FINANCE, INSURANCE & SOFTWARE 61 BUILDING IN CONFIDENCE


Peter Richardson of Build-Zone provides insight into structural defects insurance policies – including what they cover, and which features developers should focus on when choosing warranties for new housing developments.


E


ven with the best care and due diligence, building houses can be complex, and sometimes things go


wrong. For developers and housebuilders, the key objective for selling newly built houses is to achieve the best financial return. This is made possible by building and completing high-quality homes that meet the specified reuirements, stay within budget, and adhere to the project timeline. Put simply, the housing stock released onto the property market must be premium, finished to a high standard and supported by minimum 10 year structural defects insurance policies. Structural defects insurance policies are sometimes referred to as inherent or latent defects insurance. They are designed to protect homeowners in new build housing developments from structural defects in design, quality and materials. They provide peace of mind and offer financial protection if there are significant issues with the structural integrity of the properties.


When housebuilders and developers


EVEN THOUGH A NEW HOME WARRANTY ISN’T REQUIRED BY LAW, MOST LENDERS INSIST ON THIS TYPE OF COVER


sell newly built houses on the open market, they will require a structural defects insurance policy to comply with a mortgage lender’s requirements. The provider must be approved by UK lenders to sell the property upon completion. Even though a new home warranty isn’t required by law, most mortgage lenders insist this type of cover on the build is mandatory when considering lending to potential homeowners, meaning they won’t provide a mortgage until the developer has acquired inherent latent defects insurance cover. With the right policy, buyers can be confident knowing the properties are


protected against potentially costly inherent latent defects. Most providers will send surveyors and technical auditors to site to assess the structures and building works at crucial points during the construction period. This reduces the risk of things being missed that could lead to the development of latent structural defects. It is, therefore, essential to understand what is covered under any given policy before signing up, as not all policies are eual. his can help find the right structural defects insurance policy to protect a new build housing property portfolio.


Once properties are built, the latent structural defects policy is usually split into two periods: • Builder Inherent Defects Liability Period: 0-2 years


• During this phase, the builder or developer is responsible for correcting any problems caused by any physical damage or defect from faulty workmanship or materials.


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