Our exclusive interview this week takes a look at how new homes are covered by a warranty to protect buyers from serious defects, by looking in detail at what they mean with CEO of warranty provider CRL, Steve Mansour.
Steve, please tell us a little about yourself and CRL.
I started my career in Toronto, Canada over 15 years ago, in the residential real estate market before relocating to the UK in 2003, where I continued to grow my business in the property, construction and finance fields. My experience is very heavily focused on sales and growth, and coupled with the industry experience directly related to Structural Insurance has proved to be interregnal in setting CRL apart in the market.
I am the CEO for CRL UK, and its wider group, and the ‘approved person’ with the Financial Conduct Authority (FCA). These positions afford me the scope to directly influence the direction CRL needs to move in to ensure we are continually innovating and driving not only our business forward, but the market as a whole.
CRL was established in 2011 and has grown into a leading specialist in 10-year and 12-year structural defects insurance policies. CRL source cover for the residential and commercial construction industry in the UK and Ireland. CRL prides itself on offering bespoke solutions for all properties with a fast turnaround and a level of customer service that is industry leading.
What exactly is a new homes warranty, what does/doesn't it cover and how does it work?
Structural Defects Insurance, also known as a home builder warranty, structural warranty, structural insurance or latent defects insurance, is a special kind of cover used for new homes. This applies if the property is brand new or if the property is less than 10-years-old. Housing associations tend to require 12-year policies, and CRL currently cater for all instances of cover required. Anyone engaged in a building project or managing a portfolio of new build properties that require mortgages, will require a structural insurance policy on the property.
Most new homes will come with a two-year developer warranty and during this period of time the developer in question will be responsible for putting right any issues covered under the warranty.
However, structural defects insurance is different to the two-year developer warranty. Instead a warranty is offered from a third party, like CRL, and usually lasts for a period of 10 years, with the issuing company responsible for any repairs needed from years three onwards. The reason a structural defects warranty is important is that structural defects in new homes can take time to become apparent, which means structural faults can appear after the two-year developer warranty has expired.
Should this happen, with the 10-year warranty in place, the homeowner will be covered for the costs to repair or rebuild the faulty aspects of the property. Usually structural defects specialists will help protect you against things such as faulty building materials like lintels or steel supports, a faulty architectural design of the home that leads to structural problems, or issues such as land contamination. It is important to always check exactly what you will be covered for.
Mortgage lenders require that a structural defects warranty is in place on every new build property before mortgages are approved. Once the build is complete the warranty passes from the contractor to the owner of the property.
Many people may not realise that there are numerous warranty providers in the market – are there unique aspects of your product, and does it change depending on the price/type of home?
CRL has an unrelenting commitment to providing a high-quality, flexible and competitively priced customer focused service. We also have dedicated account management, flexible underwriting, a hands-on approach, we’re venturous in our risk appetite, have an established surveying team, offer immediate cover, transferable policies, a fast registration process and fast quote turnaround.
The main elements of cover are largely the same despite the type of home, or its value. CRL does however pride itself on being one of the industry leaders in working with developers on modern methods of construction, and we do try and support new initiatives in the market which may, from time to time, require some refinement to the terms of cover.
If someone finds something significantly wrong with their new home, what do they do?
Mitigate the loss by taking all responsible immediate steps to prevent any further loss or damage, and give written notification as per the “How To Make A Claim” Section within their policy. This will register a claim with the warranty provider will investigate.
Is a claim a long process, what does it involve and how many claims are approved?
A full investigation will be completed, this will include (but not be limited to):
- A review of all information provided by the home owner
- A review all the information received prior to commencement of the development work
- A review all inspection reports completed during the build process
- A review any third-party reports provided
- A review of the terms and conditions of the relevant policy
Where required, insurers will appoint a loss adjuster to investigate further.
Each claim is unique and presents its own challenges, CRL endeavours to finalise all claims as swiftly as possible in conjunction with the home owner and developer. All valid claims are approved and resolved in the appropriate manner.
New homes sometimes get some critical coverage in the press - are major problems very commonplace?
Major problems to new homes are not commonplace. CRL has arranged billions of pounds worth of cover to date and we have experienced very few issues. It is important to have a robust inspection process in place and we work closely with our developer clients, providing technical support and guidance at key stages of the development to resolve any issues at the construction phase.
Given the numerous advantages of new build homes, for example, energy efficiency and specification, why do you think more house-hunters aren't really interested in new homes?
I actually think it’s the opposite. There are many house-hunters who recognise the advantages of new build homes over the rest of the market. The challenge facing the industry is to supply sufficient numbers of new homes to meet the demand and this has continued to cause difficulties as not enough new homes have been built in the UK for many years.
New homes need to be affordable and be the right homes in the right places. If you look back over ten years ago, almost 70% of new homes being built were apartments, this was partly driven by planning requirements and not necessarily what purchasers wanted. More recently we have seen a resurgence in family homes being built, which incorporate more outside space, off-street parking and communal areas. Whilst this is a positive move and supports what many purchasers want, it brings with it more challenges in relation to affordability and the number of homes being accommodated on any given development.
Are market pressures on material costs and availability of quality skilled labour warning signs for building standards at present?
Skill shortages within the construction industry have been an ongoing problem for many years. Materials and prices have also caused challenges, particularly with the uncertainty around Brexit and the vote last year. I do believe with these challenges comes opportunities to diversify and innovate. I heard of one major housebuilder (Persimmon) taking steps to acquire its own brick factory last year to control costs. This factory will be producing almost 90 million bricks a year for them.
At CRL we have seen developers innovate and turn more to MMC (modern methods of construction) and off-site manufacturing. As a company, we embrace MMC and continue to work with many different off-site manufacturers providing technical input and inspections at the factory and on site. This way we are involved from start to finish, helping to maintain high standards.
What are your thoughts on the recent Housing White Paper?
We welcome the recent Housing White Paper as it recognises some of the challenges facing the UK housing market. It obviously sets out several plans to encourage housebuilding, including planning the right homes in the right places – something I mentioned in your earlier question. I think time will tell whether this proves to be an effective way to increase the number of homes being built. At the last count, we need to be building at least 220,000 homes a year just to keep up with population growth. Perhaps we can revisit this question again next year?