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Buildings insurance, subsidence and a withdrawn mortgage offer

We are now at the point of exchange on a property with a recent (2021) history of subsidence for which there was an insurance claim. Our mortgage lenders have withdrawn their offer based on the fact that we cannot get buildings insurance with an excess of lower than £2,500.  As is standard, the mortgage offer states the excess cannot be higher than £1,000.

It is galling as they offered us the mortgage itself with full knowledge of this history and having sent out their surveyor to assess the subsidence in person.  

Can anyone offer advice on insurers who might have a lower excess in this situation, or mortgage lenders who have different criteria?

For context, the cause of the cracking was clay-shrinkage-related subsidence as a result of vegetation. Trees were removed and a certificate of structural adequacy was issued. Before deciding to pursue the property we engaged a specialist historic surveyor and structural engineers among others (arborists, drains specialists, roofers, the list goes on...)

I appreciate many will still say cut your losses, but I'd like to feel I've tried every avenue before we do so.

Thanks for reading. 



  • MultiFuelBurner
    MultiFuelBurner Forumite Posts: 1,197
    1,000 Posts First Anniversary Photogenic Name Dropper
    edited 19 July at 6:56AM
    Have you talked to an insurance broker and set out the terms £1000 excess and no more. Let them do the leg work for you.

    You will likely have to pay a hefty yearly premium to bring the excess down but rarely do insurance companies not have a figure they will be happy to sell a product for.
  • RogerPensionGuy
    RogerPensionGuy Forumite Posts: 303
    100 Posts Name Dropper First Anniversary
    I have observed that after a building claim like subsidence or similar. 

    When the house gets a new owner the insurance sector can just wind up the prices and excess as they can.

    A few years ago a new buyer was buying a house as per above and the new to be owners requested to use same insurance that had insured the house for 20 years.

    Subsidence claim was 12 years before the sale above I mention.

    The insurance company wanted 4K annual premium for new owner and old price was £700 PA.

    The sale failed and due continuous issues with companies not wanting the risk it took 12 months to sell it and unfortunately 10% below the average price for that road area.

    My view is I would always try staying clear of buildings insurance issues and claims unfortunately. 

    I'm also guessing with the poor building standards and inspections plus climate, subsidence and similar will become more of an issue fir more people. 

  • eddddy
    eddddy Forumite Posts: 15,431
    Part of the Furniture 10,000 Posts Name Dropper
    edited 19 July at 1:20PM

    There might be 2 options to investigate...

    Option 1
    The building was insured in 2021 when the claim was made. Presumably the sellers have stuck with that same insurer who paid that claim since then.

    Normally, that same insurer would be prepared to continue insuring the property with you as the new policy holder. Have you tried that approach?

    Maybe ask the sellers to contact their insurers and ask.

    Option 2  
    Try going direct to any company brand in the Lloyds bank group (Lloyds Bank, Bank of Scotland, Halifax). They say they'll insure on normal terms, as long as any subsidence damage has been repaired, and there's no further monitoring required. Maybe get a quote online, then phone them or webchat with them to make sure.

    Lloyds Bank group is likely to be the cheapest option, as they would insure on normal terms (i.e. the same premium and same excesses as a house which hadn't had subsidence.)...

  • Danby4244
    Danby4244 Forumite Posts: 2
    Fifth Anniversary Name Dropper First Post Combo Breaker
    Thanks all for the replies.

    The vendors' existing insurance is with Adrian Flux  - they wouldn't transfer the policy and can only offer us a policy with £5,000 excess for subsidence.

    Really appreciate the recommendation of Lloyds @eddddy - I tried them but their underwriter also came back with £2,500 which we are getting a lot. 

    Many insurance companies/brokers I'm speaking to comment that it's unusual for a lender to stipulate a figure for the subsidence excess, given that the liability is with the insurer. Impossible situation really.
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