BLP discusses registration requirements
- Date: 23/12/2010
BuildingTalk: A new trend is emerging that affects anyone who is building, renovating, converting or extending residential property.
Brian Kilroy, business development manager, BLP explained: 'Everyday for the last two months I have taken a phone call from an SPV, developer or builder whose project is in jeopardy because their application for a new homes warranty has just been turned down or the company they have approached has raised their security requirement by up to 500 per cent - sometimes to several thousand pounds per unit.
In one case, a builder had been quoted security at GBP26,500 - per unit'.
As most new build requires a new homes warranty or guarantee - because the mortgage lenders require a warranty or guarantee to lend on new property - this sudden hike in registration requirements is taking its toll on builders.
Brian continued: 'When a developer or architect starts a project, their budget for registration/security payments will probably be set based on previous experience; however, this is no longer a good starting point as underwriters are raising premiums to cover the very real risk of builders (or their suppliers) going bankrupt during the build or during their liability period - the first two years after a unit is sold.
'Because the builders only find out that their deposits will be exponentially higher than they have budgeted once they are committed or already on site, they are left with a large, unexpected bill that will either eat into their profit or extra costs that will have to be passed onto the buyer.
And neither solution is desirable'.
'We provide insurance rather than warranty cover so we do not require registration fees or loss of deposit cover and, as we evaluate each site individually, we have been able to help in every case.
The result is that builders and developers' fees are reduced considerably, the BLP New Homes Insurance Certificate means that the property is mortgageable and work can begin - problem solved,' Brian added.
'The only other alternative is for builders and developers to swallow their larger bill for a warranty from another supplier and pass their increased costs onto the end consumers'.