ALL THE ANSWERS YOU NEED

CML/UK FINANCE & LENDER APPROVED INDEMNITY SCHEMES

THE FACTS

Frequently Asked Questions

CML/UK Finance & Lender Approved Indemnity Schemes

General Questions

There are two indemnity schemes suitable to Lenders, either:

  • A Professional Consultants Certificate (PCC), or,
  • Latent Defect Insurance (LDI)

The Council of Mortgage Lenders (CML) now called UK Finance has created the PCC on behalf of the banks to formalise and standardise the certification of newly built or newly converted residential property.

The UK Finance standard PCC certificate needs to be administered and signed off by a chartered professional consultant such as a Surveyor who must be registered with the Chartered Institute of Builders (CIOB) or an Architect who is registered with the Architects Registeration Board (ARB) in order for it to be valid.

Professional Consultants Certificates were previously called Architects Certificates. 

LDI stands for Latent Defect Insurance. This is a stand alone insurance policy to cover strucutral defects and the waterproof envelope of the property. Subjectivies and exclusions can form part of this cover, so it is important to be aware of these before you take out cover. 

Cover is available for all type of projects including commercial and are accepted by the Help to Buy scheme. 

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 has always been in the CML/UK Finance guidelines for lenders to request an Indemnity Scheme for newly converted property. Almost all Lenders have now made it a mandatory requirement to have indemnity cover in place for properties that have had any ‘new build’ work caried out in the past 10 years.  

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 LDI, which is additional to the building regulations.

Professionals you can trust

All the certificates are monitored and signed off by a highly qualified Chartered Professional who specialise in construction standards surveying.

Our Chartered Professionals have more than 35 years experience in the industry and qualifications to meet the Professional Consultants Certificate criteria set out by CML/UK Finance making our certificates fully approved by Lenders.

  • 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 onto customers. Our instant quotes offer great value, and our system builds in great discounts for those with multiple properties to certify.

Build Warranty holds specialist PI insurance allowing it to issue PCC’s, which is underwritten by an A rated insurer. 

Depending on the type of project our LDI policies are underwritten by trusted insurers who have specialised in the LDI for over 18 years. 

Build Warranty Technical Services operates with a carefully selected network of professionally qualified building inspectors who are friendly and co-operative to help you thoughout the build process. 

Lenders and Insurance

The majority of the mainstream residential mortgage lenders accept the PCC & LDI. You can find the current list of lenders by viewing the CML Lenders Handbook at: https://www.cml.org.uk/lenders-handbook/ or view the lists below. To fully satisfy yourselves, contact the lenders direct. 

PCC Lender Approval List

LDI Lender Approval List

A PCC is a certificate of compliance, which provides an option of 6 or 10 years 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.

LDI 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 often with policy conditions and exclusions.

In terms of build quality, generally, PCC’s only require properties are constructed to current UK building regulations standards, whereas LDI often requires a much higher standard of construction, with additional standards required by the Insurer to mitigate their risk.

A PCC is a much more competitively priced option with fewer conditions and no 2 year defect liability, unlike the LDI policies.

The PCC is not an insurance backed product (nor Defects Liability Insurance). However, the Professional Consultants carry specialist PI insurance in the event of a claim. The professionals are the ones administering and issuing the certificates; therefore, they must carry professional indemnity insurance for the six-year or ten-year life span of the certificate.

Remedies for defects should be sought from the builder or contractor if discovered in the first 24 months following completion of the services for both indemnity schemes, however with a PCC this is not a mandatory requirement and you are still covered, with LDI it is mandatory and the Developer is liable for all claims in the first 2 years. 

Primarily, we do everything diligently and up front to make sure that you don’t have any major structural problems in the first place. Providing a PCC is more about prevention than cure. In the event of a defect, contact should be made to Build Warranty, who will assess the issue and make its recommendations for a resolution.

n the event of a claim with LDI, a specific claims procedure must be followed with the Insurer and if there is a dispute, an Ombudsman can be appointed to reach a resolution. Details of the claims procedure is in the policy document provided.

Both PCC & LDI indemnity schemes do not cover snagging issues or items such as flaking paintwork or a faulty door handle. If the surveyor is found to be negligent in his duties, which leads to a structural problem then a claim against the Professional Consultant and their Professional Indemnity Insurance would be valid.

In the event of a claim with LDI, a specific claims procedure must be followed with the Insurer and if there is a dispute, an Ombudsman can be appointed to reach a resolution. Details of the claims procedure is in the policy document provided.

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 £2 million for each and every claim.

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

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

We are finding that because mortgage lenders ask for an indemnity scheme, more and more cash buyers are demanding them, to avoid any future financing problems.

