satisfied I can decide the issues I have here without these being included. Overall, I think NHBC has offered to complete the work it is required to do under the terms of the policy and Section 2 and this can be done without the need to replace the cavity trays and I cannot ask it to do more because of this. My final decision For the reasons I’ve set out above, I don’t uphold Mr S and Miss C’s complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss C and Mr S to accept or reject my decision before 23 April 2026. Thomas Brissenden Ombudsman

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