The
CMA plans to change rules relating to structural warranties, a type of
insurance that protects against potential defects in new buildings.
The
revision to existing National House Building Council (NHBC) undertakings, which
currently cover over 1.6 million homes in the UK, will protect and encourage
growing competition in the structural warranties market.
On
29 June 2017, the Competition and Markets Authority (CMA) announced – as part
of its review of legally binding commitments (known as ‘undertakings’) given by
the NHBC in 1995 – that it would consult on whether or not to amend
the NHBC’s undertakings to bring them up to date with today’s market
conditions.
This
proposal reflected the CMA’s provisional finding that, although
competition in the market has grown and house builders are now purchasing some
or all of their structural warranties from a range of suppliers, the NHBC
has retained a very high market share compared to its competitors.
Having
carefully considered responses to its consultation, the CMA has
determined in the final
decision on its review to seek new undertakings that are more focused
and closely targeted on encouraging effective competition than those given in
1995.
The CMA is
now consulting on the new undertakings that have been offered by the NHBC.
These proposals would oblige the NHBC to clearly display on its
website that builders who are members of the NHBC can source structural
warranties from both the NHBC and other providers, or from another
provider alone. Given regulatory developments, these proposals would also
remove any requirement on the NHBC to oversee warranties provided by
its competitors.
The
proposed new undertakings would replace the previous undertakings and remain in
force for 15 years. They are set out in Annex 1 of the CMA’s final
decision.
Anyone
wishing to comment on the proposed undertakings should do so by 1 November by
emailing structural.warranties@cma.gsi.gov.uk or
writing to:
Structural
Warranties Review
Competition
and Markets Authority
Victoria
House
Southampton
Row
WC1B
4AD