The majority of the mainstream residential mortgage lenders accept the PCC & LDI. You can find the current list of lenders by viewing the CML Lenders Handbook at: https://www.cml.org.uk/lenders-handbook/ or view the lists below. To fully satisfy yourselves, contact the lenders direct. 

PCC Lender Approval List

LDI Lender Approval List

A PCC is a certificate of compliance, which provides an option of 6 or 10 years 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.

LDI 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 often with policy conditions and exclusions.

In terms of build quality, generally, PCC’s only require properties are constructed to current UK building regulations standards, whereas LDI often requires a much higher standard of construction, with additional standards required by the Insurer to mitigate their risk.

A PCC is a much more competitively priced option with fewer conditions and no 2 year defect liability, unlike the LDI policies.

The PCC is not an insurance backed product (nor Defects Liability Insurance). However, the Professional Consultants carry specialist PI insurance in the event of a claim. The professionals are the ones administering and issuing the certificates; therefore, they must carry professional indemnity insurance for the six-year or ten-year life span of the certificate.

Remedies for defects should be sought from the builder or contractor if discovered in the first 24 months following completion of the services for both indemnity schemes, however with a PCC this is not a mandatory requirement and you are still covered, with LDI it is mandatory and the Developer is liable for all claims in the first 2 years. 

Primarily, we do everything diligently and up front to make sure that you don’t have any major structural problems in the first place. Providing a PCC is more about prevention than cure. In the event of a defect, contact should be made to Build Warranty, who will assess the issue and make its recommendations for a resolution.

LDI follows a specific claims procedure with the Insurer, which must be followed and offers a dipute resolution in the event of a disagreement. Details of the claims procedure is in the policy document provided.

Both PCC & LDI indemnity schemes do not cover snagging issues or items such as flaking paintwork or a faulty door handle. If the surveyor is found to be negligent in his duties, which leads to a structural problem then a claim against the Professional Consultant and their Professional Indemnity Insurance would be valid.

In the event of a claim with LDI, 

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 £2 million for each and every claim.

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

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

We are finding that because mortgage lenders ask for an indemnity scheme, more and more cash buyers are demanding them, to avoid any future financing problems.

The majority of the mainstream residential mortgage lenders accept the PCC & LDI. You can find the current list of lenders by viewing the CML Lenders Handbook at: https://www.cml.org.uk/lenders-handbook/ or view the lists below. To fully satisfy yourselves, contact the lenders direct. 

PCC Lender Approval List

LDI Lender Approval List

A PCC is a certificate of compliance, which provides an option of 6 or 10 years 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.

LDI 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 often with policy conditions and exclusions.

In terms of build quality, generally, PCC’s only require properties are constructed to current UK building regulations standards, whereas LDI often requires a much higher standard of construction, with additional standards required by the Insurer to mitigate their risk.

A PCC is a much more competitively priced option with fewer conditions and no 2 year defect liability, unlike the LDI policies.

The PCC is not an insurance backed product (nor Defects Liability Insurance). However, the Professional Consultants carry specialist PI insurance in the event of a claim. The professionals are the ones administering and issuing the certificates; therefore, they must carry professional indemnity insurance for the six-year or ten-year life span of the certificate.

Remedies for defects should be sought from the builder or contractor if discovered in the first 24 months following completion of the services for both indemnity schemes, however with a PCC this is not a mandatory requirement and you are still covered, with LDI it is mandatory and the Developer is liable for all claims in the first 2 years. 

Primarily, we do everything diligently and up front to make sure that you don’t have any major structural problems in the first place. Providing a PCC is more about prevention than cure. In the event of a defect, contact should be made to Build Warranty, who will assess the issue and make its recommendations for a resolution.

LDI follows a specific claims procedure with the Insurer, which must be followed and offers a dipute resolution in the event of a disagreement. Details of the claims procedure is in the policy document provided.

Both PCC & LDI indemnity schemes do not cover snagging issues or items such as flaking paintwork or a faulty door handle. If the surveyor is found to be negligent in his duties, which leads to a structural problem then a claim against the Professional Consultant and their Professional Indemnity Insurance would be valid.

In the event of a claim with LDI, 

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 £2 million for each and every claim.

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

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

We are finding that because mortgage lenders ask for an indemnity scheme, more and more cash buyers are demanding them, to avoid any future financing problems.

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 on (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. The certificate is valid for 6 or 10 years, depending on the ocver you take and it is from date of issue. It is transferable to any future purchasers of the dwelling, but it is untimately the Property that is covered.

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 which:

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

What are the key ‘or certified’ stages?

.

  • Stage 1. DPC: All works complete to damp proof

course level

  • 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 course of the works.

A monitoring service provides you with interim (or stage) certificates, which can be used to 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 own certificate. This is because the banks are aware each flat could be sold on independently. Our quotation system builds in discounts when certifying a number of 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 practical completion build stage) This document is essential and required prior to issue of our PCC!