Knowledge Archives - Granite Building Warranties

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Insurance Backed Guarantees (IBG’s)

What is an IBG?

An IBG is an Insurance Backed Guarantee. Despite its name, it is not a ‘guarantee’ but a policy that backs a guarantee. IBGs are also known as Guarantee Insurance Policies and Warranty Insurance Policies. However, it’s important to remember that all three terms refer to the same type of insurance product.

The objective of an IBG is to provide insurance backing to a written workmanship and/or material guarantee, provided by a building contractor to a commercial or domestic customer. Written guarantees are often given in good faith. However, the most reputable contractors are unable to guarantee their solvency to the extent that they will be able to resolve defects for the length of the guarantees.

Therefore, many contractors and warranty providers in the UK request that customers are provided with an IBG. This ensures that recourse to the written guarantee is viable in the event that the original contractor ceases trading.

IBG - Flat RoofWho provides the guarantee covered by the IBG policy?

At completion of the roofer or tanking contract, it is the responsibility of the installer to provide a guarantee. It is the installer’s promise to the customer that they will rectify any issues that may arise with the installation following completion.

This guarantee is the subject of the Guarantee Insurance Policy, and the IBG policy will reflect its terms.

 

Why do warranty companies need IBG’s?

IBG’s provide an extra layer of security by assuring the written guarantee provided will be covered, even if the original contractor ceases trading. So, it means the warranty provider has recourse against a third party.

IBG's - Pile FoundationsHow Much Do IBGs Cost?

The cost of IBG policies can vary depending on the contract value of the works and the nature of works installed. They can start from as little as £10 plus IPT (Insurance Premium Tax) for window/door installations and go up to £1,000’s.

Examples of available IBG products

  • Flat Roofs
  • Timber Treatment
  • Cladding
  • Lateral Restraint/Structural Beams
  • Structural Waterproofing
  • Basement Tanking

Build to Rent – An Asset to the Private Rental Sector

With growing reports on the poor state of private rental accommodation in big cities, the rise in build to rent properties has to be a good thing.

These properties are new build apartment blocks that have been built specifically for renters and cannot be sold on. They have to include at least 50 homes and they are all owned and managed by one landlord. They are designed, constructed and managed to a high-quality standard; created to address many of the problems that renters face from short-term leases to unscrupulous landlords charging exorbitant rents for poor quality housing.

Build to Rent property developers are leading the charge for a better way of renting, with no deposits, no fees, and longer tenancies for their residents. Often gardens are included in the development. And increasingly, sustainability and carbon footprint reduction are a part of the ethos.

Build to Rent - Goodstone Living Camp Hill Gardens

Image Source: goodstoneliving.com/camp-hill-gardens.html

Goodstone Living

Goodstone Living is one such developer. Currently looking to develop in Digbeth, Birmingham, its Camp Hill Gardens will provide more than 500 Build to Rent homes. It will also include the largest private garden in the city with a strategy focused on “long-term value creation”. Along with the housing will be amenity space and co-working areas. There will also be dedicated commercial and retail space available at a 50% reduction to local businesses.

Martin Bellinger, Principal at Goodstone Living said: “Our strategy requires us to be able to identify significant regeneration opportunities… and to transform areas in need of new housing. As the UK’s second largest city by population, Birmingham benefits from a large and growing pool of potential residents demanding high-quality, purpose-built and professionally managed rental accommodation. This makes Birmingham the perfect place for our first development project.”

Developments such as these are being constructed across London and the key regional cities. The future is looking more promising for the ever-growing number of permanent renters in the property market.

 

For further information, please contact Ed or Kelly on 01284 365345 or email ed@granitebw.co.uk / kelly@granitebw.co.uk.

WHAT IS CIL? HOW DOES CIL EFFECT MY SELF BUILD? HOW CAN I MITIGATE MY CIL PAYMENT?

Community Infrastructure Levy (CIL)

What is CIL?

According to the Government website, “the Community Infrastructure Levy (the ‘levy’) is a charge which can be levied by local authorities on new development in their area. It is an important tool for local authorities to use to help them deliver the infrastructure needed to support development in their area.

Most new development which creates net additional floor space of 100 square metres or more, or creates a new dwelling, is potentially liable for the levy.”

 

How does CIL Effect my Self Build?

What is CIL?

