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CML/UK finance & lender approved indemnity schemes
The facts

Frequently Asked Questions

CML/UK Finance & Lender Approved Indemnity Schemes 

General Questions
Professionals you can trust

Latent Defects Insurance is also referred to as Structural Defects Insurance, Structural Warranty, Construction Insurance and Self-Build/New-Build insurance. 

It is important that you are covered by a credible company, as it is considered a requirement by the majority of UK mortgage lenders before lending on any property under 10 years old. 

This is a property converted to a dwelling through a ‘material change of use’, such as converting a commercial office building into a dwelling, or a redundant barn into a dwelling.

It is a statutory (legal) requirement to have any new build or conversion project monitored by a building inspector under a building regulations application, for compliance with The Building Act 1984.

Unfortunately, the banks and building societies do not consider the building regulations to be a suitable form of guarantee for mortgage purposes. Therefore, they insist on either a PCC or Structural Warranty, which is additional to the building regulations.

Quite simply, no other company can match us for a combination of expertise, speed, and cost.

  1. Expertise: Our certificates are administered by a leading Chartered Professional with 35 years of residential property experience.
  2. Speed: We operate a state-of-the-art online software platform. This means quotes; receipts and certificates are issued almost instantly. Our surveyors cover the UK and have access to the systems on the go. We have been known to issue retrospective certificates in less than 24 hours – which is great for those who are relying on this for a property exchange.
  3. Cost: Our digital systems drive efficiencies, which reduce costs. We can pass these on to customers. Our instant quotes offer great value, and our system builds great discounts for those with multiple properties to certify.

 

Lenders and Insurance
During Certification

Latent Defects Insurance offers owners and developers, coverage from damages arising from an inherent or latent defect in the building.  

 The policy is generally available for a period of 10 to 12 years from the date of issue of final certificate of practical completion. The insured can be any party who has an interest in the property (normally the owner or developer) and can be required by funders or incoming tenants with an obligation to repair under the terms of a lease agreement. 

Latent Defects Insurance provides essential protection if you’re a homeowner who has undertaken a self-build or even added an extension to an existing property, as most defects tend to become evident a few years after the development has been completed, so it could be possible, due to economic circumstances, that the contractor is no longer in business when you need to make a claim. 

Latent Defects Insurance protects against the potential cost of rebuilding and rectifying any defects that arise and are required to protect against defects in newly built or converted and refurbished residential developments, along as the following: 

  • Commercial or domestic properties 
  • New builds or conversions 
  • Renovations or extensions 
  • Self-build constructions 

These can include private or social housing, elderly or student accommodation, business premises, and public sector buildings. Essentially, any type of newly built or altered structure can benefit from latent defects insurance, because it covers the quality and safety of its structural elements. 

It’s not a legal requirement, although all mortgage lenders require it to be in place before they will land money against a property.  

Even if you have no intention of selling your home, the skilled insight of our inspectors helps quickly identify any problem areas. In addition, indemnity protects you from exposure to a costly risks. 

 

It’s normally 10-years from completion of the property. 

A PCC is a certificate of compliance, which provides an option of 6 or 10 years of cover as approved by the CML/UK Finance on behalf of the Lenders. The Professional Consultant must only issue the certificate when they are satisfied the building has been built to an approved standard.
Latent Defect Insurance is an insurance-backed product, which is often underwritten by large insurance brokers, and they usually come with 10 years’ cover. Like all insurance products, they come with a 2-year defect liability period for the developer and a host of conditions.
In terms of build quality, generally, we only require properties to be constructed to current UK building regulations standards, whereas Latent Defect Insurance providers often require a much higher standard of construction.
With all of the above, a PCC is a much more cost-effective option for providing mortgage ready certification for newly built properties.

Once you have planning permission and before you start work, we advise that you arrange the warranty and have it in place two to four weeks before works start. It’s important to contact us straight away once you know the exact start date for the project to get a quote and the right coverage beforehand. 

Latent Defects policy will be tailored to the unique circumstances of the project or building, the cost will vary. 

Factors that can affect the cost of latent defects insurance include (but are not limited to): 

  • Number, size, and type of building/s. 
  • Experience level of main contractor/developer. 
  • Construction methods and materials being used. 
  • Rebuild value of the property (sum insured). 

 

Through a combination of meticulously compiled structural engineers reports and careful financial assessment. 

If you are building an extension, you may not need a warranty but you will need to comply with building regulations to ensure the property is structurally sound. It is always recommended to speak to us, depending on the type of extension, in order to make sure you have the right coverage before work is started on site. 

Remedies for defects should be sought from the builder or contractor if discovered in the first 24 months following the completion of the services.

