Professional Consultant Certificate and New Build Warranties guide, Online higher education advice
Professional Consultant Certificate and New Build Warranties
13 July 2022
Deciding between a Professional Consultant Certificate and New Build Warranties
All new build homes and refurbished properties require a new build warranty or Professional Consultants Certificate (formerly known as Architects Certificate) if they’re due to be sold.
Although not a legal requirement, it is mandatory for mortgage lenders who are lending on the purchase of a property. Deciding between a PCC and a new build warranty requires careful consideration.
Section 6.7 of the UK Finance (UKF) handbook defines the steps when dealing with Building Standards Indemnity Schemes for new properties. In particular, it states that if a new home warranty is not available, a professional consultant certificate (PCC) may be acceptable to lenders as an alternative.
The case for Professional Consultant Certificates:
PCCs can be up to 40% cheaper when compared to the price of a new build warranty.
In addition, it can be issued relatively quickly and hassle-free to arrange.
Drawbacks of a PCC:
The certificate is valid for just six years, and although there is an option to extend this to 10 years for an additional cost, the fact is that the certificate is not an insurance policy and should never be viewed as such.
In addition, the perception is that a certificate is 40% cheaper than a warranty. That is a clever piece of framing by those who stand to benefit from a certificate being opted for. In reality, the term is 40% less than a 10-year structural warranty. In short, you receive an inferior product, which is not insurance backed, only accepted by a selection of lenders and it expires after year six.
While a warranty provides comprehensive protection covering the cost of repairs in the event of structural issues, this isn’t the case with a PCC.
In addition, there is a need to prove negligence against the consultant – This can often be difficult, time-consuming, and costly.
The certificate becomes invalid in the event the consultant goes out of business.
The market has evolved in recent years, with most mortgage lenders not accepting a PCC if a site has over 10 residential units. In addition, the market is smaller if the project is part-complete or complete.
Finally, any project funded under the Homes England scheme will not accept Professional Consultant Certificates.
So, which is better?
Securing a building warranty backed by an A-rated underwriter is always recommended. If the A-rated market will not support your development for whatever reason, you can explore the unrated warranty market. As a last resort, consider a professional consultant certificate – However, you should confirm in writing from the lender that they accept the proposed PCC.
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