In our latest blog, Managing Director of Foxwood Building Guarantee Ltd, Brian Kilroy, discusses key considerations of Price, Quality and Consequence when choosing a New Homes Warranty provider.
On the 11th of March 2017, The Guardian published a damming article on the lack of quality evident in newly built homes in Britain. The piece was very much centred on the home-buyers experience and the resulting stresses caused by defects and failures within the new property.
The blame was predominantly targeted at the house builder and a general lack of regulatory intervention from government and local authorities. Use of traditional materials, methods and trades in UK house building were also held up as reasons for the decline in quality vs other European countries, where more advanced technologies are employed.
The building defects insurance sector has much to answer for where quality is concerned, but the developers bears a large proportion of the responsibility because they simply don't give sufficient consideration on which insurer to use. Moreover, they will buy solely on price and neglect to consider the impact that using an inferior insurer will have on the quality of the property as well as the cover afforded to the homeowner.
There are two fundamental aspects to any new home warranty. The “policy” i.e. what's covered and what's not, and the “technical service” or site inspections and quality management.
Choosing a product which has the backing of a recognised and “rated” insurer is absolutely critical. This is a 10 year policy that has to protect the homebuyer and future buyers for a decade! It is therefore essential that the insurer remains solvent and able to meet their obligation over this entire period.
Does the policy provide full rebuild cover in the event of a complete failure? Are certain key, retained elements in a converted property covered or excluded? And how will the policy respond in the event of water ingress (the most common and severe cause of damage), across the entire life of the policy?
Perhaps the most important aspect to ensuring the delivery of a quality home is the insurer's ability to manage potential defects before they happen. The experience, knowledge and diligence of the provider's surveying team can be absolutely invaluable to the developer and even elevate the quality of the build and consequently the reputation of the developer's brand.
However, some providers exploit this process as a means to reduce costs. How many inspections will they carry out on site and will there be a reliance on external companies, remote inspections and allowing developers to effectively self-police their work?
Many insurers also adopt technical manuals as part of their approach; the better providers will use these guides as platform for dialogue and a pragmatic and flexible regime based on communication with their clients. Others will use as a stick to dictate terms and a mechanism to avoid paying claims.
In addition, an aspect of the provider’s offer which has a growing significance to the protection of the homebuyer is the inclusion and membership of a “Consumer Code” - an industry led initiative that holds developers accountable for treating homebuyers fairly. Surely concern has to be raised as to why an insurer would not provide this additional protection and reassurance to homebuyers?
In a highly competitive and increasingly restrictive housing market, where build costs are rising and the availability of land, funding and skilled labour are falling, it’s easy to buy on price and forget the consequence of that approach. However, by engaging better insurers, who can literally guarantee the quality of a new home, developers can elevate their product, redefine their offer and perhaps, in that process, begin to rewrite a few headlines.
By Brian Kilroy