Structural Warranty - More than an expensive piece of paper
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Structural Warranty - More than an expensive piece of paper



Build-Zone's Simon Middleton

Build-Zone's Simon Middleton



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  • Thank you introductions. So how important is a structural warranty?I guess this must be the question every Builder or Developer considers when they first embark on a development. Is this just an expensive piece of paper or does it really add value to your business and ultimately the sales process?What I’m hoping to do is explain over the next few minutes is to give a overview as to just how important a Structural Warranty is, what it covers, who’s going to ask you for one and why. I’ll also touch on the alternatives and what happens when you come to sell a property without a warranty in place.I’m running a workshop at about 11.30 if you want to better understand the nuts and bolts of applying to be a registered developer, our rules of registration, the standards we look for from you as a business both as an entity and technically, acceptable build systems, the technical audit process as well as our sales and after sales customer support.
  • So what exactly is a Structural Warranty.Well if I can give you a little background before explaining what a New Home Structural Warranty is you will see how it comes together...The word ‘Warranty’ describes different things in different contexts. For example you get a warranty on your car, your fridge, and the gas boiler are they the same as a Structural Warranty? A Manufacturers Warranty – is normally issued on the product only and provides an element of recourse if the product is defective. It’s normally backed by the manufactures balance sheet and provides peace of mind for the consumer. Sometimes they are limited by a short time period. Sometimes the manufacturers warranty is ‘backed by an insurer so that if the manufacturer goes bust the insurer honours the terms of the warranty.A Workmanship warranty is issued by the guy that installed the product above and declares that he will come back and fix a problem, if it was his fault. Just like the manufacturers warranty it can be backed by an insurer, in which case it becomes an Insurance backed guarantee. In this situation if the installer is no longer in business then the insurer ‘picks’ up the installers original responsibilities.While both these products work, They are not sure fire solutions for obvious reasons (and arguing the case for whether or not something has been installed incorrectly is definitely high up on the list) You can appreciate that while in the process of building a new home you would need lots of these separate solutions to get the protection you need.A Build-Zone Structural Warranty (or New Home Designated Warranty) to be precise, is designed with the end consumer in mind. Firstly to protect their deposit in case the development isn’t finished and on going to provide them with the peace of mind and security that allows them to get genuine defects resolved and further down the line, irrespective of what may or may not have happened to the Developer. In addition it is fully transferrable, meaning that any subsequent owner can benefit from cover as well.A new home warranty is the combination of process and financial assessment combined with site based quality and product assessment , backed by a comprehensive insurance policy. Each Designated New Home Warranty has to be approved by central government and also has to comply with the Council of Mortgage Lenders Initiative. A New Home Warranty provides the bank or building society being asked to lend on your product the security that they are lending on a property which has been built by a Developer with good financial standing, workflow communication, quality control and has been thoroughly checked from the design right through the course of construction and has been arranged by a responsible developer who has demonstrated the willingness and ability to provide a good after sales service.
  • OK – lets have a quick look at the elements that go together in terms of securing the New Home Structural Warranty.The Structural warranty combines an element of IBG together with an insurance policy and a thorough risk management program, which culminates in a structured approach to issuing cover and providing excellent after sales customer care.A key part of the risk management process is assessing the Developer both prior to registration and regularly thereafter The technical audit process which checks the design, workmanship and materials during the course of construction to ensure that the final product meets the requirements of the warranty provider who is then able to issue the insurance protection. We try hard to combine the site audit requirements with Building Control if this is arranged via a Build-Zone partnered approved inspector from day one to ensure the site audit process is efficient as possible. The audit process provides the essential information required to assess the performance of the Developer.Comprehensive after sales customer care relates to handling defects, dispute resolution and claims notifications through to satisfactory completion.All of these elements come together to provide all interested parties with the security and confidence they need.
  • A Designated New Home Warranty whether ours or a competitors all have distinct areas of cover which have to be provided in order to be approved by Government and the Lenders in the first place. Here is a quick look at what it all means.4.1 This is sometimes referred to a loss of deposit cover and essentially protects the deposit.If you don’t start If you dont finish. 4.2 Often classed simply as the defects period. Notified of a defect during the first two years you have a duty to fix it. Investigate. What’s a defect? Proper Materials in a workmanship like manner. What’s snagging?Clearly there is opportunity here for a slight difference in opinion between what the homeowner thinks is a defect and what the developer feels is unreasonable. This can seem like an impossible situation so if it escalates, Build-Zone can instigate a dispute resolution service. Explain Dispute Resolution Service. If in the unfortunate situation the developer has gone. If the Developer refuses to do the works…….Now this all sounds great, because the home owner is looked after and the Developer can turn to someone if it gets impossible tricky But a word of warning – the developer can’t simply refuse to fix something if they don’t feel like it because there are one or two steps the warranty provider takes in securing their position with the developer, both legally and sometimes financial – to ensure you stick to the game plan. In reality developers are there to build great homes for really happy customers so in practice with regular site inspections and an emphasis on quality, these issues rarely arise. It worth mentioning Builder Developer Counter Indemnity 4.3 This is the structural period and kicks in through years 3 to 10. The insurer indemnifies the homeowner against any defect in the