A LIST OF THE THINGS YOU MAY NEED TO CONSIDER AND DO BEFORE YOU MOVE HOUSE

What is indemnity insurance?

Mon, 12 Aug 2024 12:13:26 GMT

When you are buying or selling a property your conveyancing solicitor might suggest taking out indemnity insurance. But what is indemnity insurance, does it represent value for money, and - before you spend hundreds of pounds – do you really need it?

Indemnity insurance covers legal costs and potential damages in lawsuits. It primarily protects professionals from financial loss due to negligence, errors, or omissions in their work. But it’s also relevant when buying and selling a house when an indemnity insurance policy covers a legal defect with the property that either can’t be resolved or would be very costly and/or time consuming to do so.

For example, if you are buying a property and the seller can’t provide a building regulation certificate, your conveyancing solicitor might suggest taking out an indemnity policy to cover potential costs in the future if your local authority pursues a claim because you don’t have the certificate.

However, indemnity insurance won’t cover the cost to repair or replace something. For example, if there was a policy in place because you didn’t have the installation certificate for a boiler it wouldn’t cover repair or replacement of the boiler. For this reason, it is always important when you are buying to have the property surveyed and installations checked by a competent contractor.

What does indemnity insurance cover? An indemnity insurance policy covers a legal defect with the property that either can’t be resolved or would be very costly and/or time consuming to do so. So, instead of trying to fix the problem, you simply take out the insurance to protect you against an expensive bill in the future.

Most things covered by these policies are very low risk but would be costly if they did occur.

How long does it take to get indemnity insurance ? Obtaining indemnity insurance typically takes between 24 to 48 hours. However, the exact duration will vary depending on the complexity of the application and the insurer’s processing time. In some cases, a quote can be offered in a matter of minutes but if you need a bespoke policy and an underwriter needs to review it, it can take several days to arrange.

Common Indemnity Policies.

Restrictive Covenant Insurance Some older properties come with provisions within the deeds that limit the use of the property in some way. These are known as restrictive covenants. It could be that you can’t keep livestock, or you have to give your neighbours access to a well.

If previous owners have already breached the covenant you can still take out indemnity insurance. It will protect you if the breach causes problems in the future.

Planning Permission Insurance When a previous owner has made alterations to the property without planning permission or without proof that alterations were completed within the permitted development rights of the time, you could take out an indemnity policy. This would cover the risk of local authority enforcement. This kind of indemnity could also help if there are missing building regulation certificates.

In this scenario where building regulation certificates are missing, we would also recommend buyers get a building survey. Tell the surveyor about the issue and get them to make sure the building work is structurally safe.

Indemnity for a boiler If you are selling a home and can’t provide an installation certificate for your boiler you could get an indemnity policy to cover it. However, you may want to consider getting a gas safety certificate first – this will give more practical reassurance to your buyer about the safety of the boiler and avoids you having to pay out for indemnity insurance.

Equally, if you are buying, it is important to ensure the boiler is safe. Don’t just accept an indemnity policy. The insurance will not cover the cost of repairing or replacing the boiler.

Indemnity for windows When you have new windows or doors installed you should be provided with a FENSA certificate by the fitters. This is a legal requirement in England and Wales since 2002 and means they have been fitted in line with building regulations.

If you are missing FENSA certificates it is common practice to get an indemnity policy to protect you against any losses if your local authority takes enforcement action against you because the window installation doesn’t comply with building regulations.

You can find out more about the paperwork that should be handed over with our guide to documents you need to sell your house.

Other common reasons for indemnity insurance:

Chancel repairs. Where a property is near a church the owner could be liable for costs if the church needs repairs. Indemnity insurance would cover those costs.
Absence of easement. This is where you have to cross someone else’s land to reach your property. If the ‘right of easement’ (permission to travel over that land) hasn’t been granted, indemnity insurance protects you from loss of value.
Insolvency. If someone has given you money to help with your deposit, you could need indemnity insurance. Because, if that person is ever declared bankrupt, their creditors could make a claim on your property. The insurance could protect you from lost value if this occurred.
Absent freeholder. If you’re buying a house with an absent freeholder, your seller might offer to take out Absentee Landlord Indemnity insurance. This covers you against the risk of if the landlord or their successor reappears and makes a claim against you for unpaid obligations from your lease such as the ground rent. Many mortgage lenders will require you to get an Absent Landlord Indemnity Policy for them to consider lending to you.

