Difference in Buildzone warranty value and actual rebuild cost

[upthemanor]

Hi there

 

Any help with the enclosed would be massively appreciated.

 

I'm currently in the process of purchasing a new build property that has a Buildzone warranty with a value of £150,000.  The purchase price of the house is in excess of £500,000 and the rebuild cost according to the BCIS webiste is £363,000.

 

We are at exchange of contracts stage and our solicitor has flagged that our mortgage company has stated that the certifcated value is not enough.  With this in mind they won't proceed with the mortgage offer.  We've used a mortage broker who has stated that the market is severly limited due to the value on the certifcate so much so that he can't guarantee that we can even get a mortgage with the current certificate value in place.

 

My question is this; can the builder raise the cost on the certificate (and obviously incur costs) or is this a value that is set by Buildzone?  Buildzone won't talk to me as the builder is obviously the warranty holder.  If the value can be raised what would the expected premium be (appreciate these can vary)?  

 

Many thanks for reading and I hope I've made sense.

 

Thanks

[Conor]

I'd fire this back to the vendor and ask them to upgrade the warranty at their cost. Threaten to pull out of the sale... The vendor will just have the issue again with the next potential buyer and will cough up and sort it.

[PeterW]

This will cost the vendor £2-300 for a latent defect insurance to top that up - tell them to get it or deal off 

[Mr Punter]

I have often topped up the sale prices for new build warranties to the actual sold value.  Have done this with NHBC and Premier Guarantee.  I imagine they all do similar.  I will be pessimistic about the resales when I get the cover so it saves up front costs, then pay the extra as sales are agreed.  You are better off getting the developer to up the value with Buildzone than getting a 3rd party top up.

[upthemanor]

Thanks for the replies everyone.  The builder is adamant that the warranty value is correct and that the issue is with the lender.  His view is to get a new lender.  My issue is that, whilst we have an agreement in principle with a new lender, we are likely to hit this problem if we ever wanted to sell within the first 10 years.  I just can't understand why the certificate value can't be upped?   We've obviously invested quite a bit already and have had discussions about walking away from this purchase with the builder.

 

Does £150,000 for a six bedroomed, three storey house (approx 2,800 square feet) seem excessivley low to everyone?  I'm ashamed to admit that I honestly have no idea.

[Conor]

3 minutes ago, upthemanor said:

 

Does £150,000 for a six bedroomed, three storey house (approx 2,800 square feet) seem excessivley low to everyone?  I'm ashamed to admit that I honestly have no idea.

Should be at least double that. Roughly min of £1000/m² for a new build. A developer can build it cheaper, but that's not the market rate for rebuild. The BICS estimate is closer to reality.

Edited September 16, 2020 by Conor

[upthemanor]

Thank you Conor.  Really appreciate that.  I think it's time to cut our losses and move on.  Thanks all.

[Roundtuit]

2 hours ago, Conor said:

Should be at least double that. Roughly min of £1000/m² for a new build.

Plus site clearance costs, professional fees etc before you can even start to re-build. I'd be looking for cover for the best part of £500K I think, depending on where you are in the country.