HELP! Problems getting insurance on new home!

purplebiro

Any advice greatly appreciated.

FTBs In the process of buying a victorian end terrace in South Manchester. After problems getting a mortgage because of bad credit which took 3 weeks to resolve, then our mortgage company taking five weeks to process the surveys and reports we had done on the property (GMAC, to name and shame) they have now given us a mortgage offer but with the proviso that we provide evidence that the property can be insured and that the insurers have seen our reports prior to completion.

The house is sound, with only the usual problems you would expect with a house of this age. However, the guy who did our initial mortgage valuation has ticked a box that says that the area (M19 for anyone that knows lovely Levenshulme) is known for subsidence. This coupled with the fact that there are two sapling trees in the back garden (which we're going to have removed anyway and we have a report and a quote recommending that we do so) means that no insurers seem to be willing to touch us with a barge pole.

I have spoken to the original valuer and he confirmed verbally that in his opinion this property does not have subsidence and everyone I'm speaking to seems to be of the same opinion but it seems that once the insurers see that little ticked box they run a mile.

Is there anything we can do? I have just faxed over all of our reports to another mortgage broker who has sent it on to a few specialist insurers but, as you can imagine, having spent over 3 months, a lot of energy and considerable money and all of our posessions being in storage because the process has taken so long so far we've had to move out of our rented accom we are very very worried.

Someone at work has just told me that the current insurers of the property are legally obliged to provide continous cover, so if we contact them they should provide us with insurance, providing nothing has changed on the property since the last policy was taken out by the current owners? Is this true? Does anybody have any experience of how one goes about the process of sorting this out?

Sorry to go on but we are FTBs and this nightmare is really beginning to take its toll on us both. Please help, we're deperate.

huglebear

The current insurer is not legally obliged to provide cover - their contract is with the current occupant, who may or may not have had the same information as yourselves re. subsidence. It would be worth checking with them or with the EA about their insurer - tell them sale may depend on it - if you think they might help. As they presumably planted the trees that might be a good course of action anyhow as it would be useful to know why they planted them if this is now causing a problem. With regards to insurance this is not your biggest problem. Get out your Yellow Pages and you'll find a lot of insurers who will be willing to insure a property with a risk of subsidence. It will take a day of phoning around, probably less if you already know people in Levenshulme who have insurance. However you should speak to your solicitor because there are potential problems with a property suspected of subsidence - s/he will tell you that it might prove difficult to sell on unless you have it underpinned (no point unless there really IS subsidence - sounds like there's not from what you say). It is strange that the insurers will not accept the report made on the property by surveyor/valuation if it simply says it is in an area known for subsidence. Lots of surveys say that - my partner recently bought in such an area I'm an FTB but he has tons of experience and we have legal contacts, hence my knowledge), and I am currently buying a property in an area known for mining and subsidence. This was mentioned on my survey and on my mortgage lender's valuation, but the key phrase is something like 'given the local area this property shows no significant sign of subsidence or movement'. If you don't have that, ring your surveyor and get them to talk you through the survey. If you haven't had an independent RICS survey get one asap - your surveyor will provide a good report and will also be willing to talk you through it. Your lender and insurance provider will accept most RICS surveyors - we've always used Habitus but there are tons of others. Good luck, but if there really isn't subsidence you can sort this, and if there is you really don't want this property - there are others out there!

purplebiro

Thanks for the info.

Looking at your post it seems like my best course of action would be as follows -

Wait to see if the insurance broker comes back with anything. Presumably he will have access to the insurers who specialise in properties with a subsidence risk so no point me contacting them just yet.

Talk to the valuer and ask if he will put something on headed paper for us to send with the reports when they go to insurers saying 'given the local area this property shows no significant sign of subsidence or movement'. He has already told me as much over the phone.

Get a RICS survey done (we haven't, as yet, got one of these although we've had every other report under the sun including a wall ties report which would presumable highlight subsidence if it was in any way evident). I'm reluctant to get this done straight away just becuase we have already paid upwards of £1k on reports for a house that everyone agreed has NOTHING WRONG WITH IT! ARG!

