When a building is newly constructed, or an existing structure is renovated or converted for residential purposes, it should come with a building warranty. This is a type of structural warranty taken out by the developer or builder at the beginning of the project, which is then passed to the buyer or new owner to cover the property against latent defects.
The coverage may vary depending on the property, but building warranties like these typically cover load-bearing structural elements – such as the foundations, walls, and roofs – against the cost of repair or replacement in the case of faulty workmanship or materials.
However, you may wonder whether the policy is assignable to someone else after the initial transfer from builder to buyer. Here’s what you need to know about transferable building warranties.
Yes, in most cases, a structural building warranty can be transferred to a new owner at any point during the policy term. Since the insurance is written to cover the structure specifically, it stays with the property until the cover expires. Therefore, if the first buyer decides to move out and sell the property, the structural warranty can transfer to the new buyer.
For example, if you bought a property with 5 years left of a 10-year policy, you would benefit from the remaining 5 years of coverage as the new owner. However, you would have to check the conditions for that period of the policy term carefully, and check whether the previous owner made any structural warranty claims in the past.
Additionally, even if the warranty transfers to you as the new owner, it could be invalidated if the previous owner carried out further construction work on the home – such as a loft conversion or an extension or conservatory on the ground floor.
Whichever warranties were given to the previous owner by the builders they paid to do the work will not be transferable to you. Since they have altered the structure that the original building warranty covered, this coverage will also become invalid – the property owner should have arranged a new warranty for the updated structure.
You should never assume that just because a structural warranty is transferable, it will be transferred automatically. The previous owner should provide the new owner with details of the policy, including contact information for the provider, and they should make sure that the warranty provider updates the policyholder details.
Previously, a building warranty would normally provide 10–12 years of financial protection against latent structural defects. This would include a period during the first 2 years of cover when the original builder or contractor can be held liable directly for repair work, after which the warranty provider will be responsible for paying out for successful claims.
With the introduction of the Building Safety Act 2022, the government has made it mandatory for new build homes to come with a building warranty that lasts for at least 15 years. Anyone responsible for carrying out such a development – including conversions – is responsible for setting up a new build home warranty to provide to the buyer/owner with it.
Part 5 of the Act, which covers new build home warranties, also specifies that every warranty must allow the policyholder ‘to transfer that benefit to another person’. The buyer who receives the warranty along with the property will then either benefit from 15 years of cover against latent defects, or can sell the property and transfer the warranty during those 15 years.
If you’re buying a secondhand property that’s still relatively new, which was built before the Act came into law, then you may still receive a structural warranty with it – but, again, you must check the terms carefully. The policy term and coverage may be different to brand new builds that are now regulated by the Building Safety Act.
In most cases, yes – you’re likely to need a building warranty if you want to sell the building. This is mandatory for new builds now and in future, as designated by the Building Safety Act. A new build warranty must be in place before the developer or builder can sell to a buyer, and buyers of homes in new build developments will be looking out for this.
Banks and other lenders will also expect such a property to come with a building warranty, and may not accept a mortgage application without one. The same applies to sales of newer buildings less than 10 years old – mortgage lenders won’t want to invest in helping you to buy an unprotected property that’s still at risk of developing structural defects.
If you’ve previously bought a new build home with a building warranty and choose to sell it within 10 years, you’ll find that making this policy known will be attractive to potential buyers. It will give the new owner peace of mind, and help them with their own mortgage application.
To learn more about building warranties, including how to set one up with us, you can contact Architects Certificate ABC+ on 0161 928 8804 or at firstname.lastname@example.org. Our team will be happy to help you with your structural warranty.
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