A professional consultant who carries professional indemnity insurance for the six-year or 10-year life span of the certificate administers your certificate. Our professional consultants are underwritten by one of the UK’s largest insurers, so we do not anticipate any issues regarding insurance. In the event they cease practicing or ‘retire’, they are required by the CML/UK Finance to maintain insurance run-off cover ensuring that all the certificates issued are covered for their life span.

We are insured up to £5 million for each and every claim.

Yes. Each certificate is issued with a copy of the insurance. If you would like to see a copy before order, please speak with a member of our support staff who can help.

Yes. If you would like to see a copy before ordering, please speak with a member of our support staff who can help.

If there is any damage to the building as a consequence of an inherent defect in the design, workmanship or materials in the structure of your building, latent defects insurance can provide you with cover.   

This policy Cover is generally available for 10 or 12 years after the buildings practical completion. It covers the repair or reinstatement costs if damage is discovered resulting from faulty design, construction work, or building materials.  

Latent defects insurance will usually cover the following elements: 

  • Structural Defects. 
  • Ingress of water (excluded for the first 12 months). 
  • Threat of imminent collapse requiring remedial works to prevent damage caused by a defect in design, materials or workmanship. 

In the event of a structural claim, additional areas of construction insurance cover can include: 

  • The costs of demolition to allow rebuilding. 
  • The cost of providing alternative accommodation during the period of the reconstruction or repair. 
  • Loss of rent/loss of gross profit or revenue/increased cost of working from alternative premises. 
  • Damage to mechanical and electrical services. 
  • Mechanical and/or component failure. 

 

A latent defects warranty will only cover structural defects that are not found during initial surveys and do not become apparent until months or years after completion of the building. This means that the policy will not cover the costs for damage resulting from: 

  • Known defects or defects discovered prior to taking out the policy. 
  • Abnormal use of the building or inadequate maintenance. 
  • Non-approved alterations to the building (e.g. extensions). 
  • Normal wear and tear (e.g. changes in colour due to ageing). 
  • Accidental damage, weather damage, vandalism, arson etc. 

Latent defects insurance usually will not apply to anything that hasn’t been signed off under the technical audits that take place as part of the warranty process. 

 

We do not issue paper copies of certificates. This is because our systems are digital, meaning the certificates are generated electronically. Upon certification of each stage, you are sent a ‘PDF’ copy of the certificate. The PDF copy can then be printed as normal or forwarded (to a solicitor for example).

Each certificate contains a unique identifying code (an electronic signature). Our systems provide a complete audit trail, which maintains the ability to prove who has signed off the certificate.

Electronic signatures are valid and legally binding around the world. The adoption of the European Directive 1999/93/EC of 13 December 1999 established a community framework for the use of electronic signatures on electronic contracts in the EU.

Of course, if you are unable, we are happy to print a copy of the certificate from our end and post to you. Please let us know.

Your certificate is normally issued within 24 hours of the property inspection

Yes. This can be provided for you and emailed to you following your order. We would need:

  • Your lender’s name and address
  • Your mortgage application or ‘roll number’
Certification Stages
Monitoring and Retrospective Services

We can offer certificates for properties that:

  • Have not yet commenced construction
  • Are part way through construction
  • Are completed

What are the key ‘or certified’ stages?

  • Foundation Stage (LDI only)
  • Stage 1. DPC: All works completed to damp proof
  • Stage 2. Watertight: Property completed to roof level and weather tight
  • Stage 3. First Fix: Internal plastering and first fix of joinery completed
  • Followed by:
  • Stage 4. Practical Completion: All works completed

We are not looking at cosmetic items such as a loose door handle or flaking paint. We will make sure there are no structural faults or any missing items (roof tiles for example) which could be prone to water ingress.

Not particularly. We take overall responsibility for the works to the property and provide a guarantee to the mortgage lender for the next six years. This creates considerable risk. If our property inspections determine there are defective works we would firstly, highlight these to you in a report, and offer you the opportunity to correct the defective items. Once all defective items have been completed, we will issue the certificate.

Generally, if the building inspector has approved the works, then there should not be a problem.

Usually, only one inspection per key stage is necessary. However, if for some reason we had to reject a stage, or wanted to view additional items, then additional inspections could be made at our discretion.

Therefore, if your project has:

  • Not yet commenced construction, we would make 4 inspections corresponding with the stages above.
  • You have started construction, but have not yet reached DPC level, we would make 4 inspections corresponding with the stages above.
  • You have started construction, and have passed DPC stage, we would make 2-3 inspections corresponding with the stages above.
  • Construction is completed, then we would make 1 inspection corresponding with the Practical Completion stage above.

If you’re trying to sell a property that was built in the last 10 years, and it does not have a Latent Defects Insurance policy then you will not be able to sell due to mortgage lenders denying a mortgage to a property that does not have a Structural Warranty Insurance policy. 

