Building warranties are crucial for builders, developers, and homeowners alike. These warranties offer risk mitigation by protecting against potential legal claims and disputes arising from construction defects. A 10 year building warranty also enhances marketability, giving buyers confidence in the property’s quality and reliability. Building warranties also ensure compliance with lender requirements and broaden the pool of potential buyers for a project.

A building warranty, also known as a new build warranty or structural warranty or latent defects insurance, is a 10 year insurance policy that provides protection against potential defects and issues in a newly constructed or newly converted property. It offers cover starting from the completion of the construction project.

The purpose of a building warranty is to provide financial and structural protection to homeowners and buyers in the event of structural problems, design deficiencies, or poor workmanship that may arise after the construction is complete. It safeguards against latent defects that may not be immediately apparent but could become evident over time.

Building warranties are required by mortgage lenders before financing a property purchase. They provide homeowners with peace of mind, knowing that any unforeseen issues will be addressed without placing an excessive financial burden on them. Additionally, building warranties benefit builders and developers by reducing their long-term liability for potential defects, enhancing their reputation, and improving the marketability of their properties.

New Home Warranty

A building warranty is also commonly known as a structural warranty or new home warranty or new build home warranty. It caters to newly built properties and covers potential structural defects within a set period following construction, ordinarily ten years. This form of structural warranty insurance is often mandated by mortgage lenders as part of their lending criteria.

Self-Build Warranty

Another type of building warranty is the Self-Build Warranty – This offers a reasonable safeguard for individuals who elect to delve into projects themselves or hire contractors independently when building homes. In essence, it furnishes protection against major structural problems that could crop up during or after construction. 

Completed (Retrospective) Home Warranty

Completed Housing Warranties, known as retrospective structural warranties or retrospective building warranties provide retrofit cover for existing dwellings built in the last 10 years or being resold under auctions, partially refurbished/newly converted buildings. 

You can read more about retrospective warranties and how we can help you here.

Conversion Building Warranty

Conversion building warranty caters for developments that include an existing structure and new works. Think conversion of an old mill into new apartments. Or an office building into new flats.

Mixed-Use Warranty

Specific coverage for projects that include commercial spaces with residential units inside a single development complex. A good example would be a new build project that had a supermarket on the ground floor and a set of apartments above. Two different types of uses within the same building

Commercial Warranty

Commercial latent defects Warranty or latent defects insurance is designed exclusively for non-residential edifices like hotels, business parks, care homes and offices.

You can click here to get an instant indication for your  building warranty cost

Building warranties are beneficial to builders, developers and home owners for several key reasons:

1. Risk Mitigation: Building warranties offers first party insurance and helps mitigate the risk of potential legal claims or disputes arising from defects in the construction. Having a warranty in place provides assurance to homeowners and buyers that the builder stands behind the quality of their work, reducing the likelihood of costly litigation.
2. Compliance with Lenders: Mortgage lenders require properties to have a building warranty before approving financing for homebuyers. Builders and developers offering warranties can broaden the pool of potential buyers since having a warranty fulfils a significant requirement for securing mortgage loans.
3. Marketability: Properties covered by a building warranty are more attractive to potential buyers. The warranty acts as a mark of quality and reliability, giving buyers confidence that the property is constructed to a certain standard and will be protected against structural issues for a specified period.
4. Dispute Resolution: Building warranties often provide a structured dispute resolution process. In the event of disagreements or issues with homeowners, having a warranty in place can facilitate fair and efficient resolution procedures.
5. Peace of mind for the homeowner: Building warranties offer crucial protection to homeowners by providing coverage against potential defects and issues in newly built or newly converted homes. They act as a safety net, ensuring that homeowners are not left financially responsible for rectifying structural problems that may arise after completion..
6. Reduced Liability: Building warranties can help limit long-term liability for builders and developers. The warranty typically covers certain defects and repairs for a defined period, relieving the builder of some financial responsibility for structural issues that may arise after completion.

A 10-year building warranty has two periods: For the initial two years , the developer/ builder is responsible for addressing any issues that may arise.  Once the initial two-year period of the warranty elapses, the responsibility for addressing valid claims related to structural defects shifts to the warranty provider. 

