Indemnity Insurance for Missing Building Regs

When building work has been carried out without the required building regulations approval, or when the completion certificate has gone missing, indemnity insurance is often proposed as the quickest way to resolve the issue before a property sale can proceed. It is widely used in UK residential conveyancing, but it is also widely misunderstood.

Indemnity insurance does not make non-compliant work compliant. It does not fix defects, and it does not guarantee that a building will perform safely. What it does do is transfer a specific financial risk, the risk of enforcement action by the local authority, away from the buyer and their mortgage lender. Understanding the difference matters enormously when deciding whether indemnity insurance is the right solution for your situation.

What building regs indemnity insurance covers

A building regulations indemnity policy protects:

• The buyer (and their successors in title, meaning future owners)¹
• The buyer’s mortgage lender¹
• Against the financial loss arising from a local authority issuing an enforcement notice under Section 36 of the Building Act 1984

Section 36 allows a council to require works to be altered or removed if they contravene building regulations, but only within 10 years of the work being completed (the limit was 12 months until the Building Safety Act 2022 extended it, from 1 October 2023 in England and 1 July 2026 in Wales). After 10 years, the local authority’s power to serve a Section 36 notice lapses.²

The policy also typically covers loss of value to the property if the issue comes to light and affects saleability, and legal costs involved in defending or responding to enforcement action.

What it does not cover

Indemnity insurance does not cover:

• Structural defects or safety issues arising from the work
• The cost of remediation if work is found to be substandard
• Any work that is actively being investigated by the local authority at the time of purchase
• Situations where the buyer has already approached the council about the missing paperwork

This last point is critical. Contacting the local authority is likely to invalidate cover.³ Most insurers will not issue a policy if there has been any contact with the council, because the act of enquiring draws attention to the issue and potentially triggers formal action. If you are considering indemnity insurance, instruct your solicitor before making any calls to building control.

When is indemnity insurance appropriate?

The 10-year enforcement window is the most important factor. Once 10 years have passed since the work was completed (not since the lack of approval was discovered), the council’s power to serve a Section 36 notice has expired.² This dramatically reduces the underlying risk, and most insurers are comfortable issuing policies in these circumstances.

The window is not absolute. Section 36 does not affect the right of the council, or anyone else, to apply to the court for an injunction to have work removed or altered because it breaks the regulations, and it sets no time limit on that route.² That is one reason a policy is still worth having on old work.

What building regulations indemnity insurance costs

Premiums are almost always a single one-off payment, not an annual fee. The policy runs with the property and passes to future owners.

The HomeOwners Alliance puts a typical building regulations indemnity policy at £20–£300.³ For a house selling for £500,000, it gives around £175 as the usual cost of a very straightforward policy.³ Cover for building work that lacks the right certificates can cost several hundred pounds.¹ The bands above are rough guides: the insurer prices each case on the property value and the works.

Who pays? Traditionally the seller pays, since the missing paperwork is their responsibility. However, who pays is open to negotiation: in a buyer’s market the seller usually pays; in a competitive market buyers sometimes absorb the cost to keep the deal moving.³

The regularisation alternative

For work done after 11 November 1985, you can apply to your local authority building control (LABC) for a regularisation certificate, a retrospective approval.⁴ The council will inspect the work (which may require opening up walls or lifting floors), assess compliance and, if satisfied, issue a regularisation certificate which, like a completion certificate, is evidence (but not conclusive evidence) that the work complies.⁴

Regularisation fees vary by council and include a surcharge on the normal fee: Hillingdon, for example, charges £440 to regularise a chimney breast removal and £1,210 for an extension under 40 m², with any contractor costs for opening up on top.⁵ It can take several weeks, which is often too slow for a sale with an exchange deadline. But if the work has any structural or safety dimension, an extension that may not have adequate foundations, a loft conversion where the floor joists are unknown, regularisation is far preferable, because a surveyor and the council inspector will actually assess the work rather than simply covering the legal risk.

How to obtain indemnity insurance

Indemnity insurance for missing building regs is not sold on comparison websites, it is arranged through specialist legal indemnity insurers, almost always via your solicitor or a legal indemnity broker.¹ Your conveyancer will typically do this as part of the sale process.³ Your solicitor will recommend an insurer based on the specific risk.

The application process is straightforward: the solicitor completes a proposal form describing the works, their date, the property value and the absence of enforcement contact. A quote can sometimes be given within minutes, but a bespoke policy that an underwriter has to review can take several days.¹

Questions to ask before accepting indemnity insurance

Is the work structurally sound? If there is any doubt, commission a structural engineer’s report. Indemnity insurance will not pay for remedial works.

What does your mortgage lender require? Most high-street lenders accept indemnity insurance for older works, but some have specific exclusions, particularly for extensions on listed buildings or in conservation areas. Your solicitor can check the lender’s own requirements in Part 2 of the UK Finance Mortgage Lenders’ Handbook before proceeding; the Handbook is voluntary, so a lender that does not use it has to be asked directly.⁶

How old is the work? If it was completed less than 10 years ago, discuss regularisation with your solicitor. Some insurers won’t cover very recent works at all.

Has the council been contacted? Be completely honest with your solicitor. Even an informal enquiry can invalidate a policy.

Is this a listed building? Listed building consent issues are a separate matter from building regulations and require separate advice. Some indemnity policies exclude listed structures.

Common scenarios resolved by indemnity insurance

Converted garage: A garage was converted to habitable space in 2009 without building regs approval. The current owners want to sell. The works are over 10 years old, no enforcement action has been taken, and the buyers’ solicitor has requisitioned evidence of compliance. An indemnity policy is arranged within two days at a cost of £220, the transaction proceeds.

Missing completion certificate: A kitchen extension was built in 2015 under a full building regs application, but the final inspection was never called for and no completion certificate was issued. The LABC confirms the application was opened and inspections were made at foundation stage and first-fix, but no final. An indemnity policy is issued noting partial compliance; the buyer’s lender accepts it.

Pre-1985 rear extension: A Victorian terrace has a 1970s extension with no building regs paperwork whatsoever. Regularisation is unavailable. A policy is issued at low cost reflecting the age of the works and the expired enforcement period.

In each case the insurance is a practical commercial solution to a legal gap, not confirmation that the work is safe or compliant.