Lack of Planning Permission Indemnity Insurance Mortgage Company conveyancing requirements
Halifax and Accord, like many mortgage companies, set their own requirements when it comes to lack of planning permission indemnity insurance. The content herein aims to help domestic conveyancing firms on the various mortgage company 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 bank, be it Bank of Scotland, Barclays or Natwest. The content on this page is not focused on lack of planning permission indemnity insurance requirements.
Need help with lack of planning permission indemnity insurance from your lender?
In your capacity as a solicitor on a mortgage company panel you must conduct due diligence as to (including any additional enquiries to clarify any issues which may arise) to ensure the residence has the benefit of any necessary planning consents (including listed building consent) for its construction and any subsequent change to the property and its current use; and there is no evidence of any breach of the conditions of that or any other consent or certificate affecting the property; and that no matter is revealed which would preclude the residence from being used as domestic property or that the property may be the subject of enforcement action.
Where there is evidence of a breach of planning permission but in your professional opinion there is no reasonable prospect of enforcement action and, following reasonable enquiries, and you are assured that there is a good and marketable title and are in a position to submit an unqualified certificate of title, the lender may not require Lack of Planning Permission indemnity insurance and you may proceed.
If there is such evidence and all outstanding conditions will not be satisfied by completion, where you are not able to provide an unconditional COT, you should reveal this to the lender in accordance with 2.3. of Part two of the Council of Mortgage Lenders Handbook. Each bank such as Halifax or Accord may take a different approach.
About Lack of Planning Permission Indemnity Insurance
Lack of Planning Permission Insurance is typically needed where there is no verification of compliance with conditions can be provided for works that have existed for 12 months or more, whether a residential premises or large commercial project. The consequential losses flow from the successful enforcement proceedings by the local authority. In a typical conveyancing scenario the owner would be expected to cover the costs of the Lack of Planning Permission Indemnity Insurance, which would be taken out in the purchaser’s name as well as the bank.
A lack of planning permission indemnity insurance policy is usually more cost effective than gaining retrospective approval and is certainly significantly quicker. The downside is that the risk of enforcement action does not disappear.
Santander and Virgin Money in common with the majority of mortgage companies, obligations require that where lack of planning permission indemnity insurance is to be taken out:
- you must point out to the mortgagor 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 bank of any notice or potential claim in respect of the insurance
- the lack of planning permission indemnity insurance policy should always be for the benefit of the bank and, if possible, in favour of the borrower and any next owner or mortgage company. Where the mortgagor will not be covered by the lack of planning permission indemnity insurance policy, you must advise the borrower of this fact.
- the lack of planning permission indemnity insurance policy must be effected at no charge to the mortgage company
- the lack of planning permission indemnity insurance policy must not incorporate conditions which you recognise would invalidate or prejudice the interests of the bank
- your firm must approve the terms of the lack of planning permission policy on behalf of the mortgage company
- the limit of indemnity must meet the requirements for the mortgage company (See Part II Handbook requirements )
- your practice must provide a copy of the lack of planning permission indemnity insurance to the mortgagor and explain to the mortgagor why the lack of planning permission indemnity insurance policy was effected and that additional insurance may be necessary if there is further lending against the security of the property
- you is obliged 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 China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| 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. |
| Capital Home Loans | An amount which is at least equal to the value or the purchase price of the property, whichever is the higher |
| Darlington Building Society | The higher of value or purchase price of the property. |
| 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. |
| LendInvest | An amount at least equal to the valuation of the property. |
| LiveMore | An amount equal to the purchase price or value of the property, whichever is higher |
| Manchester Building Society | Purchases- higher of the Purchase price & valuation Re-mortgages- Loan x 115%. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| Mortgage Express | Amount of loan + 15% |
| Nationwide Building Society | Purchase Price (valuation if price is at a discount). Contact Issuing Office for advice on a remortgage |
| Platform | 110% of principal sum. |
| Reliance Bank | £1,000,000.00 |
| Rooftop Mortgages | The value of the property for mortgage purposes as disclosed in the valuation. |
| Secure Trust Bank | An amount at least equal to the market value. 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). |
| TSB | The value of the property |
| RBS (One Account) | An amount equal to the value of the property. |
| Tipton Coseley Building Society | Minimum of mortgage advance. |
General Lack of Planning Permission indemnity insurance points to consider
The full terms, conditions and exclusions for lack of planning permission indemnity insurance are explained in the policy document. Conveyancing Practitioners are obliged to direct your non-lender client 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 is essential check the document to ensure it is as it should be. The duration of this non-investment insurance contract is in perpetuity unless otherwise stated in the lack of planning permission indemnity insurance policy. It is well worth checking that the time frame is correct.Lack of Planning Permission indemnity insurance: Significant characteristics 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 Cover normally includes- 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 lack of planning permission insurance, to the extent that such costs are rendered abortive by court order.
- The cost of altering or destroying 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 sums paid with the written consent of the insurance company to free the land from the risks specified in the lack of planning permission insurance.
- Loss in market value resulting from the successful enforcement of the risks specified in the lack of planning permission insurance.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
- Cover for compensation incurred in any action regarding the risks specified in the lack of planning permission indemnity insurance, including solicitors charges.
Due diligence should extend to checking that the answers on the application form are accurate. However remote the likelihood of a claim on the mortgage company insurance policy might be you can certain that the insurer will check the details on any proposal form thoroughly before any claim is admitted.
Lack of Planning Permission Indemnity Insurance has limitations - Other considerations
Lack of Planning Permission insurance may satisfy lenders such as HSBC or Yorkshire Building Society 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.WhenIBought
Have you only discovered missing planning permission when trying to sell or remortgage? If the work predates your purchase, consider what you were told about the missing consent and any indemnity policy arranged at the time. Visit WhenIBought's page on missing planning permission to explore the issue and tell us what happened when you bought.
The content set out above covers to properties in England and Wales.