A building warranty also covers the cost of:

Contaminated Land Cover

In case contamination is discovered, rectification costs or the cost to relocate can be substantial. With a building warranty in place, home owners will be protected from these unforeseen expenses.

Alternative Accommodation Costs:

If repair or rebuilding work necessitates finding alternative accommodation, the building warranty provides financial protection against these relocation costs. For commercial property owners, it also covers potential loss of rent from tenants who need to relocate.

Fees:

Should structural defects incur any additional fees, the building warranty ensures the financial burden isnt with the homeowners 

Removal of Debris:

After defects, repairs, or rebuilding work, debris removal and disposal costs may arise and the costs associated are cover under the building warranty.

Choosing a suitable building warranty requires your attention and understanding, as it protects your long-term investment. Making an informed decision may seem overwhelming initially, but here are some essential tips you can follow.

1. Define Your Needs: Every building project has its unique demands. As such, grabbing any available warranty won’t suffice. Be clear about what you need a warranty to cover: Is it a new home or a mixed-use development?
2. Research: Knowledge equips you with negotiating power and helps prevent future clashes. Try to understand terminologies like structural warranty insurance and their implications in different scenarios.
3. Compare Providers: This process involves more than comparing prices. Yes, while the cost of building warranties is crucial, other factors matter too:

• • Check the reputation of potential providers
  • Evaluate their financial stability
  • Analyse customer reviews if possible

4. Policy’s Coverage: Understand what each policy covers comprehensively—pay particular attention to limits, exclusions, deductibles, etc

Remember that selecting the right building warranty does demand time and effort but provides great peace of mind about unforeseen issues in the future when chosen appropriately—in essence, ensuring that potential structural failures or defects don’t compromise your hard-earned investment. 

As highlighted earlier in this discussion on building warranties & insurance: Always safeguard your investment by making well-informed decisions!

In today’s challenging construction and insurance markets, developers frequently encounter obstacles when it comes to securing building warranty insurance or negotiating favorable terms at reasonable rates.

Some of the reasons include: 

Inadequate presentation of the project and professional team: Insufficiently showcasing the project details and the expertise of the professional team involved can hinder the insurance process.

Approaching insurers without suitable risk appetite: Engaging with insurers who may not have an appetite for the specific risks associated with the project can lead to overcharging and limitations in obtaining coverage.

Overreliance on current providers for optimal coverage and premium rates: Depending solely on existing providers to consistently offer the most suitable coverage and competitive premium rates may result in missed opportunities to explore more advantageous options.

At J3 Advisory, we understand the importance of effectively packaging and presenting the right information to the appropriate A-rated insurers. This proactive approach helps minimise unnecessary losses and safeguards our clients’ interests while connecting them with the ideal insurance partner. We navigate the complexities of the construction and insurance markets to secure the most suitable and cost-effective coverage for your specific needs.

A major consideration when investing in a building warranty is, undoubtedly, the cost. 

Some of the factors that impact the cost of a building warranty include stage of the build, as insurers view completed or part-completed properties as higher risk. Delaying warranty procurement can inflate premiums by up to 100%. Different construction methods also influence costs, with timber frames, piling, green oak, and alternative methods potentially raising premiums. Additionally, the experience of the contractor or developer plays a significant role. At J3 Advisory, we assist in navigating these factors to find the most suitable and cost-effective Building Warranty for your project.

Every new home, whether it’s a single self-build or a large-scale development, must adhere to the requirements set by statutory Building Regulations. During inspections, the Building Control Surveyor primarily focuses on assessing compliance either during their visit or when issuing a completion certificate. However, warranty inspections take a more thorough approach, building upon the foundation of Building Regulations and drawing from insights gained through past insurance claims.

For example, let’s consider the case of a flat roof. While a Building Control Surveyor may inspect for water ingress during their visit or upon completion, a Warranty Surveyor goes the extra mile to ensure that the roof doesn’t pond excessively, posing risks such as increased pressure on membrane joints or structural deflection over a 15-year period. This meticulous approach aims to identify and address potential vulnerabilities, mitigating risks and providing long-term assurance for homeowners.

By combining the knowledge and experience gained from both Building Regulations and past insurance claims, warranty inspections offer a comprehensive assessment that goes beyond immediate compliance, focusing on long-term quality and durability.