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The Essential Guide » The Planning Stage » Structural Warranties For Self Build & Property Renovation Projects
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Structural Warranties:
NOTE:
1) All of the structural warranties offered by the major companies offer differing levels and types of cover, and they work in different ways. This section will give an overview of what a warranty is, what is does and why you should make sure you get your projects covered with a good quality product. You should do some research into the best company and policy for your particular project).
2) The text of this document is here to offer unbiased advice, and therefore I will not be mentioning any product by name in the body of the writing. You should be able to find the various products listed within the site.
“New build”, “Conversion”, many “Extension” and sometimes even Renovation projects need to be covered by a good quality “Structural Warranty”.
If you are obtaining funding from any lender, they will normally insist that you give them written details of your policy before any funds are released to you.
Whether you are using funding for the project, or not, you would be unwise to consider building without the cover of a structural warranty for numerous reasons, including:
1) Resale:
This would be one of the main considerations for me. You may be “Cash rich” and have enough funds to enable you physically complete the project without having to borrow. - You may think “ I can save myself a few thousand pounds by not bothering with a warranty”. WRONG! – Any saving you may make by not covering the building will be more than wiped out by the loss in value of the property when you come to sell it. – Whether that be in 2 years or 20 years!
If anyone, at any time were to apply to borrow money from any of the major lenders on the property, without it having been built “under warranty”, they would be turned down. No lender would have the confidence in the quality of the property to use it to secure funds against. It would be, for all intents and purposes, worthless!
2) Damage repair:
Structural warranties will normally cover “repairs” to the property during the period of cover (subject to an “excess” of in the region of £500 to £1000, payable by the policy holder to cover the first amount of each and every claim made under the policy). The term “Repairs” can cover a wide range of circumstances, and you would need to read policy documents to know exactly what you are covered for.
Most projects never need to call on this facility, and even if there is minor damage to some part of the project, which is covered by the warranty, it is still often better not to make a claim, especially if the total cost of the claim is around the same amount as the excess. However, just one major problem which may only occur on one in a hundred projects, where you know you are covered, can make taking the policy out, worthwhile.
3) Faulty materials and workmanship:
If you find that contractors or subcontractors have produced poor quality work which needs rectifying, or for some reason the quality of the materials used could be below standard ( for example, concrete may need to achieve a certain “strength” in a particular element of the building. But when tested, falls short. It may require removing and replacing. The problem that will often be encountered is that by the time the fault is discovered, the faulty section has been incorporated into other work. The actual rectifying of the concrete could involve taking re scaffolding, taking down brickwork, and many other actions. In most cases your structural warranty will cover the costs incurred in putting the work right. Check policies to see what is and is not covered in this respect.
How do they work?
Most policies follow similar lines, where the work is inspected during the construction period and is “passed” or “failed”. If a section of the work fails an inspection, the policy holder will normally be notified in writing and requested to bring the work up to a suitable standard before proceeding with the project. The inspections will normally be at set times, usually:
1) After excavation of the foundations / before pouring concrete.
2) Before you pour the floor slab
3) Wall plate (in traditional build) / Before the roof is covered (Timber Frame)
4) After “first fixes”
5) When drainage is laid, but before it is backfilled.
6) Completion.
Inspections may vary from project to project, and often an inspector may call in unannounced to a project to check that everything is going as it should be.
There are two main types of “product” generally on offer, these are: “With” or “Without” Building Regulations.
The only difference between the two products in a practical sense is that the “With Building Regs” warranty will often involve only one person coming to site to make the inspections. When this happens, the one person will be qualified to inspect the work “with 2 hats on” (If you opt for this product, you may find that you can save a bit of money, although this is not always the case).
If you apply for the “Warranty” and the “Building Regs” separately, you will need to coordinate two inspections at each of the “stages” mentioned above, and you should not complete that section of work until you have been given the go ahead from each of the inspectors.
As each section is “passed” you will normally receive a certificate which you can forward to your finance provider who will then normally be happy to release funds as agreed at the start of the project.
Once all the construction work has been satisfactorily completed, you should receive a “Completion Certificate”. This will then cover your property for a period of usually 10 years (although some policies can offer up to 15 years).
Who offers these warranties?
As I mentioned at the start of this section, I will not be mentioning individual companies or organisations. You should be able to find some companies offering structural warranties within this site. All I would say is that you should make sure that whoever you use, you make sure a) That they are qualified and suitably insured to be able to offer the inspections and the warranty, and b) That you check that the policy itself suits your individual project. – There are numerous products on the market, each one slightly different from the rest. – Check the "small print” to make sure that you are not going to hit problems as you progress.
The chances are that you will have heard of one or two major organisations who provide structural warranties. These people have been around for years and have been covering houses built by the large commercial developers. They will obviously “know the game inside out” and provide high class products at a reasonable price.
There are, however other options from not so widely known companies which are just as reputable and offer similar quality products. You may find that they are also worth looking into. These companies tend to operate more specifically within the “private market”, often specializing in “Self Build”, “Conversion” and “Extensions”.
Amongst others, one such product is the “Architects Certificate”. There are many Architects practices around the UK, and many of them will be able to offer a package similar to the larger structural warranty companies. – They will have taken out suitable insurance to cover any claims made, and will work in an almost identical manner to the larger more well known companies, making inspections at the same stages and issuing “interim” and “completion” certificates in the same manner. Often their overheads are lower and they will therefore be able to offer a lower price for the service.
Before you agree to take out a structural warranty policy with anyone, make sure that your lender will accept it. – Some lenders won’t accept “Architect’s Certificates”, some won’t even accept one or other of the widely known products. – If you talk to the people dealing with your funding application and tell them who you are considering using, they should be able to quickly check on whether or not that company is on their approved list.
What will the policy cost?
This will usually be dependant on the “square footage” (or “square meterage”) of the property, and will sometimes vary according to the nature and complexity of the build and therefore the number of inspections which the company decides it will need to make.
Fees for a “Warranty only” services will start at about £1000 for a small property. You may get quotes a little lower than this, but generally not by much. – A warranty for a large property can be in the region of £3000 - £4000.If you have been quoted much less than about £9000 even for a small project, then be a little wary of the quality of the product. If you are quoted much more than £4000 for a large project, it’s probably worth shopping around.
If you take one of the inclusive “Warranty and Building Regulations” packages you can expect to pay an extra £500 - £2000.
Many of the companies which offer the Warranty services will also now offer the SAP energy assessment which all new buildings need to complete, as an extra service. If they do the charge should be in the region of £150 - £200.
The Structural Warranty is a very important part of your project, give it the attention it deserves and you should be well covered against major problems with the building itself, for at least 10 years. You will also be covering yourself for “if and when” you come to sell the property.
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