Indemnity Insurance of Absentee Landlord Bank conveyancing requirements
HSBC and Barnsley BS, like many banks, have their own specific instructions when it comes to absentee landlord indemnity insurance. The purpose of this page to assist conveyancing firms on the numerous lender conveyancing panel where the title for the the property to be mortgaged incorporates absentee landlord. Solicitors should still check the CML handbook requirements for each bank, be it Halifax, Bank of Scotland or Yorkshire Building Society. 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 conveyancing practitioner on a mortgage company panel you must notify to the mortgage company (see PII of the UK Finance Lenders’ Handbook) if it becomes apparent that the landlord is either absent or insolvent. If the bank are to lend, they may ask you to take out missing landlord indemnity insurance. Lenders’ 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 to missing landlord insurance. Numerousbanks in the past 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 mortgage company accept indemnity insurance if the landlord is absent or insolvent. Examples of such requirements as follows:
| Lender | Requirement |
|---|---|
| Ahli United Bank | Please refer to Central Administration Unit |
| Aviva Equity Release | Yes |
| Coutts & Co | No, but may be accepted with our prior written approval. Please refer individual cases. See 1.11 |
| ModaMortgages | We only lend if (a) there are six or less flats in the building and (b) appropriate indemnity insurance covering the issue is in place. A copy of the insurance policy should be submitted via email to completions@modamortgages.co.uk. Please include the Mortgage Reference Number which is on the first page of the Mortgage Offer. |
| Molo Finance Buy to Let | Yes, provided that you can give an unqualified certificate of title. |
| Paragon Residential | Generally no, but:- (i) Where the security comprises a house, we may be prepared to accept a suitable indemnity policy if the landlord is absent or insolvent where the lease term is a long lease such as 999 years or similar. (ii) Where the security comprises a flat, we may be prepared to accept a suitable indemnity policy if the landlord is absent or insolvent if:- 1. the term of the lease remaining at the end of the mortgage is a minimum of 100 years; and 2. there are no more than two flats in the block; and 3. there is sufficient evidence that the owners of the flats are performing the obligations imposed on the landlord, particularly, in respect of repairing and insuring the building. |
| Pepper Money | No, Pepper Money does not lend where the landlord is absent or insolvent. |
About Absentee Landlord Indemnity Insurance
Missing Landlord Insurance is typically required when the freeholder or landlord of land or premises is insolvent, missing or where Bona Vacantia applies in relation to removed companies. This results in an inability to pay ground rent and seek permission 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 alleging breach of covenant should they subsequently surface.
Leeds Building Society and Yorkshire Bank Home Loans in common with the majority of banks, requirements are that where absentee landlord indemnity insurance is to be taken out:
- your firm is obliged to disclose to the insurer all relevant information which you have gathered
- the minimum level of cover for the policy must satisfy the requirements for the mortgage company (See Part II Handbook requirements )
- you must provide a duplicate of the absentee landlord indemnity insurance to the borrower and explain to the mortgagor why the absentee landlord indemnity insurance policy was effected and that additional insurance may be mandatory if there is supplemental borrowing against the mortgaged property
- your practice must approve the terms of the absentee landlord policy on behalf of the mortgage company
- your firm is duty bound to spell out to the mortgagor that the borrower will need to adhere to any conditions of the absentee landlord indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in respect of the insurance
- the absentee landlord indemnity insurance policy must be effected without charge to the lender
- the absentee landlord indemnity insurance policy needs to be in favor of the mortgage company and, if possible, for the benefit of the mortgagor and any subsequent registered proprietor or bank. If the borrower will not be protected by the absentee landlord indemnity insurance policy, you must advise the borrower of this fact.
- the absentee landlord indemnity insurance policy should not contain conditions that you are aware would invalidate or compromise the interests of the lender
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| Ahli United Bank | An amount equal to the value of the Mortgaged Property |
| Aviva Equity Release | Full value of the property. |
| Birmingham Bank | completions@birminghambank.com |
| Coutts & Co | The open market value of the property according to the valuation report. |
| Cynergy Bank | The market value of the property. |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Habito | Higher of purchase price or valuation |
| Hinckley and Rugby | The policy must be for our benefit and for no less than the amount lent to the borrower, including retentions, stage payments and interest. |
| 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. |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| ModaMortgages | An amount at least equal to 110% of the mortgage valuation. |
| Molo Finance 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 mortgages. |
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Parity Trust | An amount equal to at least 110% of the mortgage advance |
| Pepper Money | An amount equal to at least 110% of 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 and also the borrower(s). |
| Precise Mortgages 2026 | An amount at least equal to 110% of the mortgage valuation. |
| RBS - Virgin One | An amount equal to the value of the property. |
| Together Personal Finance | Minimum of £2,000,000.00 per claim. |
| Topaz Finance | Valuation or purchase price, whichever is higher. The policy must always benefit the borrower and any subsequent owner or mortgagee - the policy must be index linked. |
Absentee Landlord Contingency Insurance : Reflections
The full terms, conditions and exclusions for absentee landlord indemnity insurance are shown in the policy document. Conveyancing Practitioners should direct your non-lender client to the absentee landlord indemnity insurance policy paperwork. Absentee Landlord indemnity insurance is devised to grant indemnity in respect of the risks set out in the policy schedule - so it’s important to check the schedule to determine that it is in order. The duration of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. It is well worth checking that the time frame is correct.Significant features and benefits of absentee landlord indemnity insurance :
The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the absentee landlord indemnity insurance schedule. Absentee Landlord indemnity insurance Cover normally includes- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development commenced, 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 order.
- Cover for compensation incurred in any proceedings regarding the risks specified in the absentee landlord policy, including fees of a legal nature.
- Market value reduction resulting from the successful enforcement of the risks specified in the absentee landlord insurance.
- Money paid with the written consent of the insurance company to liberate the property from the risks specified in the absentee landlord indemnity insurance.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurer
- 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.
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 absentee landlord policy will not be valid.
Supplemental considerations for absentee landlord indemnity insurance
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from absentee landlord insurance may be adequate for your client.The above information is in relation to properties in England and Wales.