New build mortgage warranty reinstatement cost

[whatxd]

I've just finished building my own house, all signed off and the final piece of paperwork I need is the structural warranty.

First off - this is a complete waste of money. I'm a bricklayer by trade but I can do pretty much everything, my labour cost outside of plumbing was sub £10k. I won't be making any claims

The only reason for having the warranty is so that I can sell in 3 years or take a mortgage out on it myself.

The reinstatement cost is only £400k which whilst significantly more than I paid, only works out at around £1000 per sqm. The house is 6 bed 6 bathroom, 370 sqm give or take (over 2.5 floors)

Whilst cost per sqm is a load of bks as designs and tastes, and how much money you're wasting on a project manager with day workers who hide behind each other can swing things wildly one way or another, my worry is that a lender will look at this reinstatement cost as too low.

House is worth £1 - £1.2 million

Anyone got any experience of this? Should I try and up the reinstatement cost?

[miko382]

Lenders use rigid calculators, so a low reinstatement cost on a 6-bed house might trigger red flags or stall a mortgage. Bumping it up prevents future valuation issues.

[Mr Pointy]

Surely if you want future buyers to be able to rely on the warranty then it needs to be of a sufficient level for another builder to reinstate - unless you're going to commit to doing so FOC for the next 10 years (or however long the warranty is for)?

[smokey mow]

Mr Pointy said:

Surely if you want future buyers to be able to rely on the warranty then it needs to be of a sufficient level for another builder to reinstate - unless you're going to commit to doing so FOC for the next 10 years (or however long the warranty is for)?

Very much this ^^^

Prices are calculated on what an average consumer would have to pay and not what you and your mates could do it for.

Don’t forget that reinstatement costs would also be typically higher than build costs since you also need to factor in the costs on any demolition and also potentially rehousing the residents during that works.

Edited by smokey mow on Sunday 21st June 11:39

[Sarnie]

Make sure you buy the right Warranty too, I've seen lots of examples of builders who've bought the cheapest warranty, which was not acceptable to lenders.....

[whatxd]

smokey mow said:

Mr Pointy said:

Surely if you want future buyers to be able to rely on the warranty then it needs to be of a sufficient level for another builder to reinstate - unless you're going to commit to doing so FOC for the next 10 years (or however long the warranty is for)?

Very much this ^^^

Prices are calculated on what an average consumer would have to pay and not what you and your mates could do it for.

Don t forget that reinstatement costs would also be typically higher than build costs since you also need to factor in the costs on any demolition and also potentially rehousing the residents during that works.

Edited by smokey mow on Sunday 21st June 11:39

I'm not really bothered about any of that stuff. They aren't worth the paper they're printed on. The whole industry is a scam. This is solely about satisfying lenders.

[Dimebars]

whatxd said:

I'm not really bothered about any of that stuff.

Until you need to sell. Whilst that may not immediately be in your future plans, there may be some form of scenario that arises that requires it.

But crack on.

[barryrs]

By arranging the structural warranty post construction I suspect you will be looking at a significantly higher premium (may also require a 24 month cash bond) than if this had been arranged at the start. Most warranty providers will want to complete periodic inspections throughout so at this stage they will likely now want your consultants to take on some of the risk.

ETA.

I didn't opt for a structural warranty on my self build (4-bed, 155m2) as the premium was £6k and they wanted £2k in escrow for 2 years. I had no intention on moving and after 8 years i still have no plans to move.

Edited by barryrs on Monday 22 June 11:35

[whatxd]

barryrs said:

By arranging the structural warranty post construction I suspect you will be looking at a significantly higher premium (may also require a 24 month cash bond) than if this had been arranged at the start. Most warranty providers will want to complete periodic inspections throughout so at this stage they will likely now want your consultants to take on some of the risk.

ETA.

I didn't opt for a structural warranty on my self build (4-bed, 155m2) as the premium was £6k and they wanted £2k in escrow for 2 years. I had no intention on moving and after 8 years i still have no plans to move.

Edited by barryrs on Monday 22 June 11:35

It was arranged at the start, they are giving me the option to increase the reinstatement cost before rubber stamping it

[whatxd]

Dimebars said:

whatxd said:

I'm not really bothered about any of that stuff.

Until you need to sell. Whilst that may not immediately be in your future plans, there may be some form of scenario that arises that requires it.

But crack on.

"This is solely about satisfying lenders"

[omniflow]

whatxd said:

smokey mow said:

Mr Pointy said:

Surely if you want future buyers to be able to rely on the warranty then it needs to be of a sufficient level for another builder to reinstate - unless you're going to commit to doing so FOC for the next 10 years (or however long the warranty is for)?

Very much this ^^^

Prices are calculated on what an average consumer would have to pay and not what you and your mates could do it for.

Don t forget that reinstatement costs would also be typically higher than build costs since you also need to factor in the costs on any demolition and also potentially rehousing the residents during that works.

Edited by smokey mow on Sunday 21st June 11:39

I'm not really bothered about any of that stuff. They aren't worth the paper they're printed on. The whole industry is a scam. This is solely about satisfying lenders.

Yes, but as has been pointed out to you already - in order to satisfy lenders the policy would need to be acceptable to the lender. In order to be acceptable, it would need to allow the new owner to be able to re-instate the building by paying standard market rates.

I get that you've got a problem with this type of product, but you need to get over that and see the bigger picture.