Cornerstone - Housebuilders - are you open to a Defective Premises Act claim?


02 May 2017

Most housebuilders will have heard of the Defective Premises Act 1972 (DPA), but few appreciate the extent of its implications

Most housebuilders will have heard of the Defective Premises Act 1972 (DPA), some might even have experienced it, but few appreciate the extent of its implications for those involved in the construction of new dwellings.

It’s important to remember that in the usual course of events, a housebuilder will have a contract for sale with the first purchaser of a new dwelling. That contract will contain express (and implied) terms relating to the design and construction of the dwelling, thus providing the first purchaser with a breach of contract claim if the dwelling is found to be defective. But what about a subsequent purchaser that a housebuilder has no contractual relationship with? Can they bring a claim in relation to a defective dwelling?

In headline terms, the DPA imposes a duty on those involved in the construction (and design) of new dwellings to work in a professional or workmanlike manner, to use proper materials and ensure that the completed dwelling is fit for human habitation. But what does this actually mean? The following six points will hopefully provide housebuilders with some useful guidance.

  • What is a dwelling? The DPA applies to the provision of new dwellings. It can include the conversion (but not repair) of an existing building where the work is so extensive it has effectively created a new dwelling. A dwelling is not defined in the DPA so will be a matter of fact in each case however it clearly includes houses and flats, but not buildings used predominantly for commercial or industrial purposes.
  • Who owes the duty? Housebuilders and contractors building new dwellings clearly fall within the definition in the DPA. How much further down the contractual chain a claimant can look is yet to be tested in the courts.
  • To whom is the duty owed? The duty is owed to every person who acquires an interest in the constructed dwelling. In practice this means that a subsequent purchaser may be able to bring a claim against a housebuilder (as the party who built the dwelling) under the DPA, subject to rules on limitation set out below, despite there being no contractual relationship between the housebuilder in question and the subsequent purchaser in question.
  • What is the duty? There are three elements to the duty created by the DPA.
    • To carry out the work in a workmanlike (housebuilder/contractor) or professional manner (designer).
    • To use proper materials.
    • To ensure the dwelling is fit for human habitation when complete


So, a claimant must show that inadequate work and/or materials have resulted in a defect which renders the dwelling unfit for human habitation. It is not enough to show that inadequate workmanship and/or the use of improper materials has resulted in a defect: a claimant must demonstrate that the dwelling is unfit for human habitation

The court will ask whether the claimant has demonstrated that a housebuilder’s failure to do its work in a workmanlike manner has resulted in the property being unfit for human habitation. We all have a pretty good idea of what constitutes a defect (as far as the DPA is concerned, this includes a failure to carry out necessary work as well as carrying out work badly) but when does a defect render a dwelling unfit for habitation? By way of example, the following have been found to be ‘defects’ for the purposes of the DPA in the past.

  • Constructing a dwelling on an inherently unstable hillside.
  • Constructing a dwelling without some essential attribute, e.g. a roof (not surprising) or damp proof course (perhaps more surprising).
  • Using inadequate foundations.
  • Heave caused by tree root damage.
  • A failure to provide a means of access.
  • Work not in accordance with regulations (e.g. Building Regulations) or standards - (e.g. NHBC).
  • A collection of defects rendering a dwelling dangerous or unsuitable for its purpose  (as opposed to minor defects).
     
  • How long is the duty owed? The duties imposed by the DPA run for six years from completion. However, if remedial work is undertaken to a dwelling, the six years will start to run from the time the remedial work was finished.
  • How much can a claimant expect to recover? A DPA claim will usually seek reinstatement costs, i.e. the cost of putting the defect(s) right. If that measure of damages is disproportionate to the benefit to be obtained, a claimant will be entitled to the diminution in value of the dwelling. A claimant may also be able to claim a modest amount of damages for loss of enjoyment while the dwelling is uninhabitable.

For further information on housebuilders or Defective Premises Acts claims, please contact Josh Ripman. This article provides only a general summary and is not intended to be comprehensive. Specific legal advice should be taken in any individual application. Law covered as at December 2015.