Bank conveyancing panel conditions re Absentee Landlord Indemnity Insurance
Halifax and Skipton, like the majority of mortgage companies, dictate their own requirements when it comes to absentee landlord indemnity insurance. The purpose of this page to assist conveyancing lawyers on the different mortgage company solicitors panel where the title to be charged includes absentee landlord. Solicitors should still check the CML handbook requirements for each lender, whether it be Virgin Money, Yorkshire Building Society or HSBC. The content on this page Is not to be read as absentee landlord indemnity insurance advice.
Need help with absentee landlord indemnity insurance from your lender?
As a solicitor on a bank panel you must notify to the lender (see Part 2 of the UK Finance Lenders’ Handbook) if it comes to your attention that the landlord is either absent or insolvent. If the mortgage company are to lend, they may require missing landlord indemnity policy. Banks’ attitudes are changing however and an increased number of banks have tightened their requirements on the minimum lease term before they are prepared to lend. LENDER monitor has noted a changing attitude towards to absentee landlord insurance. A number of lendersmortgage companies in the past stated that, they would have lent on an missing landlord, whereas they will no longer do so. See 5.14.15 to see if the mortgage company accept indemnity insurance if the landlord is absent or insolvent. Examples of such requirements as follows:
| Lender | Requirement |
|---|---|
| Accord Buy to Let | Yes, provided you are satisfied that such insurance is a solution to the difficulty identified and you can give an unqualified Certificate of Title. You must retain a copy of any insurnace policy on your file. |
| Accord Mortgages | Yes, provided you are satisfied that such insurance is a solution to the difficulty identified and you can give an unqualified Certificate of Title. You must retain a copy of any insurance policy on your file. |
| Fleet Mortgages | Yes. However, your attention is drawn to 9.1 below. |
| Rely Mortgages | We only lend if (a) there are 6 or less flats in the building and (b) appropriate indemnity insurance covering the issue is in place. |
| Saffron Building Society | Yes - subject to the terms of Section 9 of Part 1 of the Handbook, and the policy being for our benefit and the benefit of our Transferees |
| TSB | Indemnity insurance is required if we agree to lend. |
| Vida Homeloans | Vida Homeloans may accept indemnity insurance if the landlord is absent or insolvent, provided: • It meets our requirements in section 9, • There are 6 or less flats in the building, and • You must be satisfied that the insurance will make the title good and marketable and you can give an unqualified Certificate of Title |
About Absentee Landlord Indemnity Insurance
Missing Landlord Cover is normally needed when the freeholder or landlord of land or property is insolvent, absent or where the company is no longer in existence. This impacts the ability to pay ground rent and obtain permission to lease assignments and alterations to the residence. The loss arises because the landlord may request ground rent or attempt forfeiture of the lease on the premise of breach of covenant should they subsequently appear.
Accord and Leeds Building Society like the majority of lenders, obligations require that where absentee landlord indemnity insurance is effected:
- the limit of indemnity must satisfy the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- the absentee landlord indemnity insurance policy should be placed on risk without expense to the lender
- your practice must approve the terms of the absentee landlord policy on behalf of the lender
- you is required to reveal to the insurer all relevant information which you have gathered
- your practice is duty bound to point out to the borrower that the borrower must comply with any conditions of the absentee landlord indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in relation to the policy
- your practice must provide a duplicate of the absentee landlord indemnity insurance to the borrower and explain to the mortgagor why the absentee landlord indemnity insurance policy was effected and that additional insurance may be mandatory if there is additional borrowing against the mortgaged property
- the absentee landlord indemnity insurance policy should not incorporate terms which you are aware would void or prejudice the interests of the bank
- the absentee landlord indemnity insurance policy should always be for the benefit of the bank and, wherever possible, in favour of the mortgagor and any next owner or mortgagee. Where the mortgagor will not be covered by the absentee landlord indemnity insurance policy, you must advise the mortgagor of this fact.
| Lender | Requirement |
|---|---|
| Accord Buy to Let | An amount at least equal to the amount of the mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgagee. |
| Accord Mortgages | An amount at least equal to the amount of the mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgagee. |
| Bank of Scotland | Not less than mortgage advance plus 10% |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| Godiva Mortgages | Minimum of the value of the property. |
| Keystone Property Finance | An amount equal to 110% of the valuation or purchase price - whichever is the greater |
| ModaMortgages | An amount at least equal to 110% of the mortgage valuation. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| NRAM Ltd | Preference for full market value of the property, but if this level of cover is not available, will accept a minimum of the actual loan amount. You must approve the policy on our behalf. |
| Paragon Mortgages Ltd | An amount at least equal to the stated value of the Property. |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Rely Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Saffron Building Society | Higher of purchase price or valuation. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage and also the borrower(s). |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
| Scottish Building Society | Amount of mortgage plus 25%. |
| TSB | The value of the property |
| Vida Homeloans | It must be for a minimum of 110% of the purchase price or valuation, whichever is greater |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
| Zephyr Mortgages | Valuation or purchase price, whichever is higher. The policy must always benefit the borrower and any subsequent owner or mortgagee - the policy must be index linked. |
General Absentee Landlord indemnity insurance points to consider
The full terms, conditions and exclusions for absentee landlord indemnity insurance are shown in the policy paperwork. Conveyancing solicitors should point the borrower to the absentee landlord indemnity insurance policy paperwork. Absentee Landlord indemnity insurance is designed to grant indemnity in respect of the risks specified in the policy schedule - so you should check the schedule to ensure it is as it should be. The duration of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.Absentee Landlord indemnity insurance: Significant aspects and benefits:
Protection via such a policy is to cover the risk of third parties looking to enforce rights that can affect the use of a property. Absentee Landlord indemnity insurance Policies should be checked for the following- The out of pocket expenses of altering or taking down all, or part of the development and the reinstatement of the land, insofar as such alteration, demolition or re-instatement is made necessary by court order.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurance company
- Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, prior to proceedings for the enforcement of the risks specified in the absentee landlord policy, to the extent that such costs are rendered abortive by court decision.
- Loss in market value due to the successful enforcement of the risks specified in the absentee landlord policy.
- All sums paid with the written consent of the insurance company to free the property from the risks specified in the absentee landlord insurance.
- Reimbursement for compensation incurred in any action in respect of the risks specified in the absentee landlord insurance, as well as solicitors charges.
As with any insurance policy, all material information needs to be disclosed to the insurance company at the outset and throughout the policy term, otherwise the absentee landlord policy will not be valid.
Absentee Landlord Indemnity Insurance has limitations - Supplemental considerations
Absentee Landlord insurance may satisfy lenders such as Barnsley BS or Birmingham Midshires and prevent clients from from suffering financially but it cannot compensate for the stress and inconvenience the emotional suffering - after all the value of a home cannot always be measured in cash in the eyes of the owner. Information contained within this webpage is for general information for Regulated law firms in England and Wales on the the mortgage company solicitor panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the lender indemnity insurance. Whilst we endeavour to keep the information up to date and correct we do not make any representation or warranties of any kind about its completeness, accuracy, reliability or suitability. Any reliance you place on the information is strictly at your own risk. Lexsure will not be liable for any direct or indirect loss or damage arising out of or in connection with the use of this information.
An important exclusion applying to most absentee landlord Policies is if you make any contact with any party who might cause a claim under the Policy, it can invalidate the cover.
The content set out above covers to properties in England and Wales.