Lack of Planning Permission Indemnity Insurance Mortgage Company conveyancing requirements
Birmingham Midshires and Godiva Mortgages, like the majority of banks, dictate their own specific instructions when it comes to lack of planning permission indemnity insurance. This page sets out to enlighten residential conveyancing lawyers on the different lender approved list of panel lawyers where the title to be charged incorporates lack of planning permission. Solicitors should still check the CML handbook requirements for each mortgage company, for example Santander, HSBC or Accord. 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 property lawyer on a bank panel you must investigate (including any supplemental investigations to clarify any issues which may arise) to ensure the premises has the correct 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 restrict the property from being utilised as residential 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 judgment there is no reasonable likelihood of enforcement action and, following appropriate enquiries, and you are satisfied that the title is good and marketable and can provide an unconditional COT, the lender will not insist on Lack of Planning Permission indemnity insurance and you may go ahead without it.
Where there is such evidence and all outstanding conditions will not be satisfied by completion, where you are not able to provide an unconditional certificate of title, you should reveal this to the lender in accordance with 2.3. of the UK Finance Lenders’ Handbook P2. Each lender such as Birmingham Midshires or Godiva Mortgages may take a different stance.
About Lack of Planning Permission Indemnity Insurance
Lack of Planning Permission Cover is typically required where there is no proof of compliance with conditions can be provided for works that have been in existence for a year or more, whether a domestic residence or large commercial project. The consequential losses flow from the successful enforcement action by the local authority. In a typical conveyancing scenario the vendor 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 less expensive than applying for retrospective approval and is certainly much quicker. The downside is that the risk of enforcement action still remains.
Nationwide and Yorkshire Bank Home Loans in common with many banks, obligations require that where lack of planning permission indemnity insurance is to be put on risk:
- you are responsible for approving the terms of the lack of planning permission policy on behalf of the lender
- your firm must spell out to the borrower that the borrower will need to comply with 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 respect of the insurance
- the lack of planning permission indemnity insurance policy should be placed on risk at no expense to the lender
- the lack of planning permission indemnity insurance policy must be in favor of the mortgage company and, if possible, for the benefit of the mortgagor and any subsequent owner or mortgagee. If the mortgagor will not be covered by the lack of planning permission indemnity insurance policy, the borrower must be informed accordingly.
- the lack of planning permission indemnity insurance policy must not incorporate terms which you are aware would invalidate or prejudice the interests of the mortgage company
- the level of indemnity must satisfy the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- your practice must reveal to the insurer all relevant information which you have gathered
- your firm must send a copy of the lack of planning permission indemnity insurance to the borrower and explain to the mortgagor why the lack of planning permission indemnity insurance policy was effected and that a further policy may be required if there is further borrowing against the security of the property
| Lender | Requirement |
|---|---|
| Allied Irish Bank | |
| Coutts Finance | |
| Danske Bank | |
| First Direct | |
| Foundation Home loans | |
| Godiva Mortgages | |
| Halifax | |
| Halifax Loans | |
| Investec | |
| JPMorgan | |
| Landmark | |
| LendInvest | |
| MPowered Mortgages | |
| Parity Trust | |
| Pepper Money | |
| Platform | |
| Progressive BS | |
| The Mortgage Lender | |
| Together Personal Finance | |
| Yorkshire Bank |
Non lender-specific considerations
The full terms, conditions and exclusions for lack of planning permission indemnity insurance are explained in the policy paperwork. Conveyancing Practitioners are obliged to direct the borrower to the lack of planning permission indemnity insurance policy itself. The intention of lack of planning permission indemnity insurance is to afford indemnity in respect of the risks specified in the policy schedule - so you should check the document to determine that it is correct. 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.Significant aspects and benefits of lack of planning permission Contingency insurance :
This policy would usually provide protection from financial loss that might arise in the event of a third party making a cliam in respect of the risks identified in the policy document. Lack of Planning Permission indemnity insurance Policies should be checked for the following- Diminution in value resulting from the successful enforcement of the risks specified in the lack of planning permission policy.
- All sums paid with consent in writing from the insurance company to free the land from the risks specified in the lack of planning permission insurance.
- 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 policy, to the extent that such costs are rendered abortive by court order.
- The cost 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.
- Cover for compensation incurred in any proceedings regarding the risks specified in the lack of planning permission indemnity insurance, as well as fees of a legal nature.
- All ancillary costs and expenses incurred by the Insured with the written consent of the relevant insurance company
As is the case with all conventional insurance, 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.
Further considerations for lack of planning permission indemnity insurance
Lack of Planning Permission insurance may satisfy lenders such as Barnsley BS or Barclays 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 is in relation to properties in England and Wales.