A number of major of lenders’ have overreacted to Zurich announcement to exit the Home Warranty and Building Control Market.
98 of Lenders in the UK publish their requirements to conveyancers through the CML Lenders Handbook. That handbook requires lenders to specify what building warranty policies are acceptable to them when lending on properties built in the last ten years.
In light of the Zurich pulling out of the New Home Standards Indemnity Insurance market, approximately 7 lenders – including RBS and Britannia - republished their requirements for conveyancers via the CML website. When it comes to answering the question “Please provide a list of new home warranty schemes acceptable to you” they have de-listed Zurich.
By these lenders removing Zurich from their list of acceptable warranty schemes, these lenders are effectively telling conveyancers (and therefore the public) that any property which has been built in the last 10 years with a Zurich backed guarantee insurance is no longer acceptable for lending purposes.
The fact is that Zurich have made it clear through the press that they are going to honour in full all commitments to existing customers and policyholders appears to have fallen on deaf ears as far as these lenders are concerned. Therefore, there is absolutely no reason for lenders to have de-listed Zurich from their list of acceptable warranty schemes.
It is important that if you are purchasing a new build property that has been constructed within the last 10 years with a Zurich guarantee you need to take the following advice: Speak to your conveyancer and make sure that they do not blindly accept the lender’s newly published requirements but rather, your conveyancer should speak to the Legal Department of the specific lender. The chances are that the lender did not realise the implication of the change they have made to their lending requirements and will accept the policy. If necessary speak to Zurich to see if they can assist in applying pressure on the lender to accept the policy.
I suspect that over the next couple of months the 7 lenders will realise their mistake and revert back to accepting Zurich as an acceptable building warranty.