Guarantees or insurance warranties were essential for new-build homes, James said, but it was not always realised that they were equally important for residential conversions, major residential extensions and commercial builds.
All those properties would typically need a guarantee of 10 or 12 years, but it could be difficult to find products if they had been involved in an insolvency.
"The National House Building Council has long been the dominant presence in the market for new homes, with around three in four of all new-build warranties. But they’re less keen on sites where there’s been a receivership, which could take out 75% of the possible providers you could work with," said James.
"The insurance market has been growing in recent years, largely because of new entrants/ operators, but this year has seen liquidation of an unrated insurer and the withdrawal of two A-rated insurers."
Inevitably, receivers looking for warranties for part-built developments had subsequently found the market particularly challenging, not least because some of those schemes no longer had protection.
Providers may also be reluctant to return payments made by developers because terms and conditions had been breached, increasing the pressure on receivers looking to proceed quickly.
All those properties would typically need a guarantee of 10 or 12 years, but it could be difficult to find products if they had been involved in an insolvency.
"The National House Building Council has long been the dominant presence in the market for new homes, with around three in four of all new-build warranties. But they’re less keen on sites where there’s been a receivership, which could take out 75% of the possible providers you could work with," said James.
"The insurance market has been growing in recent years, largely because of new entrants/ operators, but this year has seen liquidation of an unrated insurer and the withdrawal of two A-rated insurers."
Inevitably, receivers looking for warranties for part-built developments had subsequently found the market particularly challenging, not least because some of those schemes no longer had protection.
Providers may also be reluctant to return payments made by developers because terms and conditions had been breached, increasing the pressure on receivers looking to proceed quickly.
James said insurers looked for the following crucial elements before providing cover for a newbuild scheme:
- A financially strong developer, with a good professional team willing to provide aftersales care for the first two years.
- Technical documentation and copies of risk assessments for the scheme
"Insurers recognise the increased risk, so they’ll either decline to offer protection or increase their premiums. Some insurers will take these developments on, but their technical inspectors often err on the side of caution, and so they’ll require more information than usual before proceeding."
As a result, we typically tell receivers that we need four weeks to make comprehensive site inspections, discuss everything with the contractors and their subbies, identify potential issues which might arise when work restarts, and then collate all that data into a form which the underwriters will appreciate.
As a result, we typically tell receivers that we need four weeks to make comprehensive site inspections, discuss everything with the contractors and their subbies, identify potential issues which might arise when work restarts, and then collate all that data into a form which the underwriters will appreciate.
"Our basic message to receivers is always the same: give us the time and work with us in partnership to really get to understand this development and assess every aspect, because that gives us all the best chance of success, which is getting the right warranty in place, and then moving forward to complete the scheme."
