Landlords and property developers can no longer sue builders for shoddy workmanship when they refurbish a home.
The Court of Appeal rejected claims from a couple that a builder had ruined their home by failing to damp proof a basement - and lost.
The judges declined their right to compensation under the Defective Property Act and agreed with the builder that they had no claim.
Previously, courts let homeowners claim compensation from builders for faulty work - even if they had bought the property after the work had been completed.
But the Court of Appeal has ruled that the Defective Property Act only applies to newly built homes and not the refurbishment or extension of an existing home.
Key to the ruling was the judges’ understanding of the clause ‘wholly different from old’ in the Defective Property Act.
They reckoned a property that had undergone changes, however far reaching, could never be “wholly different from old’ because somewhere in the building a part would remain unchanged.
Therefore, they said, the law could only apply to a new building.
The decision came in the case Jenson and another v Faux.
The case was first heard at the Technology and Construction Court, where the judge heard the Jenson bought the house from a Mr Green who refurbished the property. He added a loft extension, moved walls, extended and refitted the kitchen and changed the basement in to a living room.
Mr Faux managed the project.
After moving in, the Jensons found the basement flooded as damp proofing was poorly fitted. They pursued Mr Faux for compensation.
He argued they had no case because the Defective Property Act only protected the owners of a newly built property.
The judge agreed with the Jensons and Mr Faux appealled.
At the Court of Appeal, Lord Justice Longmore said: “There is no doubt a grey area within which it would genuinely be arguable that a dwelling had so changed that it had a different identity from before but works of extension or refurbishment works, to my mind, have to be much more substantial than they were in this case before such a grey area was reached.”