Retrospective defects insurance policies exist to help you sell your property in the most efficient way possible. Retrospective defects insurance requires a full structural survey to be undertaken before the policy is issued to identify any existing issues or problems so that they can be corrected or removed from the policy. 

Yes, Latent Defect Warranty covers any new build, conversion or major refurbishment of residential home including (but not limited to) houses, flats, bungalows, barn conversions that were built in the last 10 years. 

Generally, if you have not yet started the build you will require a monitoring service. This is where we make inspections during the work.
A monitoring service provides you with interim (or stage) certificates, which can be used for ‘draw down’ payments from the banks. This is an added-value service.
If your build has been completed, then you will require the retrospective service as we can only make one post-completion inspection.

We have been through a lengthy audit process with our insurers. They are satisfied with our company’s expertise and quality assurance procedures so allow us to administer the certificates retrospectively.

The main query regarding retrospection certification is that the CML/UK Finance standard form of certificate states under clause 1:

“I have visited the site at appropriate periods from the commencement of construction to the current stage to check generally.”

This suggests the service is only applicable to full monitoring services. However, where builds have been completed the CML/Uk Finance are not particularly helpful and structural warranty companies will not offer retrospective services, meaning customers are stuck. This is why we went through an audit process to help customers.

Therefore, our retrospective certificates are edited under clause 1 to state: “I have visited the site at appropriate periods to check generally.”

We have administered hundreds of these types of certificates without any issues. However, we cannot guarantee that a particular underwriter or solicitor will not take issue with them, as they are not fully compliant with the CML/UK Finance standard form.

Our case in point is that our company has been audited for this service and is willing to offer insurance against the build for the next six years when others will not.

We accept under conversion projects, the main building is already complete. However, some projects have extensions meaning the four usual stages including DPC apply. However, if there were to be no additions, then we would recommend using 3 stages as follows:

  1. Water tight: As the building is existing, we would use this stage to examine the strip-out and structure.
  2. First Fix: Internal plastering and first fix of joinery completed.
  3. Practical Completion: All works completed.

When certifying flats, each flat will need its certificate. This is because the banks are aware each flat could be sold independently. Our quotation system builds in discounts when certifying several flats at the same time.

  • A copy of the project drawings
  • A copy of the planning consent
  • A copy of the building regulations completion certificate (at the practical completion build stage) This document is essential and required before issue of our PCC!

Frequently Asked Questions

CML/UK Finance & Lender Approved Indemnity Schemes 

General Questions

There are two indemnity schemes suitable for Lenders, either:

  • A Professional Consultants Certificate (PCC), or,
  • A Structural Defect Warranty

This is a property converted to a dwelling through a ‘material change of use’, such as converting a commercial office building into a dwelling, or a redundant barn into a dwelling.

It is a statutory (legal) requirement to have any new build or conversion project monitored by a building inspector under a building regulations application, for compliance with The Building Act 1984.

Unfortunately, the banks and building societies do not consider the building regulations to be a suitable form of guarantee for mortgage purposes. Therefore, they insist on either a PCC or Structural Warranty, which is additional to the building regulations.

Professionals you can trust

Quite simply, no other company can match us for a combination of expertise, speed, and cost.

  1. Expertise: Our certificates are administered by a leading Chartered Professional with 35 years of residential property experience.
  2. Speed: We operate a state-of-the-art online software platform. This means quotes; receipts and certificates are issued almost instantly. Our surveyors cover the UK and have access to the systems on the go. We have been known to issue retrospective certificates in less than 24 hours – which is great for those who are relying on this for a property exchange.
  3. Cost: Our digital systems drive efficiencies, which reduce costs. We can pass these on to customers. Our instant quotes offer great value, and our system builds great discounts for those with multiple properties to certify.

 

Lenders and Insurance

A PCC is a certificate of compliance, which provides an option of 6 or 10 years of cover as approved by the CML/UK Finance on behalf of the Lenders. The Professional Consultant must only issue the certificate when they are satisfied the building has been built to an approved standard.
A Structural Warranty is an insurance-backed product, which is often underwritten by large insurance brokers, and they usually come with 10 years’ cover. Like all insurance products, they come with a 2-year defect liability period for the developer and a host of conditions.
In terms of build quality, generally, we only require properties to be constructed to current UK building regulations standards, whereas Structural Warranty providers often require a much higher standard of construction.
With all of the above, a PCC is a much more cost-effective option for providing mortgage ready certification for newly built properties

Remedies for defects should be sought from the builder or contractor if discovered in the first 24 months following the completion of the services.

A professional consultant who carries professional indemnity insurance for the six-year or 10-year life span of the certificate administers your certificate. Our professional consultants are underwritten by one of the UK’s largest insurers, so we do not anticipate any issues regarding insurance. In the event they cease practicing or ‘retire’, they are required by the CML/UK Finance to maintain insurance run-off cover ensuring that all the certificates issued are covered for their life span.