Image: www.homebuilding.co.uk

For some types of build, including self-build, relief or exemption from the levy may be available.

A self-build housing exemption is available to anyone who builds or commissions their own home for their own occupation. On completion, they must provide the requested supporting evidence. The property must also remain their principal residence for a minimum of 3 years.

According to the Government guidance, there is a set process which requires 4 steps. These must be undertaken within the required timescales in order to gain a self-build exemption.

Step 1

The applicant must assume the liability to pay the levy by completing an Assumption of Liability form and submit this to the collecting authority.

Step 2

The applicant must certify that the scheme will meet the criteria to qualify as a ‘self-build’ development and complete a Self-Build Exemption Claim Form and submit to the collecting Authority.

Step 3

A commencement notice must be received by the collecting authority prior to the commencement of the development (start of works on site). This must state the date on which the development will commence; failure to submit the commencement notice will be subject to a surcharge.

Step 4

Following completion of the build, the Self-Build Exemption Claim Form – Part 2 must be submitted to the collecting authority, along with the additional supporting evidence, within 6 months of the date of the compliance certificate.  Acceptable supporting information includes:

  • Proof of the date of completion
  • Proof of ownership – (freehold or leasehold)
  • Proof of occupation as the applicant’s principal residence

In addition to the above, applicants must also provide a copy of one of the following:

 

For further information on Self-Build Warranties please contact Ed, Kelly or Rob on tel: 01284 365345 or email ed@granitebw.co.uk / kelly@granitebw.co.uk / rob@granitebw.co.uk

 

Birmingham Ahead of Other Regional Cities for Development

Birmingham Library

Birmingham is undergoing a Renaissance. Chosen to host the Commonwealth Games in 2022, and with the arrival of HS2 getting ever closer, the city is seeing unprecedented amounts of development and regeneration.

The Government too has invested in the city, providing hubs for 5,000 civil servants. Another Department of Transport hub is also likely to be added soon.

According to EG Radius, Birmingham is racing ahead with its development activity for regional cities. Since the beginning of 2016, Birmingham has seen 688 applications for new commercial projects (the largest for a regional city). There have also been 264 applications for residential schemes, second only to Manchester with 316.

No other UK regional city surpassed its 12,200 new units that came through in planning applications during the pandemic in 2020. And it would seem that Birmingham is well placed to keep the momentum going post pandemic, as many of these proposals start to come to life with construction. Cranes pepper the skyline and there is a feeling of optimism that surrounds the city.

 

For further information, please contact Ed or Kelly on 01284 365345 or email ed@granitebw.co.uk / kelly@granitebw.co.uk.

Grenfell Cladding Legacy Still Unsolved Four Years On

Grenfell legacy leaves thousands of leaseholders in unsaleable flats and with astronomical bills four years on from the tragedy.

The anniversary of the Grenfell fire tragedy, in which 72 died and many more were left traumatised, injured and homeless, is a grim reminder of a terrible night. But it also started a process which has left thousands of leaseholders living in flats they cannot sell; because of unsafe fire issues and the prospect of enormous bills to fix the problems.

According to an article in The Times, “four years after Grenfell, tower blocks are still covered in lethal cladding. Flat-owners are now receiving bills to make the buildings safe — and discovering to their horror that they exceed the value of their homes”.

Grenfell Cladding Legacy Still Unsolved Four Years On

Source: The Times

Government Action

The Government has now offered a total of £5.1bn to remove the dangerous cladding on the highest risk blocks. However, thousands of dangerous buildings remain; and costs are estimated to be closer to £16bn to make all buildings safe.

A Government bill was defeated in the House of Lords in March 2021 which would have prevented the bill for remedial work, such as the removal of unsafe cladding from blocks of flats, being passed to leaseholders and tenants. Baroness Pinnock described the situation as an “unresolved crisis of major proportions” which can only be fixed with upfront funding from the government. The life-threatening issue of flammable cladding was not in any way the fault of families in flats. But, they were being asked to “pay the price“, she said.

In 2019, an EWS1 testing system was introduced to see if buildings met safety standards. Only 1 in 10 sites passed this test. Without the EWS1 certificate, lenders will not provide mortgages, and valuations of flats are put at £0.

What are Developers doing?

