Vanishing trick brings house down: Maria Scott looks at insurance problems in the property market: Home owners are lodging claims against lenders for damage stemming from vacant adjacent properties

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The Independent Online
REPOSSESSED and abandoned homes are starting to pose a financial threat to people living in adjoining properties, according to a solicitor specialising in insurance claims.

A report issued by the Joseph Rowntree Foundation last week estimates that up to 40,000 homes have been abandoned by owners who were unable to repay their mortgages and have not handed back the keys.

Richard Houseago, a partner in the legal firm Jarvis & Bannister, acts on behalf of lenders facing insurance claims from home owners. He advises on whether the insurance cover they carry for the property is liable for a claim from the neighbours.

'I have had three such cases come through my door from lenders recently,' said Mr Houseago.

In each, the home owners have felt troubled enough to bring proceedings against the lender.

The most vulnerable properties are terraced houses. A typical problem is leaks from the repossessed house next door. At worst, these can lead to dry rot spreading into the neighbour's house.

Another serious problem is subsidence originating from the empty property which cannot be repaired properly without co-operation from the owner.

Mr Houseago points out that subsidence claims can be complicated at the best of times, but that people can face extra difficulties if the house next door is unoccupied and owned by a bank or building society. At least the lender has an insurance policy on which to claim.

If the problem is dry rot, some individuals may not be covered by their own insurance and will have to sue the owner of the repossessed house directly.

With dry rot, the aggrieved neighbour may have a claim on the common-law grounds that the rot was causing a nuisance.

But the right to do this would be more doubtful where the property was subsiding. It is difficult to argue that this constitutes causing a nuisance.

Mr Houseago recommends that people living next to a repossessed home should find out who owns it in case of a problem.