Brexit & Structural Warranties: Build-Zone has become a major force in the provision of Structural Warranties having started in 2003. Build-Zone were one of the first providers to achieve Designated Warranty Provider status by the Department of Communities and Local Government.
Build-Zone uses an in-house Technical Services Company – Build Zone Survey Services Ltd (BZSS), which operates separately under different management and can provide or arrange Building Control and other Technical Inspections using rigorously checked and audited construction professionals and “Approved Inspectors”, all of whom have to agree to specific Consultancy Agreements.
So what about BREXIT? Are there other things that you need to consider?
So far as Passported Insurers operating and accepting risks in the UK are concerned – Brexit will not make much difference, certainly initially, for example those Insurers based in places such as Gibraltar wanting to do business in the UK.
However, with regards to covering risks based within the EU then they will have to qualify and be compliant with Solvency II.
What is ‘Solvency II’ and what does it mean for Policyholders?
New rules which came into force in 2016 hopefully ensure a uniform and enhanced level of policyholder protection across the EU.
The new framework – like the current rules – applies to the majority of EU Insurers and Reinsurers.
Going forward with the UK having already gone through Solvency II– it is extremely unlikely that the UK will abandon the principles. Also of course if any UK Insurer wishes to trade with an EU Member State it is going to have to comply with Solvency II requirements.
So UK Insurers or those passported under the UK and who want to insure risks in Eire are going to have to make new arrangements which may include moving their Operations to EU countries – causing more financial stress to their business model.
With Solvency II there will be extra financial cost and as a Consumer you should be aware of what other business is underwritten by the Insurer to satisfy yourself of the long term risk analysis might be – for example if there is any long tail or open ended business being underwritten (such as Motor or Professional Indemnity).
Your choice of Insurer is becoming even more critical. Why?
Structural Warranty Insurance runs for 10 years whereas most insurance policies run for 12 months, will they still be there to pay claims? What happens if your insurer goes bust?
Should we be concerned about unrated Insurers?
Definitely – Security Rating is one of the basic indicators of the Insurers ability to pay Claims always remembering 10 years is a very long period.
Invariably one is told not to worry as they are covered under the Financial Services Compensation Service (FSCS) BUT the FSCS only pays up to 90% of any claim and does not provide cover for any
Company with a turnover over £1M. You could still have a substantial exposure and being a Creditor does not guarantee any payment.
Do you remember the following Insurers – they were “Unrated” and went bust!
QUINNS, SETANTA INSURANCE, ERIC, BALVAR, LEMMA….
Now Construction Specialist Gamble is in trouble and as a matter of interest the CEO of Gable has recently stated that he blames Brexit and Solvency Two for the collapse!
The Solicitors Regulation Authority (SRA) experienced the problem twice (on 12 month policies) and stated:
“The failures of Quinn’s and Lemma Europe is a warning to all companies about the risks of opting for an Unrated Insurer. There is a very high price to pay in these scenarios in a personal, as well as a business capacity. An official rating from an independent Ratings Agency (such as Standard and Poors, AM Best and Fitch) is the most objective measure of a Firms financial security”.
Consider the following carefully: 10 Year policies demand even closer scrutiny as the end result could be that you are left without a Warranty on your Property and if you wish to sell the Property then you will need to be able to purchase another Warranty for the remainder of the Policy period – unless it is going to be a cash sale/distressed purchase.
Even if you can find an Insurer who is prepared to do it you will still have very high Technical Audit costs in addition to high premiums.
How to Save Costs, get a better Service and faster quotes: There are many so called “Whole of Market” brokers out there who run their companies like a telesales operation with staff who have had little or no training.
They will ask you to complete a Proposal Form and then they will merely ‘broadcast’ or email this around Warranty Providers (such as Build-Zone) to try and get the cheapest quote, and then they will lump Fees on top.
When it comes to technical issues then there are few that have the knowledge required and who could care less. They are driven by Price and Commission levels.
Shorten the chain of command, reduce costs – COME TO US DIRECT.
We prefer to make sure that the job is done properly to start with. Whilst Building Control is more of a tick box exercise to comply with Building Regulations, Technical Audits need to be done on behalf of Insurers as they are covering that building or Development for 10 (or 12) Years and to us “Prevention is better than Cure”.
BZSS is unique and totally Client driven. We believe that to be effective Inspections should be done by independent Professionals. Everything that is done by way of Inspections is further audited by the Team in BZSS giving Clients a further layer of protection.
The Team is led by a Building Surveyor, Building Engineer and specialist Loss Adjuster – so they have a thorough understanding not only of Construction and the Building Regulations but also what can go wrong having had extensive experience of claims over many years.
“We work from the back coming forward”. Our aim is to make sure that your Project, no matter how large or small, is delivered on time with the minimum of problems and hopefully on budget.
If you choose a BZSS audited and contracted Approved Inspector who works to BZSS requirements we can combine Building Control with Technical Audits – saving you time, inconvenience and considerable Fees.
Build-Zone will be exhibiting at MIPIM UK based at the Olympia in London from the 19th – 21st of October 2016.
If you would like to come and talk to us, find us on stand G11/13.
On the eve of MIPIM UK Build-Zone, one of leading providers of Structural Warranties, issues a stark warning about using Unrated Insurers.