design, workmanship or material or components of the housing unit affecting or causing actual destruction or physical damage. This ranges from Waterproofing of the housing unit to drainage and of course the structure itself.5.1 Contaminated land cover, this covers remediation expenses incurred in compliance with a Statutory Notice requiring the remediation of contamination in the Policyholders Land. So if you are remediating a brownfield site those elements off remediation might fail in the future.5.2 Repairing the unit where there is a present or imminent danger to the physical health and safety of the occupants of the Housing Unit because the Housing Unit does not comply with the Building Regulations that applied to the work at the time of construction or conversion in relation to the following:-   Structure Fire Safety – for example incorrect means of escape.Site preparation and Resistance to Contaminants and Moisture Sanitation, Hot Water Safety and Water Efficiency Drainage and Waste Disposal Combustion Appliance and Fuel Storage Systems – poorly installed applianceProtection from Falling, Collision and Impact – poor installation of guarding Glazing – Safety in Relation to Impact Opening and Cleaning – Incorrectly specified safetyglazing
  • So who is going to ask you for this product – Well it depends.If you are securing development finance then that lender is going to stipulate it.It’s quite possible that if you are using your local authority to provide the Building Control function and you require no funding initially, then no one is actually going to tell you to get one. If you are using an Approved Inspector to carry out Building Control then under the Warranty Link Rule you will have to have one. This is why 5.1 and 5.2 etc.............Otherwise its a little unfortunate because the next time it raises its head as a requirement if when your sales agent mentions it for inclusion in the sales pack or worse still when your customer or conveyancer asks for a copy of the cover note to enable them to secure a mortgage on the sale.Invariably any mortgage lender is going to require that a warranty is in place from a recognised provider before they release funds to purchase the property. This is relevantboth when the property is brand new and at any point in the 10 years post it’s completion. This is why, once issued, the policy is fully transferrable to any successor in title.If you don’t have one at that point then you are likely to loose sales at a time which is already fraught!
  • An Architects or professionals certificate has been (and to a certain extent continues to be) the normal alternative route for developers to ‘cover’ their developments but unfortunately they are not as comprehensive a medium as you might like to think and some lenders simply refuse to accept them as sufficient security. Essentially they are an extension of the professional indemnity insurance and rely on the homeowner proving negligence which is not a straightforward process and can turn out to be a long a fruitless affair.If the professional who issued the certificate is out of business, retired, or worse - dead then the customer may struggle a bit. That's not to say there is anything wrong with these certificates its just not the consumer friendly protection the consumer and their lender is looking for.It’s interesting to note here that Build-Zone are more frequently being asked to arrange warranties retrospectively (ie some years after the property was completed) because a specific lender will no longer accept an Architects certificate.A cash buyer is less likely to insist on a structural warranty – or maybe prepared to negotiate in terms of sales value in the absence of one.As I mentioned previously – you can sometimes arrange a warranty retrospectively but as the warranty provider has been unable to inspect during the course of construction they are an expensive option compared to arranging it from day one.
  • Once you have successfully registered you can use the Build-Zone brand to assist you in establishing your quality credentials and you will be issued with a Build-Zone Registration Certificate.Build-Zone appears in the CML Handbooks and BSA Mortgage Instructions for lenders throughout the country.We are approved by Government as Designated Warranty Link approved for the purposes of the Warranty Link Rule.Experience - Build-Zone has been providing warranties since 2003We can facilitate the delivery of combined Building Control and Technical Auditing which will save you in terms of site inspection costs and duplicated inspections. We can provide additional services like the Code, Air Pressure Testing, Sound Testing, SAP etc., as required.All site inspections are carried out by a large network of auditors up and down the country which means site based inspection servicing is local and quick, reducing the overall carbon footprint. All site inspections are reported via a bespoke web based system enabling fast completion reporting which speeds up delivery of the cover note which is the trigger point to a sale completion.
  • Sales support literature, conveyancing guidelines and sales support from our team all form part of the package to help you sell you homes.After sales are really important and reputations are built here so from Dispute resolution, and a professional claims service which is managed by an independent specialist claims provider means the homeowner is getting an independent claims service.We want you to build on your reputation and how we work together to give the homeowner a great new home experience is crucial.
  • So if you are about to start a development project, what are the next steps?Well the first thing to do is register with us. From our perspective you don’t need to be exceptionally experienced or a large business but we do need to look at your Organisation and Structure, Finances, Workflow Communication between management and the development, Health & Safety Awareness, Site Management and Quality Control. We understand that everyone has to start somewhere and so have many different approaches to ensure that our registered developers perform well, irrespective of their size. The registration process starts with a simple application form.Once registered we ask you to make a contract notification allows us to assemble the information on a particular development, from the location to the professional team, unit design, build methods, contract costs etc and enables us to assess the most suitable method of design and site based risk management process which is confirmed to you in a quotation.Once you decide to proceed, an initial From that point we either instigate a combined Building Control and technical audit service or just an audit service depending on your chosen building control route.Plan checksSite InspectionsRegular reports and Site based communication to ensure you are building a quality home.At satisfactory completion we quickly issue the Cover Note which signifies the property has met the requirements of the CML innitiative and has Building Regulation completion which is the trigger point you need to be able to sell the property with confidence.

