Buildings insurance is not a legal requirement for everyone who owns a property. However, it will more often than not be a requirement of your mortgage terms – so you won’t be able to complete on your mortgage until it is in place.
This is true if you are a landlord or an owner occupier, particularly if you own part or all of the property’s freehold.
Leasehold vs. freehold
If you own a leasehold property – which is very common in places like London where flats are prevalent – building insurance might be a necessity, as it is required by the lease. However, this is usually organised by the person who owns the freehold and may be included in the service charge.
However, this is not always the case; sometimes even those who live in flats may own a share of the freehold. Therefore, you will be required to adequately protect the building in which your flat is.
Some homeowners may not have a mortgage but they do own the freehold – in this case, it’s advisable to secure buildings insurance regardless of it not being required by a mortgage lender.
Seek advice – your conveyancing solicitor will be able to guide you on the terms of your lease and your obligations when it comes to insurance.
What is buildings insurance?
In the event of any sudden or unexpected damage to your home – for example, fire, subsidence, or water damage – buildings insurance will cover the costs of repairing or rebuilding your home if it is damaged or destroyed.
For landlords, damage to your rental property can lead to a loss of income if tenants need to find other accommodation as a result, so landlord insurance will cover them, and include a level of buildings insurance.
If you’re an owner occupier or landlord and you’d like to discuss your obligation to take out buildings insurance, please give our team a call and they would be happy to assist with your requirements.