Their latest Brochure is being launched at MIPIM UK tomorrow and highlights the issues that face the Insurance market – on which the Construction Industry and Lenders rely upon to protect themselves, third parties and Clients.
Yet again another Insurer, GABLE, has gone into administration which demonstrates that it is even more important when taking out a 10 year policy in particular that you only accept an Insurer that has achieved at least an ‘A’ rating from one of the recognised Rating Agencies – such as AM Best, Standard and Poor’s or Fitch.
The CML also needs to be more proactive in this respect – by recommending to their Members that they should only accept ‘A’-rated Insurers bearing in mind most of them insist that Borrowers have a Structural Warranty in the first place.
Unrated Insurers should not be accepted – just ask the SRA (Solicitors Regulation Authority) who got caught not once but twice.
Remember Quinn’s, Lemmar, Balvar, Setanta, ERIC, Millburn, Enterprise?
………. and now GABLE.
It is not all about Price!
Come and see us at MIPIM UK from the 19th till the 21st of October on stand G11/13.
After decades of practice, developers are still looking for consistency in delivering quality new housing. Bob Stembridge, Structural Warranty Consultant at Build-Zone, asks what can be done to the benefit of buyers and developers alike…
The recent All Party Parliamentary Group (APPG) Inquiry into the Quality of New Housing in England has highlighted the shortcomings in the new homes being delivered across England (and quite possibly in the whole of the UK but their remit did not go that far). What is significant is that in 2004, the Barker Review highlighted the issues with selling homes which were either incomplete or did not have an effective aftercare service. The industry has since improved but not by as much as would have been hoped. As the report states, build quality reacts according to the level of activity in the market – less activity and the greater the quality of output but the opposite also applied, which was exactly the reason for the Barker Review.
Quite often reports into housing quality compare the final product to buying a motor car. While the construction and delivery methods may differ, the buyer’s expectations are in many respects similar. They expect the product to be fit for purpose at the time of taking ownership and for years afterwards. However, buying a new home just increases the stakes when things do not go to plan. Then the costs and extra effort needed to put things right can be astronomical. Thus an effective system that acts to prevent delays and misunderstandings can only benefit all parties.
As a warranty provider, our role is to audit the developer’s work during construction of the new home and to provide a line of recourse for the owner up to 10-years after completion. Also, other stakeholders such as the lenders depend on our independence and the insurer’s financial strength to stand behind our 10-year warranty. Thus we have a vested interest to ensure the developer produces a product fit for purpose, and the homeowner has the knowledge to look after it.
The APPG have made ten recommendations which they hope will mean more homeowners are happy with the buying and owning process. Some are already in place and need tweaking while others will require a break from current ‘conventions’. Here’s a brief overview of some of those recommendations:
Andy Butchers, Director of Build-Zone Survey Services Ltd, shares his insider knowledge to help troubleshoot this area of a building whether you are considering a New Build or Conversion.
Basements in a new building can “hide” the ultimate in luxury in both new builds and conversions with the secret swimming pool, sauna, Jacuzzi, games room, Gym, Home Cinema or Music rooms.
For conversions where space is limited and the cost of selling and “up sizing” may be prohibitive then extending upwards and downwards may be the most cost effective solution. However, working on an existing structure is considered more difficult than a new build.
As a Warranty provider primarily due to our risk management and visit regime we do not actually see many basement claims but as you can appreciate, when it does go wrong, along with the stress and disruption it can cause, it can be both extremely difficult and expensive to resolve the problem. I have detailed a number of pointers which should be considered along with your design team to provide you with the most cost effective solution and when constructed professionally should provide no problems throughout the life of the building.
1)Suitability of a Basement for its location.
One of the first things to consider is if it is appropriate and cost effective to construct a basement. If you look at recent press articles some suggest London Local Authorities are clamping down or even stopping (through the Planning process) new or updated basements as part of conversion work due to the ‘perceived risk’ to surrounding properties.
Redrow founder and chairman Steve Morgan has called for stamp duty and Help-to-Buy changes to drive the housing market forward and keep the economy growing.
Steve Morgan was speaking at the launch of Woodford Garden Village, one of the largest brownfield redevelopments in the North West, where local community groups, politicians and industry professionals had gathered to help Redrow celebrate its opening.
During the day he highlighted how housing transactions have gone down as stamp duty has gone up and the tax was affecting people’s mobility: “Stamp duty has a huge impact on the market. Not only do buyers have to raise huge deposits, they then have to find thousands more in stamp duty. The last two increases have been very damaging, particularly to the London market.”
He also called for Government to extend the time limit from application to completion on Help-to-Buy equity loans to 12 months from the current 6. This would enable first time buyers to reserve a new build house farther in advance of its completion when using the incentive; allowing them to compete with investors who are free to reserve at an earlier stage.
Overall though the Redrow chairman was positive about the housing market, and saw the current climate as a good time for housebuilders, with land finally coming through the planning system – albeit still too slowly for his liking – and for customers, with mortgage interest costs remaining low.
He was particularly passionate about the much-anticipated Woodford Garden Village development, on the former Woodford Aerodrome site, near Stockport, in Greater Manchester; a major brownfield site that will eventually feature around 920 new homes, a new primary school, and significant green space.