Structural Warranty - More than an expensive piece of paper Structural Warranty - More than an expensive piece of paper Presentation Transcript

  • The New Home WarrantyExpensive piece of paper or a genuine value add?
  • EXACTLY what is a New Home Structural Warranty?• Manufacturers warranty?• Workmanship warranty?• Insurance backed guarantee?• It’s a fully transferrable insurance policy, backed by an A Rated insurer.• Approved by Government and Lenders
  • The elements of a New Home Structural Warranty.• Initial developer risk assessment• Recognised insurance cover.• Thorough site based technical audit program.• Continual reassessment of developer performance.• Comprehensive after sales customer care.
  • Whats does a Build-Zone New Home Warranty cover?Section Cover Responsibility4.1 Cover Prior to Completion Insurer4.2 The first 2 Years Post Completion 1st Developer (Defects Period) 2nd Insurer4.3 Years 3 to 10 Insurer (Structural Insurance Period)5.1 Contaminated Land Remediation Expenses Insurer (Years 3 to 10)5.2 Physical Health & Safety of Occupants Insurer (Years 3 to 10)
  • Who is going to ask me for a New Home Warranty?Prior to Works Starting• Your development financier• An Approved InspectorDuring the project• Your sales agentAt Completion• Your customer or their solicitor
  • Is there an alternative?• Professional/Architects Certificate• Find a cash buyer!• Retrospective warranty• Frustrated sale can lead to reduction in value
  • Helping you realise value More than just an expensive piece of paper!• Build-Zone ‘Registered Developer’ status• Recognised by Lenders CML & BSA• Designated Warranty Link Approved• Experience & flexibility• Combined technical auditing & building control• Efficient web based audit reporting
  • Helping you realise value • Full sales support service Sell with confidence! • Defects dispute resolution • Independent claims service • More than an expensive piece of paper!
  • Next Steps... Register/ Quote BuildProcess Sell with Confidence
  • Thanks for listening!If you have a specific question, my workshop starts at11.30am and is being held in the Wolseley House.0845 230