Who is covered by indemnity insurance? An indemnity policy covers the person or people buying the property and their successors. If you are taking out a mortgage on the property, it also covers your lender.

Can you invalidate indemnity insurance? Have you taken out an indemnity insurance to protect you from a problem with your property? Be careful who you tell. It is a common clause in policies that you will invalidate it if you reveal the problem to a third party.

Let’s say you’ve taken out a policy to cover you for a building alteration that doesn’t have planning permission. If you then applied for retrospective planning permission, your insurance would be invalidated.

How much does indemnity insurance cost? The price of indemnity insurance varies. Both the value of your property and what the policy will cover will affect the premium. A one-off policy to cover a risk of chancel repairs could cost you a few pounds. But, an indemnity to cover building work that doesn’t have the right certificates could cost several hundred pounds. Typically, indemnity insurance costs between £20 to £300.

Sadly, this is one insurance policy where you can’t hit the comparison websites to find a better deal. Specialist insurance firms offer indemnity insurance. So, your solicitor or conveyancer will simply present you with a quote.

Who should pay? This is up for negotiation. Indemnity insurance benefits the new owner so there is an argument for the buyer footing the bill. Indeed, some houses have issues that have been there for years. Every new owner will assess the risk afresh and decide if they want the added protection of indemnity insurance.

In other cases, the issue may have been something the current owner has not done properly. In this case, there is an argument for the seller paying the insurance premium.

And at other times, negotiations mean the cost is split. Usually though, as the insurance is rectifying a problem that could stop the sale, the seller picks up the bill.

Can you pass on an existing policy to a new owner? Yes. You may have bought the indemnity insurance but it is tied to the property. This means you can hand it over to new owners who will continue to be protected by it.

However, if the property value increases, then you may have an additional premium to increase the cover. There is no fee for transferring the benefit of cover to the new owner.

HMRC Guidance And Warning Over Tax Avoidance Schemes

Mon, 09 Oct 2023 09:04:42 GMT

Information For Owners of Rental Property

The HMRC has published new guidance over tax avoidance schemes aimed at landlords who have set up a limited company and an accompanying LLP.

The scheme is marketed as a tax planning option available to individual property landlords to structure their property business and transfer the property Title into a Limited Liability Partnership it is sometimes referred to as a hybrid business model.

HMRC’s warns that this scheme does not work as the arrangements are primarily caught by a number of other existing tax measures, and may incur increased tax liabilities and penalties.

The Revenue says any landlord who believes they are in this arrangement and wish to get out can contact HMRC for help.

And it states: “If you’re using this or similar schemes or arrangements, HMRC strongly advises you to withdraw from it and settle your tax affairs.”

In addition, HMRC considers that a property rental business is likely to be within the exclusions from Business Property Relief at s.105(3) IHTA 1984 as it involves the ‘making or holding investments’, and the use of the hybrid business model does not change the availability of the relief here.

Anyone involved in such a scheme is advised to contact HMRC to discuss how they can settle their position by emailing spotlight63@hmrc.gov.uk and to consider taking independent professional tax advice.

The spotlight reminds promoters of the scheme that they must disclose the scheme or face penalties of up to £600 per day

For more information follow the link below

Property business arrangements involving hybrid partnerships (Spotlight 63) - GOV.UK (www.gov.uk)

SHE WAS ALMOST SCAMMED OUT OF £56,000!

Thu, 07 Sep 2023 14:42:58 GMT

This Is A Clients Experience With Using WhatsApp!

We have just been instructed by a client who instructed a fraudster posing as a conveyancer on WhatsApp.

Initially she had instructed a well-known online conveyancing company. They unfortunately had to decline her instruction when they found that they were also acting for the seller.

