Insurance product recoups homebuyer costs in case of gazumping
It’s every homebuyer’s nightmare – you are willing and able to buy a property, have an offer accepted, pay a surveyor and valuation fees, only to receive the unwelcome news that the vendor has changed their mind or accepted a higher offer.
According to research by campaign group Which?, around a third of recent home purchases have fallen through at an average cost to homebuyers of almost £3,000.
With this in mind, Canopius has launched a Home Buyer Fees insurance product to protect people against the loss of fees should a property purchase fall through.
Available through mortgage advisers, insurance advisers and IFAs, the residential insurance product costs between £49 and £67 (including the insurance premium tax IPT) depending on the level of cover selected.
It will insure someone in the following circumstances:
- The vendor drops out for a reason beyond the control of the insured customer
- The vendor is not legally entitled to sell
- Compulsory purchase is revealed in the searches
- The customer is given notice of redundancy
- The customer or someone they are buying the property with dies following an accident.
However, it won’t cover you in the case of loss of fees where you are in a ‘contract race’ so you’re up against other buyers all competing to exchange contracts first.
Canopius said it covers lost or increased conveyancing, valuation and survey fees, plus mortgage and arrangement fees in the above instances.
Depending on the level selected, customers can receive up to £3,000 back in lost fees (gold cover) or £1,500 (bronze cover).
It’s a single use cover valid for six months and a stand-alone policy, so the cost won’t be added to your mortgage.
To make a claim, customers need to keep hold of their receipts to prove the loss suffered and Canopius said customers should receive the money within around 10 days.
Similar insurance products are already on the market but Canopius said it hopes to see sales volumes grow to 30,000 to 40,000 per year after the first two years of launch.
David Swan, head of mortgage, specialist consumer products at Canopius, said: “With a proportion of UK house purchases collapsing even after offers have been accepted, we are pleased to offer homebuyers indemnity against the loss of fees in this increasingly common circumstance.
“The product is extremely cost effective, provides certainty for buyers at an emotionally and financially vulnerable time and enables them to acquire their new home without incurring any unnecessary expense in lost fees.”