Home buyers pay price for that sinking feeling: Maria Scott looks at insurance problems in the property market

WHEN Harry Figov and his wife Ruth Godden set out to buy a detached house in Redhill, Surrey, they were prepared to foot the bill for a full structural survey to make sure the property had no serious defects.

But Mr Figov's bill for surveys has come to nearly pounds 800, including pounds 200 for an unexpected structural engineer's report requested by his mortgage lender, the Cheltenham & Gloucester Building Society.

Mr Figov has now paid pounds 435 for his own survey, more than pounds 180 for the valuation report for the C & G, plus the pounds 200 for the engineer's report.

He said C & G was worried about the risk of subsidence in this part of Surrey. 'My own surveyor said he looked very carefully for subsidence because he knew Redhill was a high-risk area. He couldn't find any signs of a problem. The C & G's valuation survey noted that the area had a history of subsidence and that there was some recent rendering on one of the walls,' said Mr Figov.

'C & G said we would have to have an engineer's report. They would not accept our own surveyor's report.'

Paul Trott, chief valuer at the C & G, said Mr Figov's case sounded unusual. 'We would normally only ask for an engineer's report where the valuer has given some evidence of movement and cannot confirm whether it has stopped moving.'

He said the demand for the report would probably have come from the insurance company through which the C & G was arranging cover for Mr Figov's property.

New borrowers generally buy building insurance through their lenders. And lenders require the property to be insured.

Nationwide Building Society said insurers were increasingly demanding engineer's reports from prospective borrowers, adding to the costs.

Subsidence claims cost insurers pounds 540m last year, and the companies are all becoming more wary about insuring homes in areas known to be at risk from subsidence.

While house buyers may wince at the expense of an engineer's report, a clean bill of health should at least provide peace of mind. And if a subsidence problem does develop later, there should be no grounds for the insurer to argue the claim is invalid.

Peter Hales, managing director of Nationwide Surveyors, said: 'Now we are seeing a situation where if the valuers see any sign of movement, the insurer is asking for a report.'

General Accident, one of the three insurers used by the Nationwide for buildings policies, confirmed that for about 200 post codes throughout the country, it now required an engineer's report on homes.

Donald Malcolm, manager of retail accounts at General Accident, said: 'This is mostly in the South-east, but also in Liverpool, York and Humberside. The reports cost pounds 150 to pounds 200.'

Mr Hales said the Nationwide was trying to negotiate with its insurers so that they would be more willing to accept the opinions of surveyors.

However, Mr Malcolm at General Accident argued that a surveyor's report would not cover the structure of the property and the substratum in the details required by the insurer.

(Photograph omitted)