The client went on to WhatsApp to look for recommendations, one member of the group offered to act for her stating she was a qualified conveyancer. After a little online research, client accepts, pays £1050 deposit and so the process begins.

A few months pass, client receives an email saying it was time to exchange and client tries to deposit £56,000 via the internet in readiness for exchange, a day later funds are returned to her account. The client then goes into her local bank, deposited funds, but again the deposit is returned into her account. The client then contacts the conveyancer saying that the bank keeps returning the deposited funds; conveyancer says, ‘Don’t worry I will email you another bank account to use instead.’ At this point client becomes alarmed and proceeds to find a local conveyancer and instructs us.

When the client came into our office to complete the necessary onboarding requirements, we advised her to get her phone and computer scanned and to ensure that she has appropriate virus protection on both systems and not to use her phone to do any business at free Wi-Fi spots and most importantly to report it to Action Fraud.

Fortunately, the bank’s anti-fraud due diligence protected her from losing the £56,000, but she lost £1050 initial deposit and is now having to deal with the fact that all her personal information has been compromised and there may be further future ramifications.

The statement, ‘Don’t worry I will email you another bank account number to use instead’, is a BIG RED FLAG! No regulated, genuine legal firm would ever change their client account bank details.

PROPERTY FRAUD IS ON THE RISE – HOW TO AVOID FALLING VICTIM TO ‘SOPHISTICATED’ SCAMMERS.

Wed, 30 Aug 2023 11:49:48 GMT

STEPS YOU CAN TAKE TO PROTECT YOURSELF AGAINST PROPERTY FRAUD

PROPERTY fraud could hit record levels in 2023 - because criminals are finding "increasingly sophisticated" ways to trick homeowners.

Property fraud is when someone attempts to gain ownership of a property by impersonating the registered owner, or by using forged documents to transfer the property into their own name. Once fraudsters acquire ownership of a property, they will sell it, or raise a mortgage on it.

The rise in successful crimes may be attributable to an improvement in available technologies. This is partly due to the Land Registration Act, which was introduced in 2002 with the aim of cutting out an old-fashioned paper process. Whilst many of the reforms have been beneficial, an open electronic register has encouraged fraudsters to take advantage of the system.

Another major impact on climbing rates of property fraud is that since Covid it has become common practice to be able to purchase a property without meeting a mortgage broker, surveyor, or conveyancer in person as many are now working from home and all communication is done via emails and phone calls. This has made it even easier for fraudsters to infiltrate and impersonate one of the parties involved.

Empty houses or properties let to tenants are particularly vulnerable. Criminals will typically rent a vacant property and begin to intercept the landlord’s post before posing as the true owner and selling the house to a cash buyer. Often the Land Registry will be the first to recognize the crime, by which time it is usually too late.

Another common type of scam fraudsters use is to pretend to be buyers. They make an offer but withdraw before exchanging. Then they later use the information to forge documents and transfer the property into their names.

TYPES OF PROPERTY FRAUD

Property fraud can come in many forms, including:

When a property is sold by someone who is not the legal owner.
Property buyers being scammed into transferring money to the fraudster’s bank account.
Property investment opportunities that are too good to be true.
Quick sale companies who promise to buy your home fast, then dramatically drop the purchase price at the last minute .

WHICH HOME OWNERS ARE MOST AT RISK?

According to the Gov.uk website , you are more vulnerable to property fraud if:

You have had your identity stolen
Your property is rented out
You live overseas
Your property is empty
Your property is mortgage-free
Your property is not registered with HM Land Registry (HMLR).

The Land Registry is the definitive record of property ownership in England and Wales. If your name is on the Proprietorship Register of the Land Registry’s Official Copies, this effectively proves that you are the legal owner of that property. Digital records of your property’s title will be downloadable from the Land Registry if it was bought or mortgaged from 1998 onwards. You can check to see and download details of your property here .

If a fraudster manages to trick the professionals involved with a property transaction into believing that they are in fact the true owner of the property with a registered title, the fraudsters can then make off with the proceeds of sale. The innocent purchaser may have acquired valid title to the property, and the original owner could be left high and dry.

