Structural Guarantees. What are they? And how do they work?
Structural guarantees provide peace of mind when buying a new build property as they give insurance against any major problems with your new home.
What is a structural guarantee?
A structural guarantee is an insurance policy that covers defects in the workmanship, design and materials used in the construction of a new build property. Most warranty providers give a ten-year guarantee to protect against any problems.
How does it work?
The warranty provider will check the plans and inspect the house during the construction phase. This inspection is done during several stages. They start with the foundations, then they inspect the superstructure. The roof is checked pre-felt and pre-felt batten, pre plaster and just before completion.
If anything goes wrong with your property the warrant provider will fix it instead of you having to chase up builders.
What do structural guarantees cover?
Structural guarantees deal with problem issues. This includes cracking walls, problems with the roof structure or a fault with damp proofing.
However each policy will be different, so it’s best to read the small print to find out exactly what is covered. Typically, major faults in the design and construction will be covered, but snagging defects are excluded. As a general rule, the wider the cover, the more expensive the policy.
How long does cover last?
Most providers offer 10 years of protection. Typically most warranties provide more cover in years one and two. The image below shows what your guarantee will likely be over.
What does it cost?
A structural guarantee is almost invariably charged as a single premium and costs vary from £1,000 up to £5,000, depending on the size and complexity of the project. The average cost for a warranty is £2,000. This is usually paid for by the developer.
Cover can vary, so cheapest isn’t always best. More comprehensive cover will generally cost more.
Doesn’t household insurance cover these risks?
No, they don’t. When buying new built property it is important to get specific cover. This is because new homes have some significant risks which usually appear in the first two years after completion. A warranty is a normal method of covering these risks.
Are they compulsory?
It’s not compulsory, but you may have difficulty selling a house less than ten years old if you don’t have a warranty in place. At Esper Wealth we insist that all developers we work with get a structural guarantee to protect our investors’ interests.
Mortgage finance
A structural warranty is often a requirement for obtaining mortgage finance. The lender will want a structural guarantee in place from a respectable provider.
Who offers structural guarantees?
Below is a list of the largest providers. NHBC is the market leader.
- NHBC
- LABC (Local Authority Building Control)
- BuildCare Structural Warranty
- Protek Selfbuild Structural Warranty
- ProAktive Selfbuild Warranty
Warranty providers work hand in hand with private building inspectors to ensure that the new build property is built to industry standards.
What is covered?
Generally, the cover is quite limited. Structural guarantees are just concerned with major faults in the design or construction of a house. This includes roofs, chimneys, ceilings, the external render, foundations and load bearing parts of the floors. Snagging defects such as sticking doors or creaking floors are usually excluded. It’s a good idea to check the small print to see what’s covered and what’s not. Items like roof tile damage and double-glazing failure are optional. Generally speaking, the wider the cover, the more expensive the policy.
What is a lock-in period?
Structural guarantees often come with a ‘lock-in’ of one or two years which prevents the transfer of the warranty to a new owner.
Aftercare
Aftercare is a service provided by property agents such as Esper wealth when you buy a new build property. In the first twelve months after completion, we will be on hand to deal with any issues with your new home. If any defects arise we will liaise directly with the developer and resolve these problems for you.
Defects insurance period
Most new build warranties offer a 2-year defect insurance period. This level of cover is more comprehensive than the structural guarantee. This covers most defects. You can find out more about new build warranties and what they cover here.