Mortgage Company conveyancing panel conditions re Absentee Landlord Indemnity Insurance
Natwest and Barclays, as with many mortgage companies, have their own specific instructions when it comes to absentee landlord indemnity insurance. This page is designed to help property law lawyers on the various lender approved list of panel lawyers where the title to be charged incorporates absentee landlord. Solicitors should still check the CML handbook requirements for each lender, for example Godiva Mortgages, Bank of Scotland or Birmingham Midshires. The content on this page is not focused on absentee landlord indemnity insurance requirements.
Need help with absentee landlord indemnity insurance from your lender?
In your capacity as a solicitor on a mortgage company panel you must notify to the lender (see PII of the UK Finance Lenders’ Handbook) if it comes to your attention that the landlord is either missing or insolvent. If the bank are to lend, they may insist on absentee landlord indemnity insurance. Banks’ approach is changing however and an increased number of banks have changed their requirements on the minimum lease term before they are prepared to lend. LENDER monitor has noted a changing attitude towards in missing landlord insurance. A number of lendersmortgage companies previously stated that, they would have lent on an missing landlord, whereas they will no longer do so. See 5.14.15 to see if the bank accept indemnity insurance if the landlord is absent or insolvent. Examples of such requirements as follows:
| Lender | Requirement |
|---|---|
| Bank of Ireland | Only if such insurance covers us in the event of a failure to insure or repair the common parts and services. |
| Bluestone Mortgages | Please contact: Settlements Team: Bluestone Mortgages, Floor 10, 40 Leadenhall Street, London EC3A 2BJ Tel no: 0800 368 1833 Option 3 Email: settlements@bluestonemortgages.co.uk |
| Habito | Yes. Provided that you are satisfied that the insurance will make the title good and marketable. |
| Holmesdale Building Society | No. |
| Precise Mortgages | We only lend if (a) there are 6 or less flats in the building and (b) appropriate indemnity insurance covering the issue is in place. |
| Sainsbury's Bank | We will not lend where there is an absent or insolvent landlord. |
| Yorkshire Bank | Yes, if the requirements of section 9 are met. |
About Absentee Landlord Indemnity Insurance
Missing Landlord Cover is normally required when the freeholder or landlord of land or premises is insolvent, absent or where Bona Vacantia applies in relation to defunct companies. This results in an inability to pay ground rent and obtain consent to lease assignments and alterations to the premises. The loss arises because the landlord may request ground rent or take action for forfeiture of the lease claiming breach of covenant should they subsequently emerge.
Barnsley BS and Chelsea BS in common with many banks, obligations require that where absentee landlord indemnity insurance is to be put on risk:
- the minimum level of cover for the policy must meet the requirements for the lender (See Part II Handbook requirements )
- the absentee landlord indemnity insurance policy must not incorporate terms which you are aware would void or compromise the interests of the lender
- the absentee landlord indemnity insurance policy must be in favor of the mortgage company and, if possible, in favour of the borrower and any next owner or bank. Where the borrower will not be covered by the absentee landlord indemnity insurance policy, the borrower must be advised accordingly.
- your firm is obliged to reveal to the insurer all relevant information which you have acquired
- you is duty bound to point out to the borrower that the borrower must adhere to any conditions of the absentee landlord indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in respect of the policy
- your firm must supply a copy of the absentee landlord indemnity insurance to the mortgagor and explain to the borrower why the absentee landlord indemnity insurance policy was effected and that a further policy could be mandatory if there is additional borrowing against the mortgaged property
- your practice must approve the terms of the absentee landlord policy on behalf of the lender
- the absentee landlord indemnity insurance policy must be placed on risk without cost to the mortgage company
| Lender | Requirement |
|---|---|
| Accord Buy to Let | 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. |
| Accord Mortgages | 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. |
| Bank of Ireland | The limit of indemnity must be an amount not less than the market value of the property. |
| 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. |
| Habito | Higher of purchase price or valuation |
| Holmesdale Building Society | 110% |
| Landbay Partners | An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%. |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| Nedbank | You are to refer to us for specific instructions on any matter involving indemnity insurance. |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| Precise Mortgages 2026 | An amount at least equal to 110% of the mortgage valuation. |
| Sainsbury's Bank | An amount equal to the higher of the value of the property or the purchase price. |
| Skipton Building Society | For lender only cover we will accept a minimum of 110% (index-linked) of the amount of the loan. |
| TSB | The value of the property |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
| RBS - Direct Line | An amount equal to the value of the property. |
| RBS- First Active | An amount equal to the value of the property. |
| Tipton Coseley Building Society | Minimum of mortgage advance. |
| Yorkshire Bank | Open market value of property. |
Absentee Landlord Contingency Insurance : Reflections
The extent of the terms for absentee landlord indemnity insurance are explained in the policy document. Conveyancing Practitioners are obliged to point your non-lender client to the absentee landlord indemnity insurance policy paperwork. Absentee Landlord Contingency insurance is designed to afford indemnity in respect of the risks set out in the policy schedule - so you should check any draft to determine that it is in order. The duration of this non-investment insurance agreement is in perpetuity unless otherwise stated in the absentee landlord indemnity insurance policy. It is well worth checking that the time frame is correct.Significant features and benefits of absentee landlord indemnity insurance :
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. Absentee Landlord indemnity insurance Cover normally includes- All sums paid with the written consent of the insurance company to liberate the land from the risks specified in the absentee landlord insurance.
- The cost of works (including professional fees) for the purpose of the development begun, or contracted for, prior to proceedings for the enforcement of the risks specified in the absentee landlord indemnity insurance, to the extent that such costs are rendered abortive by court decision.
- Loss in market value due to the successful enforcement of the risks specified in the absentee landlord insurance.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
- The out of pocket expenses 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.
- Liability for damages or compensation incurred in any action concerning the risks specified in the absentee landlord indemnity insurance, as well as legal and associated costs.
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 absentee landlord policy will be invalidated.
Supplemental considerations for absentee landlord indemnity insurance
Absentee Landlord Indemnity policies can provide effective protection, but non-lender clients should be asked to give pause for thought and consider that the consequences of not being able to enjoy the property as anticipated may mean that absentee landlord indemnity cover will not necessarily be the right solution.The above information covers to properties in England and Wales.