As a developer, builder or lender of Development finance it is important you keep abreast of the latest changes in the Latent Defect insurance sector.
As a leading Broker in the market we are happy to publish the latest updates so you can ensure you are fully informed.
New entrants to the warranty sector
There has recently been a number of new entrants providing Latent defect Insurance (Building Warranty’s. With the demand seeing a significant increase, it is only natural that more providers will try to enter the market.
There is a need be cautious when thinking of using a new entrant as some who are trading have a very limited approved lenders list. This can cause serious problems when the developer comes to sell a unit and the high street bank providing the mortgage to the purchaser will not accept the warranty.
In most cases the developer then has to purchase a retrospective warranty from one of the other providers which always proves to be very expensive.
Here is a list of the main providers and their Underwriters active in the market who have a comprehensive list of approved lenders:
Building Life Plans – Underwriter Allianz
Buildzone – Underwriter Am trust
Self-Buildzone – Underwriter Canopius
Checkmate – Underwriter Inter Hanover
CRL – Underwriter Casualty and General
ICW – Underwriter Elite Insurance
LABC – Underwriter Am trust
NHBC – Self-Insured
Premier Guarantee – Underwriter Am Trust
Protek – Underwriter Canopius
Aviva (commercial warranties only)
Each insurer has its own strengths and weaknesses and that is where an independent Broker like London Belgravia Brokers can assist and ascertain which is the most appropriate provider for any given project.
Stage of works pricing
It is important to be aware that if you do not take out a warranty before building work starts, you will be financially penalised. Most insurers charge more for each stage of works completed. Typically, on a new build project the following price increases are a good estimation:
Not started – standard rates
Foundations poured – 15% of premium
Up to DPC – 25% of premium
Watertight – 50% of premium
First fix – 75% of premium
Completed – 100% of premium.
There is one insurer in the market that will charge up to a 500% uplift for a completed unit.
Barn Conversions Warranties
Any property developer or builder about to undertake a project involving the conversion of a barn needs to consider the cost and difficulty in obtaining a Building Warranty (Latent defect insurance).
There has been a quantum shift in the risk assessment for this type of development: the majority of insurers have recently made the decision not to offer cover for barns. One of the largest has enforced a minimum premium cost of £25,000 regardless of the build cost, reinstatement or sales value, that’s a whopping amount if you are building anything under about 3,000 sqft.
However, it’s not all bad news. Out of the big six insurers, two will still offer cover; however, they need to collate a large amount of information from you and it can take weeks to just get an indication of cost. As an example of their reluctance, one of the providers currently refuses to insure a barn if livestock has been kept in it in recent years.
Follow the link to see a recent barn conversion project for which we provided latent defect insurance http://www.marlandspark.co.uk/
Alternatives to a warranty when converting a barn
If you are developing a Barn and are going to sell it, rent it or refinance it a professional consultants certificate could be a wise solution. Most Mortgage Lenders will lend where the property is covered by a Council of Mortgage Lenders (CML) Professional Consultants Certificate (PCC). These certificates are limited by the professional indemnity cover of the consultants concerned. For instance, when we provide these certificates our cover is up to £3m which will cover most build costs for barns. However, for the majority of consultant’s (such as architects offering an Architects Certificate), their cover is only £1m.
In order to ensure the best price for a warranty or PCC on a barn conversion make sure that you take the policy out before you start any work on the conversion, and make sure you have at the very least the list of information below
A Detailed Site Plan – showing the site as a whole and its location and levels if it is on slopes.
Photographic Evidence – colour photos, both external and internal, showing all sides of the building, outbuilding, garages and any unusual features.
Structural Report – A detailed report (not just a condition survey) from a suitably qualified Professional (Building Surveyor / Structural Engineer) detailing the condition of the structure and its suitability for conversion.
Detailed Plans – A full set of plans and specification of works to be undertaken
Waterproof Envelope – (existing materials and those proposed to be used) as well as details of proposed Tanking, Damp Proof Membrane and Damp Proof Course
Ground Investigation Report including soil strength tests and contamination tests
London Belgravia Brokers Ltd
We are an independent organisation authorised and regulated by The Financial Conduct Authority offering advice and market quotes for the UK Building warranty market. We also provide independent monitoring solutions from professionally qualified building surveyors. Our Team has in excess of 20 years’ experience in the UK property sector including development, asset management and Insurance
Our ethos is based around outstanding customer service. Obtaining a structural warranty can be an arduous process with lots of form filling, additional questions from insurers and time spent chasing an actual quote. We take away that pain by managing the process for you and ensuring you receive the best price for the most appropriate cover to meet your requirements.
If you would like more information or a chat about your requirements, please give us a call:As a specialist broker we know which insurers to use for each specific project in order to get the best price and cover.
If you would like to discuss any subject with me further give me a call I’ll be happy to help.
T 0203 701 0420 E gf@lbb.london W www.lbb.london
