Explore why building material costs are increasing and what this means for landlords and their property insurance.
What’s the challenge?
Did you know one of the most common misconceptions about property insurance, is that the building sum insured must correlate with the properties market value. In fact, the building sum insured must reflect the reinstatement value. Which refers to the cost of completely rebuilding a property following an insured event which destroys a property.
Therefore, it is important that your building sum insured takes into consideration the rising cost of building materials to prevent under insurance. Particularly for properties that require unusual or specialist materials, such as larger, older or grade listed buildings. Furthermore, there are numerous other costs included in this value such as the removal of debris, the clearance of the site, traffic management, access to the property and surveyor and architect fees.
RebuildCostASSESMENT.com reports ‘on average, buildings are covered for just 68% of the amount they should be in Britain. However, with rebuild costs rising rapidly, the current situation is likely to be even worse. Between July 2020 and July 2021, the cost of materials rose by 20%, according to the Office for National Statistics (ONS).
According to CLC (Construction Leadership Council) ‘Timber, cement, roofing products, bricks, blocks, insulation, steel and cable management systems remain the products in shortest supply, while global shortages of semi-conductors are a cause for concern in the lighting and appliance sectors.’
What you need to know…
- Construction costs are rapidly rising.
- Escalating shipping prices and delays at British ports causing shortages of crucial parts and materials.
- Shortages of insulation, plaster, concrete products and even power tools have been experiences in recent months.
- It is anticipated that labour and material costs will continue to rise in 2024, and therefore essential your building insurance keeps pace with these usually high levels of inflation.
How we can help?
We can provide a building insurance valuation through our association with Rebuild Cost Assessment Limited and can help ensure your properties are insured for the correct amount so you can avoid the dangers of under insurance.
Our dedicated team are on hand to answer any questions you may have and explain more about how we can help. Simply contact us at 01509 274000 or info@ajibl.com.
