Michael McGuire, building warranties specialist at Octo Insurance Brokers, tells Project Scotland why he believes Scottish developers should rethink building warranties
Scotland’s construction sector is evolving, but when it comes to building warranties, it’s fair to say that many developers are missing out on opportunities to save. In a market where costs are rising, margins are tightening and speed to market is critical, it’s no longer sustainable to treat structural warranties as a tick-box exercise.
A building warranty, also known as a structural warranty or latent defect insurance, is a ten-year insurance policy arranged by developers before construction begins. The warranty provides financial protection to homeowners in the event of defects in design, materials or construction, covering faulty foundations or load-bearing walls, poor-quality materials and water ingress. It’s a requirement for mortgage approval, meaning a property cannot be sold by a developer without one.
The Scottish market is lagging behind the rest of the UK when it comes to building warranties, largely due to an over-reliance on a small number of long-standing providers. In Scotland, developers work with the local authority to meet building regulation requirements, and they tend to recommend a small number of warranty providers. Meanwhile in England, developers can use Approved Inspectors, third party building control providers, who refer a wider range of warranty providers, offering more choice.
There are several warranty providers Scottish developers have access to, so why do so many continue with the status quo? In a lot of cases, it’s down to two things: habit and a lack of awareness. Developers stick with the provider they’ve always used, without realising there are more competitive and flexible options out there. Ultimately, building warranties are a regulated product, meaning no matter who you go with, you’ll be protected.
One of the biggest cost inefficiencies in the Scottish market comes down to how building warranties are priced. The long-standing providers tend to base pricing on sale value, which inflates the premium. Meanwhile modern brokers, like Octo Insurance Brokers work with warranty providers that price based on rebuild value, which is usually significantly lower.
For example, a property selling for £300,000 might only have a rebuild value of £200,000. In that scenario, using a sale-value model means developers could be overpaying by thousands per unit, costs that stack up across a site.
The lack of awareness around alternative warranty providers and the fact that these warranty providers haven’t historically targeted the Scottish market, is holding Scotland back. Unlike other parts of the UK, where developers are increasingly shopping around for warranty services that offer both better pricing and service, Scottish developers are often presented with a narrow range of choices.
There’s a strong pipeline in Scotland for developers seeking building warranties, and by bringing to light the options available, it will help to make the market more competitive.
When putting a building warranty in place, it’s not just about price, it’s about the level of service, the technical guidance and how easy it is to get things over the line. When developers work with someone who really understands the process, someone in their corner, it makes a massive difference. This is where we are carving out a niche for ourselves at Octo. Launched earlier this year (2025) by father-son duo Richard and Domenico Davis, Octo is an independent brokerage with decades of experience. Octo’s proposition centres around bringing back relationship-led broking, offering clients personalised support, transparency and access to a wider range of options. With a head office in Glasgow, the brokerage services developers in Scotland as well as the rest of the UK.
My advice to developers is to not treat building warranties as an afterthought and don’t assume your current approach is the most cost-effective. If you haven’t looked at how your warranty is being priced, or whether there’s a better provider for your needs, now’s the time to do it.
There’s real value in working with someone who acts as an extension of your team, understands your project, your risks and provides a fair analysis of the market. It’s also good to keep in mind that brokers are working for you as the client and not for the insurer, so your best interests are always at the heart of every decision.
In a challenging market, where every saving and every decision matters, smart developers will be looking at where they can save money and start treating their building warranties as a strategic tool, not just a requirement.
Scotland’s current approach is limiting competition and driving up costs for building developers. The time is ripe to challenge outdated habits and bring more transparency and choice to the building warranty process.
