Part 5: Other provisions about safety standards, etc. New Homes Ombudsman scheme Section 145: New build home warranties: financial penalties Background
At present, 10-year warranties are provided on new build homes as a requirement to obtain mortgage finance rather than as a legal requirement. There is therefore no provision at present to mandate warranties in law or to impose penalties for selling a new build home without a warranty.
	In order to deter developers from considering selling new homes without a compliant warranty, subsection (1) enables the Secretary of State, or a person designated by them, to issue financial penalties for doing so in the absence of a reasonable excuse. Subsection (2) provides that the level of penalties, the process for issuing them, provision for interest or additional penalties for late payment and conferring rights of appeal will be set in regulations; subsection (3) provides that the maximum penalty prescribed in regulations may not exceed £10,000 or 10% of the sale price of the new home, whichever is the greater.
Example
If a new home were built and then sold for £250,000 without a warranty, and the developer had no reasonable excuse for not providing a warranty, the Secretary of State (or person designated by them) could issue the seller with a financial penalty of up to £25,000, or such lower maximum as may be prescribed in regulations.