CRL warranty not accepted

Relfer

I was in the process of applying for a mortgage to purchase a new build flat in Woking (Colborne Place), paid for a valuation through the Halifax and received a letter from them stating that they were unable to value the property due to the CRL issues. Apparently other large lenders are taking CRL off the approved list. I was advised by my broker that I could still apply for a mortgage with Metro bank, but my fear is that Merto will catch up with the other lenders and also remove CRL from the list at some point. I therefore asked to withdraw from the purchase altogether, as I was concerned about buying the flat and then being unable to sell it on in the future. The developer refused to return my reservation fee, advising that the problem with consumer codes would be worked out by the end of this month and essentially said I have nothing to worry about. I am now in a quandary and unsure whether to proceed or not. This would be my first foot on the housing ladder and I am borrowing half of the money to fund the deposit, hence my hesitation to proceed. I was wondering if anyone that has already exchanged is now in a position where their mortgage lender has been in touch to state that they no longer accept CRL? I am still considering using a lender that do accept CRL currently but worry about what could happen if they then strike CRL from the list and unsure of what would happen next. Any guidance would be appreciated!

sal_III

The developer should refund at least part of your reservation fee, based on what stage of the process they are. Look at the details about that in the reservation form.

Not only that the property might be harder to sell in the future, there is a chance that your warranty might not hold. If CRL don't sort this soon there will be more financial trouble for them, since they don't have insurance to cover their warranty.

Also you mentioned that you are borrowing half of your deposit - make sure to mention that to your mortgage Lender and be prepared for them to be unhappy about the fact.

SallyDucati

I think some insurers are now accepting CRL cover as long as it is not underwritten by Alpha (eg. Nationwide). I'm also currently in the process of buying a completed new build house with the original warranty provided by CRL/Alpha. CRL have been very slow to get back to the developers with a re-quote and looking at reviews on their facebook page seems that is par for the course at the moment.

The developers I am buying off are now looking for cover with another broker/provider as they are fed up waiting and losing sales. Maybe get an update on what the developers are doing about alternative cover, I think going with a different provider is the best solution in my case as CRL will no longer be involved.

Warrantyexperts

The issue with CRL warranties is that the insurer is no longer trading. Therefore cover with any warranty going through the build process or having been issued with a CRL/Alpha warranty in the last 10 years will not have any insurance. From the market I understand lenders are wising up to this and are no longer accepting CRL Warranties that are backed by Alpha, whether that's a new build or a property going through a sale. The only potential recourse for a holder of a CRL/Alpha warranty is the potential to claim through the Financial Services Compensation Scheme but this is complicated by Alpha being a Danish company registered with the Danish Financial Services authority. The position is still unclear on this but holders of such warranties are advised to seek professional guidance.

There are alternative providers who will provide cover for projects under construction or completed but you should expect to pay an increased premium with insurers. The insurers are inundated with enquiries of this nature at the moment and are slow to respond as a result so the sooner you approach them the better.

The message is, and should always be, seek independent professional insurance broker advice. Particularly in this situation where a long term insurance is required to satisfy lenders. Alpha were an unrated offshore insurer and as a result insurance brokers would not place cover with them. Why use Alpha when there are UK based financially strong insurers available?

More information is available online if you need it with specialists in this area updating their blogs and news items as the situation develops.

orlatron

Relfer wrote: »

I was in the process of applying for a mortgage to purchase a new build flat in Woking (Colborne Place), paid for a valuation through the Halifax and received a letter from them stating that they were unable to value the property due to the CRL issues. Apparently other large lenders are taking CRL off the approved list. I was advised by my broker that I could still apply for a mortgage with Metro bank, but my fear is that Merto will catch up with the other lenders and also remove CRL from the list at some point. I therefore asked to withdraw from the purchase altogether, as I was concerned about buying the flat and then being unable to sell it on in the future. The developer refused to return my reservation fee, advising that the problem with consumer codes would be worked out by the end of this month and essentially said I have nothing to worry about. I am now in a quandary and unsure whether to proceed or not. This would be my first foot on the housing ladder and I am borrowing half of the money to fund the deposit, hence my hesitation to proceed. I was wondering if anyone that has already exchanged is now in a position where their mortgage lender has been in touch to state that they no longer accept CRL? I am still considering using a lender that do accept CRL currently but worry about what could happen if they then strike CRL from the list and unsure of what would happen next. Any guidance would be appreciated!

Hi Relfer,

My partner and I are in the same boat as you - we are also purchasing at Colborne and are now on hold waiting for some news on when this will be resolved. Have you had any further updates for them or have you decided to pull out of the purchase entirely?

nic_wills

We are in the process of building our own house we had CRL warrenty you need in place we got our mortgage, they tol us we were with alpha an we needed to get a different policy we paid £2200 in February! But despite weeks of getting in touch we are always put to an answer machine or on hold with nobody answering our agent Carlos Montana seems to have disappeared off the face of the earth we are in limbo anyone else in the same predicament??

nic_wills

CRL no matter how many time you ring or email ignore you 4 weeks now we ve been trying to connect them!!!55358;!!!56620;

SallyDucati

The developers I bought from ended up going through another broker as they were getting nowhere with CRL and had ££££££s held up in stuck sales (I moved in on Friday ). Maybe try another broker? If you look at CRLs facebook page there are quite a few reviews stating the same re. not being able to get through on the phone.

Warrantyexperts

Retrospect23 wrote: »

Buy cheaper, buy twice!

We had our fingers burnt and now only use those Warranty providers with access to a minimum of A rated insurers.

We have since found One Guarantee, Q Assure and BLP to provide suitable alternatives.

There are actually around 15/16 suppliers of warranties to the market. Like any insurance the warranty providers are attracted to certain types of risk. A new build green field development is a very different risk from a canal side refurbishment of a Victorian Mill. Therefore the best policy is to speak with a specialist independent broker to assess the various aspects of your particular development.


That broker is regulated and will be able to advise on the warranties and insurers taking into account the service levels, flexibility of the provider and importantly the security of the insurer. For instance most brokers would not deal with Alpha Insurance before their collapse due to their security. As has been pointed out, buying cheap is not always best but the problem here is that the developer has no interest in whether a subsequent claim is paid because by then, the property has been sold and its no longer his problem. Therefore they will more often than not go for the cheapest with no consideration of the security of the insurer. It is a problem that the regulators should look to resolve but won't because it's a bit too complex! In the meantime go to an independent specialist broker who can give the right advice and hopefully will avoid putting anybody in this same situation.

saira172

Warrantyexperts wrote: »

There are actually around 15/16 suppliers of warranties to the market.

Do you have any idea of a company that will provide retrospective cover to a homeowner caught up in this mess?

Bought house in Nov 17 with CRL/Alpha warranty. Now trying to sell the house but have only just been informed that there is no valid insurance.

Currently there is no option to sell, change to buy to let type mortgage, change mortgage to remove ex partner, remortgage to reduce costs when the fixed fee comes to an end later this year.

So far insurance companies have said "developer is rated under 11" so they won't cover, they only deal with developers not homeowners, the house is more than 12 months old so they won't cover, or the best one "we're not sure whether we could offer you cover, we will look at this if you pay a £500 non refundable fee upfront and let you know!"

FSCS have no idea at all of any kind of timeline.