Many of the large developers who were responsible for installing the cladding – and who continue to make enormous profits from ongoing developments – are attempting to dump the costs onto the innocent leaseholders. Many feel the blame and costs should be with those who built the blocks; as well as the regulators (government and councils) who approved them.  It has been suggested that planning consent should not be granted for new developments until the existing buildings are fixed.

Even for those who are not wishing to move, costs have escalated. Service charges have increased dramatically to cover the cost of the ‘waking watch’ (security guards who must patrol the site day and night to watch out for fires).

People are being forced to live not only with the constant worry of an unsafe building, but with additional anxieties caused by unknown and ever increasing costs; whilst the developers and owners of the buildings seem to be getting away with everything.

 

For further information, please contact Ed or Kelly on 01284 365345 or email ed@granitebw.co.uk / kelly@granitebw.co.uk.

Family at the Bottom of the Garden

It seems that fairies are not the only ones to be found living at the bottom of the garden these days!

With house prices continuing to rise and a lack of affordable housing stock; one option that is becoming more popular is to build at the bottom of the garden.

Care needs to be taken to ensure correct planning and compliance with local council garden development policies is in place. But, it can be an affordable way to help younger members of the family get on the housing ladder; or to allow older members to downsize without having to move away.

Garden Room

Source: The Telegraph

A new Government scheme, Help to Build, was launched last month. This is a £150 million pound scheme offering loans to put towards a deposit to build a new home.

In many circumstances, once the children have flown the nest, owners are left living in large houses that they do not need. Many also have large gardens which they can no longer tend.

Instead of having to move from an area that is familiar and well loved, people are instead looking to sell the existing family home to the next generation to raise their families. This releases enough capital to then build themselves a smaller residence in the garden.

Alternatively, with the increase in easy to build summer houses and other habitable spaces in gardens, parents are building log cabin type homes. These enable grown children to live independently whilst saving for their own property; something that is impossible if they have to pay rent on a flat.

Lockdown has led to many people rethinking their living arrangements. Homes at the bottom of the garden can be a multi-generational answer to many questions faced by homeowners.

 

Are you considering building a new home in your garden? It would be wise to get a warranty in place that would allow the sale of the new home independently of the main residence.  For further information, please contact Ed, Kelly or Rob on 01284 365345 or email ed@granitebw.co.uk / kelly@granitebw.co.uk.

Bottleneck Caused by Rush to Hit Stamp Duty Holiday Deadline

With the deadline for the stamp duty holiday looming, the demand to get sales across the line in time has created a huge bottleneck of work for all those involved in the conveyancing chain.

 

Solicitors

We have heard of solicitors advising they cannot take on any more work due to being at breaking point.

As a result, there has been an enormous increase in costs to the buyer created by the huge demand over supply.

Homeowners have saved on average £11,566 in stamp duty since the holiday was introduced last July. According to Halifax, the rush to get a property completed by 30th June 2021 has led to a huge workload for conveyancing firms and a massive hike in fees.  However, buyers seem to be prepared to pay to ensure their sale is top of the list and will make the deadline.

 

Removal Firms

A client of ours told us they phoned 29 removal firms and were quoted four times the normal price for moving house at the end of this month, but had no choice but to accept it!

Many removal firms are not accepting work unless exchange has already taken place. This has led to disreputable firms cashing in on the demand. There is no requirement for firms to be registered with the British Association of Removers (BAR).

Effectively anybody with a van can call themselves a remover but such companies often have no insurance. They are also likely to leave you high and dry if they get an offer for a more lucrative job; not to mention the risk of damage and stolen goods!

 

Surveyors

Surveyors are similarly charging any fee they choose for full building surveys. Mortgages are also taking longer from ‘in principle’ to ‘formal’ offer.

 

When do we expect the market to correct itself?

Whilst this demand will start to correct itself after the end of June, the pressure to move things along quickly has resulted in the whole process of buying a property taking less time than a year ago.  According to Hamptons International, it is taking 92 days from an offer being accepted to exchange of contracts; whereas last summer it was taking nearly six weeks longer.  Hopefully, this will remain the timescale even after the stamp duty deadline passes.

 

For further information, please contact Ed or Kelly on 01284 365345 or email ed@granitebw.co.uk / kelly@granitebw.co.uk.

