At a time when pensions and investments aren't bringing the returns that are expected, many people are looking to property purchase as a form of investment, including both commercial and residential properties, and very few such purchases include any form of guarantee.
If you were looking to buy a brand new home, you would expect to have some form of guarantee provided with it. The guarantee would need to cover defective design, workmanship and materials, typically for ten or twelve years, and should be freely transferrable to subsequent owners if you were to sell the property within that period.
NHBC are the best-known provider of this type of insurance, especially in the housing market, where the demand for it is driven by mortgage lenders.
The situation is very different in the commercial property market. Businesses, pension funds and directors may all find themselves with significant amounts of money invested in a business property, but relying on a building contractor to act honourably if a problem occurs as a result of alteration or redevelopment.
Added security is essential when to protect you from the risk of liquidation, the contractor simply retiring or ceasing to trade, or the contractor's business being sold under terms which require no commitment to its customers from the buyer.
It is also possible that in times of financial hardship, a contractor may have 'cut corners' or used materials of lesser quality.
Recent trends towards renewable energy sources have also let to many new manufacturers and contractors springing up in the solar energy and wind turbine market, but newly established firms of contractors may not be able to satisfy the requirements of the existing warranty providers, such as NHBC.
Have a look at the following list of questions to see if you may be at risk:
• Thinking of buying a property from a receiver or liquidator?
• Considering buying a property where work is unfinished (the contractor doing the work may no longer exist) or a part-built project, where you will have to take responsibility to get the work finished yourself?
• Using a contractor that is a new business?
• Using a contractor or architect that is coming up to retirement?
• Thinking of 'going green', perhaps using recycled building materials or innovative design or construction methods or materials?
• Having any extensions, improvements or conversions carried out?
• Are you a tenant, who has had to sign a full repairing lease on the property you occupy?
If any of these apply to you, and you want to know more or protect yourself from these risks, contact us.