Ensuring safe, habitable houses

Home warranty schemes manage home-building risks to provide consumer protection.

The oldest known formal law regarding housing warranty schemes goes back to 1 700 BCE in the Code of Hammurabi.

The “high risk to consumer” areas that home warranty schemes address are:

• Establishing whether a reasonable price has been paid because of the difficulty in comparing dwellings.


• Unstable factors in production “because buildings are composed of manual works in variable outdoor environments using hard-to-stabilise materials such as concrete and timber”.


• A long period of production that poses a risk of developer bankruptcy or a “change of financial capacity of a client”.


• Safety, habitability and durability—abstract issues that are difficult to measure, which make disputes around defects complex.


• A long period of occupancy where defects may appear only much later.


• Consumer vulnerability—because of the high cost of owning a home, the transaction usually occurs only once or twice in a consumer’s lifetime. As such there is a lack of experience and knowledge.

The research notes that in many countries with a warranty scheme, protection is mainly offered for building defects but few offer assistance with breach of contract. However, the home warranty scheme movement is continually developing.

This article originally appeared in the Mail & Guardian newspaper as a sponsored feature