What is indemnity insurance for lack of building regulations adherence? Find out whether you need it, what it covers and how you can get it.
You’re most likely to come across indemnity insurance for building regulations during a house sale or purchase.
It’s a type of policy that’s sometimes recommended by conveyancing solicitors because work has been done to the property - an extension has been built, for example - but there’s a concern from the local authority over lack of evidence that building regulation consent was granted.
Indemnity insurance for planning permission is available too if you lack the documents to prove that planning permission was granted.
While the paperwork is being checked for the house sale, if there’s no completion certificate showing that the appropriate building regs process has been followed, an indemnity insurance policy is often requested by the buyers’ solicitors.
The indemnity insurance is designed to protect the new homeowners (and subsequent owners) against legal action if the local authority serves a building regulation enforcement notice. Basically, the local authority can force the owner to alter or remove any work that doesn't comply with building regulations. The insurance can cover the legal costs or fees associated with this.
In practice, building regulations indemnity insurance is very rarely claimed on and some people question how useful it really is (it wouldn't, for example, cover the cost of putting any work right). But many people agree to buy a policy so that the house sale can progress. If you’re selling a property, you may find that the buyer’s solicitors and the mortgage lenders insist on an indemnity policy being in place before the sale can go ahead. If you’re buying a property, your conveyancing solicitor may advise that a policy should be purchased before you proceed.
Remember, once any buildings work has been completed for a full 12 months, the local authority can't force you to alter or remove non-compliant work (Section 36 of the 1984 Act).
Your conveyancing solicitor will usually be able to help you find a provider. The cost of a building regulations indemnity insurance policy depends on the value of the property and the work that’s been carried out, but most policies don’t cost more than a few hundred pounds.
It will be up to you and the other party in the property transaction (or your solicitors) to decide who pays for the policy. Sometimes the buyers pay as they’re the ones who will benefit from the policy, but sometimes the sellers pay as they’re the ones lacking the building regulations paperwork, and buying the policy will allow the sale to move forward. Often, the cost is split between the buyer and the seller.
Unlike other types of insurance, indemnity for building regulations only needs to be bought once: the policy will usually continue to remain valid, with no expiry date. This means that it will cover future owners of the property as well, and the fact there’s a policy in place may make the conveyancing process a little smoother when the property next changes hands.
We don’t offer building regulations indemnity insurance, so you’ll need to look for this elsewhere. However, if the property you’re buying is a rental property, we do offer a great range of landlord insurance covers. We offer insurance for commercial and residential landlords, and you can build the policy you need with covers like buildings insurance, property owners’ liability cover and landlords’ contents insurance.
Let us know if you have any more questions in the comments section, and we'll do our best to answer them.
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