Building Warranties are often perceived as a necessary evil – while procuring a warranty for your development isn’t mandatory, all lenders will require one. In addition, you may have problems selling a house that is less than ten years old if it doesn’t have a warranty. This blog outlines the various influences that could potentially drive up the price of your Building Warranty.
- Part-completed / completed Project
A completed or part completed property makes for an ample risk, as the insurers have not had the opportunity to oversee key phases of the build. In other words, the insurers can’t identify the standards or quality the structure has been built to. On average, premiums could increase by as much as 20% for every key stage you go through without insurance.
Instances where developers don’t secure a warranty until after the build is complete, the premiums can increase by as much as 100% from the potential insurance premium, had it been arranged at the outset.
- Method of construction
- Timber frame: – An additional inspection is required when building a timber frame which raises the cost of site audit fees.
- Piling: –Typically used when being built on an unsteady ground, this method is classified as high risk.
- Green oak: – Most insurance providers won’t take account for any impairment caused by green oak in their policies.
- Alternate Construction Methods such as: –
- The use of unconventional, Eco-friendly materials including hempcrete.
- Insulated concrete forms.
- Modular Construction – Although flaunted as the future of the building industry, the cost of a warranty currently comes at a significantly higher price compared to a traditional brick & block method.
- Experience of the contractor/ developer
Finding an experienced contractor with a reputable portfolio is an important but often unknown factor that influences the cost of the warranty. A contractor with no prior records of completed (or successful) projects carries a level of risk to the insurers due to uncertainty of the standard of work. In contrast, a contractor with a portfolio of previously successful projects with no disputes will put insurers at ease knowing the structure that they’re protecting will be constructed to a certain standard.
Buildsafe have a wealth of experience in the UK property sector having worked with some major developers and global investors. We have covered over 10,000 properties, having placed insurance for over £3.2bn worth of developments. For more information, please call 020 3701 0422.