The range of new homes warranty schemes currently available in
the market is wide but if you are seeking cover to pass on to your
purchasers for a residential conversion, you may well find that the
premiums quoted are substantial and (understandably due to the
nature of existing buildings) include many exclusions. The result
is frustrating as you can end up paying for policies which offer
minimal lasting value to purchasers merely to satisfy a tick box
requirement of their mortgage providers.
However - there is an alternative for smaller schemes in the
form of a professional consultant's certificate (PCC).
This is not a new beast but one which deserves more attention with
the recent increase in residential conversions. The Council
of Mortgage Lenders (CML) publishes a standard form of PCC (which
must be used without amendment). Most lenders will accept
that form of PCC as an alternative to new homes warranty schemes on
residential conversions with up to 15 units.
A PCC is given by a consultant with appropriate qualifications.
It confirms that the consultant has monitored the works and
that insofar as could be determined from each periodic visual
inspection the property has been constructed to a satisfactory
standard and in general compliance with the drawings approved under
the building regulations.
From a consultant's point of view, a PCC is less onerous
than a collateral warranty and there is case law (Hunt and
others v Optima (Cambridge) Limited and others  EWCA Civ
714) confirming that consultants who provide certificates will
only have one duty: to take care in making the statements contained
in the PCCs. They do not have an additional tortious duty to
purchasers to take care in the work leading up to the issue of the
certificate. The liability period under a PCC is only 6 years
rather than the usual 12 under a collateral warranty. So all in
all, PCCs should be more appealing to consultants'
Of course if you are intending to use PCCs on your development,
you will want to be comfortable that the consultant in question
will be able to provide the PCC in the appropriate form on
completion of your works. You will also want to have a
'plan B' in the event that more savvy purchasers request
assurance that provision has been made for rectification of defects
in the first 12/24 months after completion (to replicate usual new
homes warranty cover to some extent). Hopefully the saving made in
choosing a PCC over a new homes warranty will enable you to
consider more creative and practical solutions for your
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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