Is Absentee Landlord Indemnity Insurance right for you ?

As mentioned in a number of articles on the Fridaysmove Conveyancing website, one popular solution to the absentee landlord issue is Absentee Landlord Indemnity Insurance.

If you are purchasing a leasehold property with an Absentee Freeholder or missing landlord, you should carefully consider the advice that your Conveyancer gives to you regarding Absentee Landlord Indemnity Insurance as there maybe consequences stemming from the inability to trace the landlord that may not be adequately compensated for by the indemnity policy.

For example, there maybe alterations or extensions carried out to the property that are important to you but maybe in breach of alteration provisions within the lease. If the alteration covenants are successfully enforced any such extensions or alterations may need to be removed. Whilst the policy provides for financial compensation for you, your enjoyment of the property may nevertheless be affected to the extent that they may wish that had never purchased the property in the fist place.  

You need to make an informed decision when it comes to the question of Absentee Landlord indemnity insurance. We suggest that you consider and talk to your Conveyancing Solicitor about  ensuring that the insurance  meets your needs what the consequences could be for you if the missing landlord reappears. Please do take into account whether the property has features which if lost, would not be adequately compensated for by a monetary payment off the insurers .    

Phil Spencer answered in a blog a question on Absentee Freeholders (where a basement and garden were not included in the lease):

"Absentee freeholders are always a nightmare, added to which the garden and basement not being included in your deeds is likely to make me think about pulling out.   I wouldn't be recommending a client of mine to proceed.   Sorry, but there'll be many more flats without these problems. When buying property, you should look to reduce as many of the risks involved as you are able. You are not able to control the risks associated with the economy or the cycles of the market but you are able to control the risks associated with your individual property. Think long term. When you come to sell it, will these issues you mention affect either the speed of your sale or the price you achieve. I'm afraid the answer has to be yes".

This is good Phil Spencer Conveyancing advice but remember that Absentee Landlord indemnity insurance will not protect you against the risks outlined by Phil Spencer.