When purchasing or taking security over new build residential property (whether that be a standalone unit or a development site) it is important to ascertain what measures have been put in place to ensure the quality of the build. In this article we compare the two main types of cover usually offered: a home structural warranty (for example, NHBC cover) or a professional consultant’s certificate (also commonly referred to as an “architect’s certificate”).

When dealing with residential properties the Council of Mortgage Lenders will require a new home structural warranty for any property that has been built or converted within the past ten years, or one which will be occupied for the first time. Where the property does not benefit from a new home structural warranty and has been built or converted within the past six years, a lender may accept a professional consultant’s certificate as an alternative. The Council of Mortgage Lenders prescribe that a professional consultant’s certificate can be provided by several experts who hold appropriate qualifications but, in most cases, it is provided by an architect hence the term “architect’s certificate”. The purpose of both is to provide comfort to a purchaser and/or lender that a new build property has been built to a sufficient and acceptable standard.

Professional consultant certificates are generally less expensive than a structural warranty and so it is more common to encounter this scenario in standalone builds or smaller development sites.

It is important for purchasers and lenders alike to note that a professional consultant’s certificate does not carry the same weight as a structural warranty for the following reasons:

• A professional consultant’s certificate will generally provide cover for a shorter period. Most structural warranties will provide cover for ten years whereas a professional consultant’s certificate will generally only provide cover for six.
• The level of cover provided by a professional consultant’s certificate is limited in comparison to a structural warranty. Moreover, to successfully claim against a professional consultant it would, in most cases, need to be proven that there has been some form of negligence on the consultant’s part and most would agree that a defect in the construction of a property will often have nothing to do with an architect (assuming here that the professional consultant’s certificate is provided by an architect)
• A professional consultant’s certificate will likely not provide cover to a purchaser or lender if the relevant consultant becomes insolvent.

In short, it should be recognised that a professional consultant’s certificate is inferior to a structural home warranty and both purchasers and lenders should be aware of the risks of accepting the former.

If no structural home warranty is available and a purchaser/lender seeks to rely on a professional consultant’s certificate in lieu then the following mitigating actions should be considered:

• The Council of Mortgage Lenders currently provides a prescribed template for a professional consultant’s certificate, so it is recommended that this format be used if and when required to make the property in question acceptable to a wider range of lenders on re-sale or re-finance.
• Engaging a suitable building surveyor to carry out an independent inspection prior to completion.
• The taking of collateral warranties particularly in the context of development sites.