A fraudster will often take the following steps:

Identify a target property. The most frequently targeted properties are generally empty houses, rental properties, unmortgaged properties or properties where the owners are overseas.
Obtain fraudulent documents which will purport to “prove” that they have the identity of the property owner. Often this involves applying for a replacement driving licence / passport with a substituted photograph of themselves instead of the true owner. It could even involve applying to have their name changed to match that of the owner of the property. These documents can then be used to create a bank account.
The target property is advertised for sale and a solicitor instructed (using the fraudulent ID documents). The solicitor will be authorised to complete the transaction and to transfer the funds received from the purchaser into the fraudulently created bank account.
Almost immediately, the money will be transferred through a series of different bank accounts making the transaction trail very difficult to trace and leaving the true owner completely unaware that their property has been transferred to a new owner.

Intervening to stop this chain of events can be very difficult. While solicitors are required to satisfy themselves that their clients are who they say they are, if the documents presented to them have been fraudulently obtained and the photographs match the person giving instructions, even with due diligence, it is almost impossible to detect any wrongdoing.

SO WHAT CAN YOU DO?

Be careful about identity theft.

Due to the Money Laundering Act 2018 clients must produce their identity documents to their solicitor when buying or selling a home. At Graham Smith Property Lawyers we like to meet the clients in person, in our office, to verify their identity using original ID documents as we consider sending ID documentation via email high risk.

With modern technology and computer software, scanning any form of document whether it be passport, drivers’ license, bank statements, then sending them via email has its dangers.

Identity theft is a very serious problem, and can lead to all sorts of fraud. Once fraudsters have got a scanned copy of your passport, then can manipulate image and details to create a very similar, if not an identical copy. Your identity is one of your most valuable assets. If your identity is stolen, you can lose money and may find it difficult to get loans, credit cards or a mortgage.

As for what a person can do with your now with your stolen identity, this is enormous.

Your name, address and date of birth provide enough information to create another ‘you’. An identity thief can use a number of methods to find out your personal information and will then use it to open bank accounts, take out credit cards and apply for state benefits in your name.
Your stolen identity can be used to launder money and implicate you in crimes which you did not commit, like property fraud. It can also be used to create fraudulent companies.
Your identity could be sold on to third parties so they too can implicate you in illegal transactions
Your passport, drivers’ license and bank statements, are a very powerful documents, that is why we take great care in protecting you.

SAFEGUARDING AGAINST EMAIL HACKING

Email hacking is a method used by fraudsters to intercept emails between a person in the process of buying a property and that person’s conveyancing solicitor. The purpose of intercepting the emails is to alter bank details referred to in the correspondence, so that funds are transferred by the buyer to the fraudster’s account.

Here is how to protect yourself:

Cross check any bank details sent to you via email with any sent in the post. If the bank details differ, ring your solicitor to query them.
If you are told via email that bank details have changed, query this with your solicitor by phone.
Do not use public Wi-Fi when exchanging emails regarding your property purchase; public Wi-Fi can be easier to hack into.
Use strong passwords on your email accounts and ensure you have anti-virus protection on your devices.

IF YOU RENT OUT A PROPERTY OR OWN A HOLIDAY HOME

Make sure that the Land Registry has your up to date correspondence address, not the address of the property. You can register up to 10 addresses with the Land Registry including an email address.

OBTAIN A RESTRICTION AGAINST TITLE.

Whether you live or do not live at the property you can register a ‘restriction’ against the title. This means that no sale or re-mortgage of the property is to be registered without a certificate signed by a conveyancer, who is satisfied that the person who executed the document is the actual owner. There is no fee for this if you do not live in the property, but if you live in the property the registration fee will cost £40. Obtaining a restriction against title might be something worth considering while you are going through the conveyancing process.

There are steps that a property owner can use to protect themselves from the likelihood of this happening.

If you are the owner of a property that is unmortgaged, you live abroad, have property sitting empty or rent out your property, then extra care should be taken as your property is at higher risk from this type of fraud.