I've advised the solictor that there is a problem but he agreed with me that the report really doesn't indicate there is a significany subsidence risk and he's on holiday so not all that much he can do right now.

Does this all seem sensible?

boom

I'm no insurance expert, but in my experience the question insurers ask is "does the house have any history of subsidence" (or words to the effect of). If your house hasn't had any, you can honestly answer "no".

The surveyor will be covering their back by saying that your particular area may be prone to it. If it's known that houses in that area have subsidence (or indeed landslip or flooding) then I think that the insurers will know this by virtue of the postcode and will increase premium (or refuse cover) accordingly.

You mention a tickbox - what is the wording corresponding to the tickbox?

huglebear

Your plan of action seems dead sensible. You might want to go back to your insurance broker after you've had an RICS survey because if it flags up nothing wrong then you may get cheaper insurance (though see boom's useful post re. insurance premiums). A Homebuyer's Survey will cost about 3-400 quid and is well worth it for peace of mind, also because in my limited experience it is one of the few reports immediately accepted by vendor, solicitors, lenders and insurers. It will also help if and when you come to sell the house. They can take a couple of days to get the report to you so sort it out sooner rather than later; if your solicitor is on holiday this isn't going to be resolved for a little while anyway. Might be worth going round the property with the surveyor if you can take the time and showing him/her your valuation report. They aren't in competition with each other and I found this really useful because the surveyor told me loads of stuff informally he didn't include in his report, and also clarified exactly what the valuation's mention of subsidence meant. Because I flagged up a couple of issues on the valuation report I was concerned about the surveyor was able to spend a bit more time on them and really eased my concerns.

BobProperty

Can I just say I've owned property in Levenshulme M19 and I've never known subsidence to be a problem in the area, neither have I had any difficulties getting buildings insurance.

purplebiro

I hadn't either but that's what the surveyor has said (he also said that he always indicates that on every survey he has done in that area for GMAC so he doesn't know what they're paying at making the insurance a condition of contract) and since then people have told me that the whole of one side of Albert Road (which is about 1km from the house I'm tring to buy) has subsidence in one form or another.

Mind you it's worth pointing out that GMAC also requested a mining report (this is urban Manchester, about 3 miles from the city centre, my solicitor thought it was hilarious!) so that just goes to show what planet they're on.

sarah_elton

The current insurers have no obligation to continue cover, but in many cases will do so - definitely worth trying them and explaining they already cover it with Mr such-and-such.

My parents sold their house which 2 years earlier had been flooded. The buyers contacted the insurers my parents had used who were happy to continue insuring the same property for the new owners, and that was despite a £40k claim.

BobProperty

Interesting "all" of one side of a road has subsidence but it never affected the other side????? Or the London - Manchester railway line come to that.
Albert Road is fairly long, not straight and it's one of the places I have owned a property on. Like I said, never been a problem. GMAC are a bit funny anyway I think about things like this.

I suppose insurers have to ask, but when I get asked "Is the property at risk of flooding?" and I live where I do then they tend to get answers like "Yes if the Mersey comes up by about 500 feet I might be".

purplebiro

I agree but the problem doesn;t seem to be when they ask if the property does or ever has suffered from subsidence - I can quite happily answer no to that. The problem come when I send them the valuation report, which is what GMAC have stipulated in my contrect I must do.

I just checked the wording on the report and the statement "property or surrounding area affected by subsidence, heave, settlement, landslip or flooding" is ticked "yes" and then below there "Is there any obvious risk to the property due to the proximity of trees" is ticked yes, with the following explaination below it - "we were concerned about the close proximity of a couple of mature trees and they should be inspected by an arborculturalist...the property is in an area where subsidence is known to occur...there is some evidence of internal deflection whcih can be seen by hairline cracks to the ceiling/party wall junctions"

We have had a tree survey done which found that a sapling in the garden should be removed to avoid damaging the back garden wall and teo leyland cypress should be removed bacuase they are so fast growing but no other implications and GMAC haven't given us an undertaking or a retainer on this. Nothing else has been said by anyone about subsidence until last week.

Also, it is my understanding that internal deflection isn't evidence of subsidence.

BobProperty

Sounds like the surveyor is covering his backside because of the mature trees, of which they are quite a few round there.