The Key to Revitalising Consumer Confidence in New Builds

Latent Defects Insurance and Addressing the Trust Gap

Corey Nugent, CEO of Resilience Insurance, shared insights on Latent Defects Insurance (LDI) with Mike Bird, highlighting its transformative impact on the property development and real estate sectors. With LDI, homeowners are protected from structural defects in new properties, addressing a significant trust gap between consumers and developers.

Addressing the Trust Gap

Nugent explained that LDI covers structural defects discovered post-construction, providing a safety net for homeowners. This insurance model, common internationally but new to Australia, has shown promise in restoring consumer confidence. Given the staggering statistic that 53% of new buildings in New South Wales present serious defects at handover, LDI offers a much-needed solution.

Boosting Construction Standards

The implementation of LDI requires independent inspections throughout the construction process. This ensures adherence to building standards and minimises defects, ultimately saving time and resources. Developers like MVAC and Stockland have embraced this model, leading to higher quality builds and more reliable housing options.

Market Penetration and Consumer Confidence

Resilience Insurance has insured over 160 buildings, equating to around 4,000 apartments, in just two years. Their success underscores a growing consumer willingness to invest in new properties when guaranteed protection against latent defects. According to surveys, 65% of buyers are prepared to pay a premium for this assurance, indicating a significant shift in market dynamics.

Economic and Social Benefits

LDI not only enhances consumer confidence but also contributes to housing affordability. By reducing the long-term costs associated with defect repairs and legal disputes, LDI presents a financially viable model for both developers and homeowners. This insurance innovation is a crucial step towards resolving Australia's housing shortage and ensuring sustainable urban growth.

Latent Defects Insurance is revolutionising the property development landscape by bridging the trust gap between developers and consumers. As more projects adopt this model, the quality of new builds improves, and consumer confidence in purchasing off-plan properties increases. Resilience Insurance’s initiative is a testament to how innovative financial products can drive positive change in the real estate sector.