Abstract

The decline in housing quality and the rising number of housing defect cases have become a serious social issue worldwide. To protect newly built home buyers from such defects, a new home warranty system is in place. In Korea, defects are categorized by timing: pre-handover or post-handover. However, only post-handover defects are covered under the warranty. This study proposes an alternative standard for the new home warranty based on construction costs for pre-handover defects. Through a statistical analysis of 238 litigation cases, three key metrics, specifically the arithmetic mean, the 80% cutoff value, and the upper whisker from a box plot analysis, were derived. These three metrics, combined with three additional “adjusted policy indicators” derived from these initial values, constitute a total of six proposed alternatives. Based on a comparison of the above alternative indicators through case studies, it was determined that setting the home warranty at 1% of the construction cost in the pre-handover stage represents the safest option in terms of both the individual case coverage rate and the aggregate deposit coverage rate. It is expected that this measure can reinforce the social safety net designed to protect buyers of newly constructed homes against pre-handover defects.

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