A social housing warranty is an important insurance policy that protects social housing developments in a variety of ways.
Many housing developers will cover themselves from a financial and structural standpoint by ensuring their project is covered by a social housing warranty.
Not sure what a social housing warranty covers? Continue reading this guide to find out everything you need to know.
What is a social housing warranty?
A social housing warranty is a type of insurance policy that’s designed to provide a level of financial security for a range of social housing construction developments. The cover protects landlords and housing associations.
A social housing warranty offers a clear conscience for all involved in a project because it guarantees that the properties are safe for occupancy, and eliminates the liability risks that are associated with structural issues that may emerge years after construction is complete.
Obtaining a social housing warranty helps developers or housing authorities secure the necessary funding for their projects. Why? Because it shows investors that their money is covered in the event of a major issue, making it a more attractive proposition.
Should anything unforeseen happen to the contractors in charge of construction – such as poor health, death or ceasing to trade – a social housing warranty offers the necessary financial cover to complete the development.
A social housing structural warranty also helps to increase the value of the completed properties as all parties involved in the project for up to 10 and 12 years are covered.
What is a social housing property?
To be classed as a social housing property, it must be intended for social housing purposes – whether as dedicated units or part of mixed-use projects.
Property is also classed as social housing when its rent is at about 50% of what the local market charges.
What does a social housing warranty cover?
Not all social housing warranties are the same, with specific policy details that can differ based on individual projects and contracts.
Having said that, social housing warranties typically feature similar coverage regarding transferability and structural element coverage.
What is structural element coverage?
Structural element coverage is part of the social housing warranty that covers a full or partial reconstruction of a building if a structural element experiences a significant failure.
What is transferability?
Transferability is a key aspect of a social housing warranty as it means the coverage is assignable. This allows for a no-risk transfer to new social landlords or tenants throughout the warranty’s 10 or 12-year duration.
What are the benefits of obtaining a social housing warranty?
There are plenty of major advantages to obtaining a social housing structural warranty for a construction project.
Firstly, a social housing development involves an array of stakeholders which makes them more complex than a standard housing construction project. With several third-party contractors and larger material volumes, a social housing project can demand significant financial investment.
For this reason, a housing association or property developer may need to seek investors to fund their project. Obtaining a social housing warranty demonstrates to investors that their funds would be protected, helping to attract even more financing.
For an investor, they must know that the money they’re putting into a project is secure and protected. With a social housing warranty, you can assure them it is.
A social housing warranty also mitigates the risk that’s associated with potential major structural defects. A warranty will cover the repair and reconstruction costs if latent defects are found within the property.
This not only avoids huge financial repercussions for the persons responsible, but it reduces the amount of time it may take for litigated procedures to establish liability. A social housing structural warranty is a safety net for all involved in the development, offering peace of mind to the contractor, investors and any future buyers during the warranty period.
How to obtain a social housing warranty
If you’re a social housing developer and you’re considering obtaining a warranty for your development, but you’re not sure – here’s how.
To be granted a social housing warranty, you must supply the following information:
- Your experience as a developer
- The development’s overview and plans
- Unit type information and quantity
- The full estimated cost for the project
- The estimated total value of the properties
If you fail to supply all of the above, it’s unlikely that you’ll be granted a social housing warranty. So, if you want to ensure you’re covered, and to be able to attract potential investors, ensure you do everything you can to cover your project accordingly.