As a property owner you should do the following to reduce your risk:

Check that your property is registered with the Land Registry . You will have to pay a £3 fee to access these documents. Properties that are least likely to be registered are those that were mortgaged or sold before 1990.
If your property is not registered, you will need to make an application for first registration using form FR1 . The fee payable will depend on the value of the property. You can find this out by using the Land Registry’s fee calculator .
If your property is registered, ensure that your contact details on the Land Registry are where you are currently living. Often people make the mistake of their contact details being at the property itself which makes it easier for fraudsters to intercept letters or indeed for notifications of fraud to be sent to your property without you ever reading them.
Sign up to the Land Registry Property Alert Service . If you put an alert on your property and ensure that your contact details are up to date, the service will alert you by email when searches and applications are made against the property you are registered to receive updates from. This service does not block these applications but warns you that someone might be making them without your permission. This service is useful for landlords and individuals with property portfolios as it is possible to register and monitor up to 10 properties.
You can also put a restriction on the title deeds of your property which can stop HM Land Registry from registering a sale or mortgage on your property without the certification of a conveyancer or solicitor that the application was made by you. If you are a business owner or do not live at the property you can request the restrictions without paying a fee. If you live at the property , the fee is £40 and the application forms must be sent to HM Land Registry by post.

If you have any concerns in relation to this you should not hesitate in reporting the matter to the Land Registry (they have a Property Fraud line – 0300 006 7030), to Action Fraud and also to your local police.

Please follow the link below to find out how you can protect yourself and you will receive an email if anyone attempts to deal with your property title.

Protect your land and property from fraud - GOV.UK (www.gov.uk)

REMEMBER THE OLD PROVERB - FOREWARNED IS FOREARMED (prior knowledge of possible dangers gives one a tactical advantage) and we suggest that you send your family and friends who own property this link so that they also can protect themselves.

GOT THE DREAM HOME BUT DON'T FORGET ABOUT INSURANCE

Tue, 05 Nov 2019 16:12:45 GMT

WHEN MOVING HOUSE THINK ABOUT YOUR INSURANCE COVER Tricia Miller

Are you aware that you become legally responsible for your new property on the day of exchange? That is why it is important that you ensure that you have buildings and contents insurance arranged on the day of exchange.

Buildings and contents policies are available separately, but you may save some money by opting for a combined policy.

TRANSFERRING AN EXISTING POLICY

Contact the insurance company you have your current building and homes insurance with as soon as possible, and definitely a couple of weeks before you anticipate exchange of contracts will happen and ask if your existing policy can be transferred to the new house. This sounds like the easiest option, but there are things to consider that can affect the premium. For instance:

• The size of your new house – if it’s bigger and valued higher than your current home it will cost more to insure.

• The postcode – being in an area where burglary rates are high will push up costs.

• Switching from one house to another house in the middle of a deal. Check if there’s a switching fee on your existing policy.

First time buyers should always shop around for the best price for a new policy. And even if you have an existing policy, it’s worth investigating whether another company would offer a better deal. Just check that there are no cancellation fees on your existing policy that would negate any savings.

COMPARE COVER

When it comes to insurance, it’s easy to be swayed by price alone, but cheaper policies may not offer you the cover that you need. It’s important to get an accurate valuation of your property as well as its contents, so that you can choose a policy that provides sufficient cover.

Take some time to study and compare what each policy offers you – comparison websites make it easy.

Other things to consider:

• Does your insurance cover property you’re putting into storage?

• Is your current house insured if the exchange date for old and new properties is different?

INSURANCE FOR MOVERS

Check that your contents policy also covers loss of or damage to your property during the move. Most removal companies will have their own insurance, but it may only cover the things that they have packed. If you’re planning to do the move yourself, or want to pack the boxes yourself, you will have to arrange your own insurance. In both instances, always check the policy excess.

When you’re booking a removal company ask about their insurance policy and make sure that they’re fully insured for the whole move. If you have items that are particularly precious, it’s worth getting them valued as you may need to highlight them to your insurance company and buy additional cover for them.

By Tricia Miller