Shortage Of Materials and Rising Prices Causing Construction Industry Chaos

Demand is outstripping supply in construction.  The main causes are:

  • COVID-19
  • Housing shortages
  • Brexit
  • Suez Canal blockage
  • Higher import tariffs
  • DIY enthusiasts

All these factors have had an impact on the availability and price of materials. With the highest recorded demand in recent years for construction in both the public and private sectors, it is easy to see why the wait for roof tiles has gone from 2 weeks to 20 weeks. Building materials also increased in price by 25%-150% over the last twelve months.

The first three months of 2021 saw enquiries with local building firms increase at their fastest rate in a decade; fuelling significant difficulties with construction material shortages, according to new data from the Federation of Master Builders (FMB).

The latest FMB State of Trade Survey found that workloads, enquiries and employment all grew in the period January to March 2021, with enquiries growing at their fastest pace in more than 10 years.

But at the same time, 38% of builders are struggling to hire bricklayers and 34% are struggling to hire carpenters/joiners, up from 23% from the end of last year.

If you can manage to secure a builder, delays caused by factory closures and the demands of HS2 on suppliers (who, in some cases, have committed all their aggregate to the project), plus Brexit and the chaos caused in the Suez Canal earlier in the year, mean that you need to be looking 3 – 6 months in advance to organise supply with your builder and merchant.

How can you avoid the shortages?

“Don’t just turn up at your builder’s merchants and expect materials to be on the shelf” says John Newcomb, Chief Executive of the Builders Merchants Federation.  Newcomb also suggests looking at alternatives such as composite decking instead of timber and clay roof tiles as an alternative to concrete.

Buying reclaimed materials is another way to avoid the shortages and can save you money.

However you decide to source the materials, be aware that prices may still rise and make sure you have a contract in place with your builder that determines who is taking the risk.  A quote today for £15,000 may be closer to £20,000 when the job is completed, and without a contract, there can be costly legal disputes further down the road.

Perhaps the wisest thing is to wait.  With the Government using construction as a catalyst for the economy post pandemic, once things have opened up, people’s focus may shift from the lockdown renovations to other things and the market will return to a more normal footing.

 

For further information, please contact Ed or Kelly on 01284 365345 or email ed@granitebw.co.uk / kelly@granitebw.co.uk.

Is This the End for the Mega Mansion?

It would seem that even the mega rich are thinking twice about the need for such ostentatious luxury as foreclosure looms for the developer of ‘The One’, the largest and most expensive mansion to be built in the US.

 

The One Mega Mansion

 

Nile Niami, the developer renowned for exceptional mansions for the super-rich, has been filed with a default notice for $82 million as the house has failed to get anywhere near its $500 million price tag.

Built over the last eight years, the house sits on five acres overlooking Los Angeles. With a record 100,000 sq ft of living space; the master suite alone is larger than most homes at 4,000 sq ft.

Luxuries include 5 swimming pools, a 50-seat theatre, its own nightclub, bowling alley, putting green and beauty salon.

However, in the current slump post-Covid, a sale is proving hard to come by. America’s super mansion market has collapsed during the pandemic and prices are being slashed. Perhaps even the super-rich realised they have no need for their own nightclub; or maybe these houses are finally just too big.

Whatever the cause, it certainly seems that at the time of an international pandemic and global crisis, even the wealthiest are reluctant to be seen investing in such ostentation.

 

For further information, please contact Ed or Kelly on 01284 365345 or email ed@granitebw.co.uk / kelly@granitebw.co.uk.

Five Things Keeping House Prices Flying High

Halifax: House prices increase by 8.2% in April 2021

£258,204

Average price

+1.4%

Monthly change

+0.9%

Quarterly change

+8.2%

Annual change

 

With strong growth showing in the latest Halifax house price data, what is keeping the house price rise from crashing?

  1. Strong consumer confidence in a house as a financial asset and a Government firmly committed to home ownership.
  2. Protection for homeowners during the pandemic; including furlough, payment holidays, and 95% mortgages for first time buyers.
  3. Attitudes to living and working changing during the pandemic and prompting a change in the way we live.
  4. Rock bottom mortgage rates and cheap mortgage finance.
  5. The waiving of stamp duty by the Government and its extension to June 2021.

 

For further information, please contact Ed, Kelly or Rob on 01284 365345 or email ed@granitebw.co.uk / kelly@granitebw.co.uk

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