London Belgravia Brokers Ltd has produced a guide to keep the industry up-to-date with the latest changes in the latent defect insurance sector…

The broker has decided to send regular updates to lenders and brokers to help keep track with the latest UK building warranty market after there were recent changes regarding barn conversions, new entrants to the market and stage of works costing.

Giles Fallan, Managing Director of London Belgravia Brokers Ltd, has outlined what he claims to be the main changes below.

New entrants

There has recently been a flurry of companies trying to enter the sector with only two still managing to operate at the moment.

With only six providers in the market (the most recent entrant started in 2010) this definitely constitutes a flurry of activity. However, be careful when thinking of using a new entrant as both of the current traders in the market only have a very limited approved lenders list. Using a new entrant with a limited list of approved lenders can cause serious problems when the developer comes to sell a unit. The high street bank providing the mortgage to the purchaser may not accept the warranty and in most cases this means the developer then has to purchase a retrospective warranty from one of the other providers which often proves very expensive.
 
Barn Conversions

Most insurers are averse to providing cover for barn conversions; they have convinced themselves that they offer a greater risk than most other types of structure. Right now there are only two insurers prepared to offer cover for barn conversions and they are not making it easy for clients.

There is a lot of form-filling involved and they want the complete history of the structure down to what livestock have ever been kept in it.

This news update is not meant as a sales tool for us, but we can help any of your clients who are struggling to get a warranty on a barn conversion. We know how to build a case on behalf of the client and what information to provide to the insurer so they can make an informed decision.
 
 
Stage of works

It is important for your clients to be aware that if they do not take out their warranty before the work starts, they will be financially penalised.

All insurers apply incremental charges for each stage of works completed before the warranty policy is put in place.
 
On a typical new build the likely uplift in cost would be:

Not started -         standard premium
Up to DPC -             25% increase on standard premium
Watertight -           50% increase
First fix -                   75% increase
Completed -           100% increase