Why It’s Time Scottish Developers Rethink Building Warranties
4 Feb 2026
Originally published as a thought leadership piece featuring insights from Michael McGuire, Building Warranties Specialist at Octo Insurance Brokers.
Scotland’s construction sector is moving fast. Costs are rising, margins are tightening and developers are under more pressure than ever to deliver projects efficiently. Yet one area continues to be treated as little more than a formality - building warranties.
For too many developers, structural warranties remain a tick-box exercise arranged at the last minute, with little thought given to how they’re priced, who provides them or whether better options exist. In today’s market, that approach is costing businesses real money.
What is a building warranty?
A building warranty, sometimes referred to as a structural warranty or latent defect insurance, is a ten-year policy arranged before construction begins. It protects homeowners against defects in design, materials or workmanship, covering issues such as faulty foundations and structural failures.
Crucially, it’s also a requirement for mortgage approval. Without an approved warranty in place, a developer cannot sell a property. That makes it one of the most important - yet often least scrutinised - parts of any residential development.
Scotland’s market is stuck in old habits
Compared with the rest of the UK, the Scottish warranty market has changed very little over the years. Many developers rely on a small number of long-standing providers who are generally recommended through local authority building control. In England, the use of Approved Inspectors and third-party building control has created a broader ecosystem, with far more warranty providers competing on price and service.
In Scotland, choice exists, but awareness is lacking.
As a result, many developers simply renew with the same provider they’ve always used, assuming all warranties are broadly the same. The reality is very different.
How pricing models can inflate costs
One of the biggest inefficiencies comes down to how premiums are calculated. Traditional providers often price warranties based on the sale value of a property. Modern providers, however, tend to price based on rebuild value which is usually far lower.
For example:
Sale price: £300,000
Rebuild value: £200,000
If the warranty is priced on sale value, the developer could be paying thousands more per unit than necessary. Multiply that across an entire site, and the overspend becomes significant.
Because warranties are a regulated product, the core protection remains robust regardless of provider. That means developers can explore more competitive options without compromising security.
It’s about more than just price
While cost is important, the right warranty partner should offer much more:
Clear technical guidance throughout the build
Responsive support when issues arise
Efficient certification to avoid delays at completion
A proactive approach that works alongside the developer’s team
This is where Octo Insurance Brokers come in. As an independent brokerage, we’re able to access a wider range of warranty providers and focus on what actually suits the project, not what’s simply been done before.
Our approach is relationship-led: understanding the development, the risks and the commercial pressures, then presenting options that make sense both technically and financially.
A call for change in Building Warranties in Scotland
The current approach in Scotland is limiting competition and driving up unnecessary costs for developers. With greater transparency and awareness, the market can become more competitive, giving businesses access to better pricing, better service and better outcomes.
Building warranties shouldn’t be an afterthought. They should be treated as a strategic decision, just like funding, procurement or design.
If you haven’t reviewed how your warranties are being priced, or whether your current provider is really the best fit, now is the time to ask those questions.
About the author
Michael McGuire is Octo’s Building Warranties Specialist. With over a decade of experience in latent defect insurance, he supports developers from initial quote through to final certification with a hands-on, transparent approach.
About Octo Insurance Brokers
Based in Glasgow, Octo Insurance Brokers is a family-run independent insurance broker. We specialise in providing both local and national corporate insurance, surety bonds and building warranties.