Lack of Planning Permission Indemnity Insurance Mortgage Company conveyancing requirements
Barnsley BS and Yorkshire Building Society, as with the majority of mortgage companies, set their own requirements when it comes to lack of planning permission indemnity insurance. This page sets out to enlighten conveyancing firms on the numerous lender conveyancing panel where the title to be charged contains lack of planning permission. It is not a alternative for checking the CML handbook requirements for each mortgage company, whether it be Santander, Skipton or Halifax. The information on this page Is not to be read as lack of planning permission indemnity insurance advice.
Need help with lack of planning permission indemnity insurance from your lender?
As a solicitor on a mortgage company panel you must enquire (including any additional enquiries to clarify any issues which may arise) to ensure the property has the appropriate planning consents (including listed building consent) for its construction and any subsequent change to the property and its current use; and there is no apparent breach of the conditions of that or any other consent or certificate affecting the property; and that no matter is revealed which would restrict the property from being utilised as residential property or that the property may be the subject of enforcement proceedings.
Where there is evidence of such a breach or matter but in your professional opinion there is no reasonable prospect of enforcement action and, following reasonable enquiries, and you are satisfied that the title is good and marketable and are in a position to submit an unqualified COT, the bank will not insist on Lack of Planning Permission indemnity insurance and you may proceed.
Where there is such evidence and all outstanding conditions will not be satisfied by completion, where you are not able to provide an unqualified certificate of title, you should notify this to the mortgage company in accordance with 2.3. of the UK Finance Lenders’ Handbook P2. Each bank such as Barnsley BS or Yorkshire Building Society may adopt a different stance.
About Lack of Planning Permission Indemnity Insurance
Lack of Planning Permission Indemnity Insurance is typically required where there is no proof of compliance with conditions can be produced for works that have existed for 12 months or more, whether a domestic residence or large commercial project. The loss arises following successful enforcement proceedings by the local authority. In a typical conveyancing scenario the seller would be expected to pay the premium for the Lack of Planning Permission Indemnity Insurance, which would be taken out in the buyer’s name as well as the lender.
A lack of planning permission indemnity insurance policy is usually cheaper than gaining retrospective consent and is without question significantly quicker. The downside is that the risk of enforcement action does not disappear.
Lloyds TSB and Barclays like many mortgage companies, obligations require that where lack of planning permission indemnity insurance is to be taken out:
- your practice must provide a duplicate of the lack of planning permission indemnity insurance to the mortgagor and explain to the borrower why the lack of planning permission indemnity insurance policy was effected and that additional insurance could be mandatory if there is further lending against the mortgaged property
- you must explain to the borrower that the borrower is obliged to adhere to any conditions of the lack of planning permission indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in relation to the insurance
- your practice are responsible for approving the terms of the lack of planning permission policy on behalf of the bank
- the minimum level of cover for the policy must meet the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- the lack of planning permission indemnity insurance policy must be effected without charge to the lender
- the lack of planning permission indemnity insurance policy must not contain terms which you are aware would void or prejudice the interests of the mortgage company
- the lack of planning permission indemnity insurance policy must be for the benefit of the mortgage company and, if possible, in favour of the mortgagor and any subsequent registered proprietor or mortgage company. If the mortgagor will not be protected by the lack of planning permission indemnity insurance policy, the borrower must be advised accordingly.
- your practice is required to disclose to the insurer all relevant information which you have acquired
| Lender | Requirement |
|---|---|
| Atom Bank | At least the open market value of the property according to the valuation report. |
| Bank of Ireland Mortgages | The limit of indemnity must be an amount not less than the market value of the property. |
| Birmingham Midshires | An amount equal to at least 110% of the purchase price or value, whichever is higher. |
| Bluestone Mortgages | An amount at least equal to the total mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgagee. |
| Britannia | Cover to the full value of the property. |
| Fleet Mortgages | An amount at least equal to the valuation of the property. |
| Harpenden Building Society | 110% of mortgage advance |
| Hodge Equity Release | An amount equal to the purchase price or value, whichever is higher. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage, the borrower(s) and any successor in Title. |
| Intelligent Finance | An amount at least equal to the total of the initial mortgage advance plus any pre-agreed reserve. These amounts will be shown in the mortgage offer. |
| Landmark | 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. |
| LiveMore | An amount equal to the purchase price or value of the property, whichever is higher |
| Lloyds | The value of the property. |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| Metro Bank | The open market value of the property according to the valuation report. |
| ModaMortgages | An amount at least equal to 110% of the mortgage valuation. |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| The Mortgage Works | The full purchase price/value of the property whichever is higher |
| Ulster Bank | An amount equal to the value of the property. |
| 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. |
Lack of Planning Permission Contingency Insurance : Reflections
The full terms, conditions and exclusions for lack of planning permission indemnity insurance are identified in the policy paperwork. Conveyancing solicitors should point the borrower to the lack of planning permission indemnity insurance policy document. The intention of lack of planning permission indemnity insurance is to afford indemnity in respect of the risks specified in the policy schedule - so it’s important to check the document to determine that it is correct. The duration of this non-investment insurance contract is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.Lack of Planning Permission Contingency insurance: Significant aspects and benefits:
The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the lack of planning permission indemnity insurance schedule. Lack of Planning Permission indemnity insurance Policies should be checked for the following- All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- All sums paid with the written consent of the insurance company to free the land from the risks specified in the lack of planning permission policy.
- Diminution in value due to the successful enforcement of the risks specified in the lack of planning permission indemnity insurance.
- Liability for damages or compensation incurred in any proceedings concerning the risks specified in the lack of planning permission insurance, including solicitors charges.
- The out of pocket expenses of altering or demolishing 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.
- Expenses for works (including professional fees) for the purpose of the development started, prior to proceedings for the enforcement of the risks specified in the lack of planning permission policy, to the extent that such costs are rendered abortive by court decision.
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 lack of planning permission policy will be invalidated.
Other considerations for lack of planning permission indemnity insurance
Lack of Planning Permission insurance may satisfy lenders such as Coventry BS or Yorkshire Bank Home Loans 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.The above information covers to properties in England and Wales.