Lender conveyancing panel requirements re Missing Landlord Indemnity Insurance
Coventry BS and Yorkshire Bank Home Loans, like many lenders, have their own requirements when it comes to missing landlord indemnity insurance. This page sets out to enlighten residential conveyancing practitioners on the numerous mortgage company solicitors panel where the title for the the property to be mortgaged incorporates missing landlord. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each lender, whether it be Virgin Money, Barclays or Birmingham Midshires. The content on this page is not focused on missing landlord indemnity insurance requirements.
Need help with missing landlord indemnity insurance from your lender?
HSBC and Chelsea BS as with most banks, requirements are that where missing landlord indemnity insurance is to be taken out:
- your firm are responsible for approving the terms of the missing landlord policy on behalf of the lender
- you must spell out to the borrower that the borrower is obliged to comply with any conditions of the missing landlord indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in respect of the insurance
- the level of indemnity must meet the requirements for the lender (see UK Finance Lenders’ Handbook Part 2 )
- the missing landlord indemnity insurance policy must not incorporate terms which you recognise would invalidate or prejudice the interests of the bank
- the missing landlord indemnity insurance policy must be placed on risk without cost to the lender
- the missing landlord indemnity insurance policy should always be in favor of the bank and, if possible, for the benefit of the mortgagor and any subsequent registered proprietor or mortgage company. Where the mortgagor will not be protected by the missing landlord indemnity insurance policy, the borrower must be advised accordingly.
- you is required to disclose to the insurer all relevant information which you have gathered
- you must provide a duplicate of the missing landlord indemnity insurance to the borrower and explain to the borrower why the missing landlord indemnity insurance policy was effected and that additional insurance could be required if there is supplemental lending against the security of the property
| Lender | Requirement |
|---|---|
| Bank of Scotland Private | Not less than the Facility plus 10%. |
| Birmingham Bank | completions@birminghambank.com |
| Bradford & Bingley | Amount of loan + 15% |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| Habito | Higher of purchase price or valuation |
| Hampden | The open market value of the property according to the valuation report. |
| Holmesdale Building Society | 110% |
| ITL Mortgages | Minimum of the value of the property. |
| 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. |
| Leeds Building Society | An amount at least equal to the amount of the mortgage advance plus 10%. Any indemnity insurance policy must protect the borrowers, any successor in title and any Mortgagee. |
| Metro Bank | The open market value of the property according to the valuation report. |
| Mortgage Express | Amount of loan + 15% |
| National Westminster Bank | An amount equal to the value of the property. |
| 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). |
| Royal Bank of Scotland -Natwest One | An amount equal to the value of the property. |
| RBS - Virgin One | An amount equal to the value of the property. |
| Tipton Coseley Building Society | Minimum of mortgage advance. |
| Virgin | We require the full market value of the Property. Where this isn't available, we'll accept the loan amount as a minimum. |
| Yorkshire Building Society | 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. |
Missing Landlord Contingency Insurance : Reflections
The extent of the terms for missing landlord indemnity insurance are set out in the policy paperwork. Conveyancing Practitioners should direct your non-lender client to the missing landlord indemnity insurance policy itself. The intention of missing landlord indemnity insurance is to afford indemnity in respect of the risks set out in the policy schedule - so it’s important to check any draft to ensure it is correct. The lifetime 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.Missing Landlord Contingency insurance: Important characteristics 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. Missing Landlord indemnity insurance Cover normally includes- 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.
- Money paid with consent in writing from the insurance company to liberate the property from the risks specified in the missing landlord policy.
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development started, before the commencement of proceedings for the enforcement of the risks specified in the missing landlord insurance, to the extent that such costs are rendered abortive by court order.
- Cover for compensation incurred in any proceedings concerning the risks specified in the missing landlord insurance, as well as fees of a legal nature.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- Diminution in value due to the successful enforcement of the risks specified in the missing landlord indemnity insurance.
Always consider what is excluded from the missing landlord insurance e.g. does the policy cover any property that has been altered within the 12 months prior to the policy being put on risk? Does it cover legal costs?
Further considerations for missing landlord indemnity insurance
Missing Landlord insurance may satisfy lenders such as Accord or Skipton 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. Content on this webpage is for general information for Regulated law firms in England and Wales on the the lender conveyancing panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the bank 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 missing 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.