BLP discusses building registration requirements


  • Date: 13/12/2010

As the year closes, a new trend is emerging that could cut off any growth in 2011
at the knees and it affects anyone who is building, renovating, converting or
extending residential property.

Brian Kilroy, BLP’s business development manager, explains: “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 registration fee by 100-500% - sometimes to several thousand pounds per
unit. In one case, a builder had been quoted £26,500 registration fee - per unit!”

As most new build requires a new homes warranty or guarantee (because the
mortgage lenders require one to lend on the property), this sudden hike in
registration costs is taking its toll on builders.

Brian continues: “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 are going to be
exponentially higher than they had budgeted for once they are committed - and
sometimes already on site - they are left with a large, unexpected bill that will
either eat into their profit or 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 adds. “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.”

For further information please call us on 020 7204 2444.

Policy is underwritten by Allianz Global Corporate & Specialty, UK Branch

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