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While this may save time or money initially, it can lead to serious complications, from limited lender acceptance to challenges with property resale. This guide explores why securing a reputable warranty during the build stage is essential and the risks associated with relying on a retrospective certificate.
A structural warranty is a long-term insurance policy that protects against structural defects in a building, typically for 10 years. It provides peace of mind for homeowners, developers, and lenders by ensuring the property meets high construction standards.
Key Features of a Structural Warranty:
A retrospective architects’ certificate is a document issued by an architect or surveyor after the build is complete. It certifies that the property was constructed in accordance with building regulations and planning permissions.
Key Features of a Retrospective Certificate:
Many lenders require a reputable structural warranty to approve mortgages on new-build properties. Retrospective certificates often do not meet their criteria, making it harder to secure financing.
A buyer interested in a newly built property may struggle to obtain a mortgage if the property lacks a recognised structural warranty.
While a structural warranty covers major defects for up to 10 years, a retrospective certificate only certifies compliance at the time of inspection. It does not cover latent defects that may emerge later.
Risk:
If a structural defect is discovered after the sale, the new owner may face significant repair costs without recourse to the builder or developer.
Properties without a reputable warranty are less attractive to buyers, as they face potential difficulties with financing and a lack of protection against defects.
Impact:
The absence of a structural warranty can reduce the property’s market value and prolong the sales process.
Skipping a reputable warranty may save money during the build stage, but it can result in higher costs later. Developers may face legal disputes or repair bills for defects not covered by a retrospective certificate.
A poorly constructed roof develops leaks three years after completion. Without a structural warranty, the owner must bear the full cost of repairs.
Ensures High Construction Standards: A reputable warranty requires regular inspections during the build process, ensuring the property meets rigorous standards and minimising the risk of defects.
Facilitates Mortgage Approvals: Most mortgage lenders recognise and prefer warranties from established providers like NHBC, Premier Guarantee, or LABC.
Enhances Property Value: A structural warranty reassures buyers, making the property more attractive and easier to sell.
Provides Long-Term Protection: Comprehensive coverage for structural defects offers peace of mind to developers, buyers, and lenders.
Risk of Skipping a Warranty
Situation:
A developer completes a small block of flats without a structural warranty, opting instead for a retrospective architects’ certificate.
Outcome:
Benefit of Securing a Warranty
Situation:
A developer of a similar project obtains a recognised structural warranty at the build stage.
Outcome:
Disclaimer Auction Finance provides mortgage advice only and is not authorised to offer legal or construction advice. Please consult a qualified professional for advice on warranties and property standards.
Ans: Structural warranties provide long-term protection and are widely recognised by lenders, whereas retrospective certificates are limited in coverage and lender acceptance.
Ans: Yes, but you may face challenges, including limited buyer interest and reduced mortgage options.
Ans: The cost varies based on the size and complexity of the project, but it is generally a small percentage of the overall build cost.
Ans: Some providers offer latent defect insurance post-construction, but it is typically more expensive and harder to secure than a warranty obtained during the build stage.
Ans: While not legally required, most mortgage lenders and buyers demand a structural warranty for new-build properties.
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