We are insured up to £5 million for each and every claim.

Yes. Each certificate is issued with a copy of the insurance. If you would like to see a copy before order, please speak with a member of our support staff who can help.

Yes. If you would like to see a copy before ordering, please speak with a member of our support staff who can help.

During Certification

We do not issue paper copies of certificates. This is because our systems are digital, meaning the certificates are generated electronically. Upon certification of each stage, you are sent a ‘PDF’ copy of the certificate. The PDF copy can then be printed as normal or forwarded (to a solicitor for example).

Each certificate contains a unique identifying code (an electronic signature). Our systems provide a complete audit trail, which maintains the ability to prove who has signed off the certificate.

Electronic signatures are valid and legally binding around the world. The adoption of the European Directive 1999/93/EC of 13 December 1999 established a community framework for the use of electronic signatures on electronic contracts in the EU.

Of course, if you are unable, we are happy to print a copy of the certificate from our end and post to you. Please let us know.

Your certificate is normally issued within 24 hours of the property inspection

Yes. This can be provided for you and emailed to you following your order. We would need:

  • Your lender’s name and address
  • Your mortgage application or ‘roll number’
Certification Stages

We can offer certificates for properties that:

  • Have not yet commenced construction
  • Are part way through construction
  • Are completed

What are the key ‘or certified’ stages?

  • Stage 1. DPC: All works completely to damp proof
  • Stage 2. Watertight: Property completed to roof level and weather tight
  • Stage 3. First Fix: Internal plastering and first fix of joinery completed
  • Followed by:
  • Stage 4. Practical Completion: All works completed

We are not looking at cosmetic items such as a loose door handle or flaking paint. We will make sure there are no structural faults or any missing items (roof tiles for example) which could be prone to water ingress.

Not particularly. We take overall responsibility for the works to the property and provide a guarantee to the mortgage lender for the next six years. This creates considerable risk. If our property inspections determine there are defective works we would firstly, highlight these to you in a report, and offer you the opportunity to correct the defective items. Once all defective items have been completed, we will issue the certificate.

Generally, if the building inspector has approved the works, then there should not be a problem.

Usually, only one inspection per key stage is necessary. However, if for some reason we had to reject a stage, or wanted to view additional items, then additional inspections could be made at our discretion.

Therefore, if your project has:

  • Not yet commenced construction, we would make 4 inspections corresponding with the stages above.
  • You have started construction, but have not yet reached DPC level, we would make 4 inspections corresponding with the stages above.
  • You have started construction, and have passed DPC stage, we would make 2-3 inspections corresponding with the stages above.
  • Construction is completed, then we would make 1 inspection corresponding with the Practical Completion stage above.
Monitoring and Retrospective Services

Generally, if you have not yet started the build you will require a monitoring service. This is where we make inspections during the work.
A monitoring service provides you with interim (or stage) certificates, which can be used for ‘draw down’ payments from the banks. This is an added-value service.
If your build has been completed, then you will require the retrospective service as we can only make one post-completion inspection.

We have been through a lengthy audit process with our insurers. They are satisfied with our company’s expertise and quality assurance procedures so allow us to administer the certificates retrospectively.

The main query regarding retrospection certification is that the CML/UK Finance standard form of certificate states under clause 1:

“I have visited the site at appropriate periods from the commencement of construction to the current stage to check generally.”

This suggests the service is only applicable to full monitoring services. However, where builds have been completed the CML/Uk Finance are not particularly helpful and structural warranty companies will not offer retrospective services, meaning customers are stuck. This is why we went through an audit process to help customers.

Therefore, our retrospective certificates are edited under clause 1 to state: “I have visited the site at appropriate periods to check generally.”

We have administered hundreds of these types of certificates without any issues. However, we cannot guarantee that a particular underwriter or solicitor will not take issue with them, as they are not fully compliant with the CML/UK Finance standard form.

Our case in point is that our company has been audited for this service and is willing to offer insurance against the build for the next six years when others will not.

We accept under conversion projects, the main building is already complete. However, some projects have extensions meaning the four usual stages including DPC apply. However, if there were to be no additions, then we would recommend using 3 stages as follows:

  1. Water tight: As the building is existing, we would use this stage to examine the strip-out and structure.
  2. First Fix: Internal plastering and first fix of joinery completed.
  3. Practical Completion: All works completed.

When certifying flats, each flat will need its certificate. This is because the banks are aware each flat could be sold independently. Our quotation system builds in discounts when certifying several flats at the same time.

  • A copy of the project drawings
  • A copy of the planning consent
  • A copy of the building regulations completion certificate (at the practical completion build stage) This document is essential and required before issue of our PCC!

TECHNICAL ADVICE

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