Trying to obtain Road & Sewer bonds from warranty providers can prove to be difficult at times, especially for SMEs. This is because the criteria for warranty providers can be somewhat heightened in comparison to insurers.
Warranty providers focus primarily on underwriting warranty and insolvency cover on developments and therefore are not fully dedicated to providing road and sewer bonds. If you are looking for surety bonds but cannot get them through your warranty provider, you have come to the right place.
In this article, we will take a look at why exactly developers need Road & Sewer bonds, why so many businesses struggle to obtain these bonds through warranty providers, why you should choose a Road & Sewer bond specialist, and much more.
Why Do Developers Need Road & Sewer Bonds?
The simple answer is that Road & Sewer bonds are a legal requirement for all developments across the UK and Ireland that want the responsibility of roads and sewers to be transferred to the local authority or water company. Therefore, developers need road and sewer bonds in order to transfer legal responsibility.
Road and sewer bonds are important financial instruments to help developers sell the plots on a development. This is because homeowners want to know that the development in which they are buying a house on has an adopted road, which will be maintained by the council in perpetuity.
In addition to this, if you don’t get a road or sewer bond, a cash bond alternative is required, therefore these bonds alleviate the capital intensity of a project at commencement. This is because the developers only have to pay an initial fee rather than a significant cash deposit.
Is It Possible To Obtain Road & Sewer Bonds From Warranty Providers?
Most warranty providers in the UK provide road and sewer bonds for housebuilders and developers, and therefore, we recommend most housebuilders seek their advice.
It is however common for warranty providers to not provide road and sewer bonds to housebuilders as they don’t fit their criteria.
Advantages Of Using Your Warranty Provider For Road & Sewer Bonds
While larger developers will not struggle to use their warranty provider for bonds, the advantages that it offers them are not much different. The main and sole advantage for these developers is convenience. This is because they will already have numerous warranties with the companies and already have a working relationship. Because of this relationship, Road and Sewer bond fees can often be more cost-effective when obtained through a warranty provider.
This allows them to not have to worry about underwriters or terms. This can make the process of securing these bonds much simpler and in some cases much quicker.
Disadvantages Of Using Warranty Providers For Road & Sewer Bonds
The most obvious disadvantage to using warranty providers for bonds is how inaccessible they can be for smaller developments. Warranty provider criteria is much higher as they specialise in warranty instead of just bonds. As they don’t specialise solely in bonds, the technical expertise and advice in relation to road and sewer bonds is slightly more diluted than a specialist broker who can offer additional supporting services. RS Bonds have unique offerings such as onsite technical risk reports and bond management services.
In reality, the process of using a warranty prover is very similar to the process of using a specialist Road & Sewer bond provider. In fact, due to their connection with numerous underwriters, Road & Sewer bond specialists such as RS Bonds can offer you more favourable bond terms.
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Why You Should Choose Specialist Road & Sewer Providers
Here at RS Bonds, we are proud to be the only company in the UK to specialise solely in the procurement of Road & Sewer bonds. Because of our unique position within the industry, we have extensive relationships with local authorities and water companies as well as established contacts within the surety market.
In addition to our 50 years of industry experience, guaranteed zero cash collateral, best price guarantee, exclusive underwriter partnerships and other selling points, we can also best value quotations to all our customers.
If you have approached your warranty provider and they are unable to support you or provide a bond, get in touch and we will assist you along the way. To get in touch with our team of experts, contact us at 0161 826 1145 or complete our online Road & Sewer bond application form today.
