FWJ Posted October 3, 2012 Share Posted October 3, 2012 I'm in the process of buying a pretty standard second floor of four 2 bed flat. Got the mortgage sorted (I thought) and got a good quote for building/contents insurance - all done over the phone. Just happened to mention that there was a wee clothes shop on the ground floor. "Oh. We don't insure flats above commercial properties." <Click> Ok, to be fair, he gave me the number of a broker who is going to send out some paperwork. To be on the safe side I phoned the mortgage company (*very* large, well known organisation) and things now a bit tricky there, thinks should be ok although not nearly as straightforward. What gets me is - I was never asked if it was over a shop. There must be thousands of flats in Scotland over commercial properties - virtually every town centre flat in the country. I never knew this could be an issue. Was genuinely astonished. Is it common knowledge? If I hadn't, by pure chance, mentioned this would my insurance have been invalidated? Link to comment Share on other sites More sharing options...
Paolo Posted October 3, 2012 Share Posted October 3, 2012 I'm in the process of buying a pretty standard second floor of four 2 bed flat. Got the mortgage sorted (I thought) and got a good quote for building/contents insurance - all done over the phone. Just happened to mention that there was a wee clothes shop on the ground floor. "Oh. We don't insure flats above commercial properties." <Click> Ok, to be fair, he gave me the number of a broker who is going to send out some paperwork. To be on the safe side I phoned the mortgage company (*very* large, well known organisation) and things now a bit tricky there, thinks should be ok although not nearly as straightforward. What gets me is - I was never asked if it was over a shop. There must be thousands of flats in Scotland over commercial properties - virtually every town centre flat in the country. I never knew this could be an issue. Was genuinely astonished. Is it common knowledge? If I hadn't, by pure chance, mentioned this would my insurance have been invalidated? Hard to say without looking at the T&Cs. There is probably snallnprint regarding commercial premises as they do view it as higher risk. Mortgage lenders will probably be OK, but may want more information. A lot could depend on the title deeds to as to where your property starts and ends and what you are responsible for. Link to comment Share on other sites More sharing options...
The Old Tolbooth Posted October 3, 2012 Share Posted October 3, 2012 When it comes to the mortgage, the lender should have picked up this info from the home/survey report (depending where you're situated), and advised accordingly if they lend above commercial premises or not. The reason some lenders don't like lending above commercial premises is because one day it can be a nice safe wee business which sells kids toys or wooly jumpers, but next week if the lease is transferred to someone else, you could find yourself living above a fast food joint, which is a much higher risk to them. Had you not mentioned this to the insurance company, then it would be seen as a "non disclosure", and any future claim would probably have been invalidated, a question often asked when applying for home insurance is whether or not the premises is situated above commercial premises. Link to comment Share on other sites More sharing options...
BoJack Horseman Posted October 3, 2012 Share Posted October 3, 2012 You'd have to wonder what would happen if the residential property below you is bought and turned into a commercial property. Link to comment Share on other sites More sharing options...
Paolo Posted October 3, 2012 Share Posted October 3, 2012 You'd have to wonder what would happen if the residential property below you is bought and turned into a commercial property. Planning permission would probably prevent that from happening. Link to comment Share on other sites More sharing options...
BoJack Horseman Posted October 3, 2012 Share Posted October 3, 2012 Planning permission would probably prevent that from happening. Happens all the time surely? Link to comment Share on other sites More sharing options...
kingantti1874 Posted October 3, 2012 Share Posted October 3, 2012 When it comes to the mortgage, the lender should have picked up this info from the home/survey report (depending where you're situated), and advised accordingly if they lend above commercial premises or not. The reason some lenders don't like lending above commercial premises is because one day it can be a nice safe wee business which sells kids toys or wooly jumpers, but next week if the lease is transferred to someone else, you could find yourself living above a fast food joint, which is a much higher risk to them. Had you not mentioned this to the insurance company, then it would be seen as a "non disclosure", and any future claim would probably have been invalidated, a question often asked when applying for home insurance is whether or not the premises is situated above commercial premises. Correct, it's not just risky for lender but for the buyer.. Not trying to put you off but have you considered how easy the flat would be to sell if circumstances change in line with scenario John suggested? Is it really a wise purchase on thy basis or has the fact it's above a commercial resulted on a lower price ... You may already have considered all of this of course but worth the question Link to comment Share on other sites More sharing options...
FWJ Posted October 3, 2012 Author Share Posted October 3, 2012 Thanks for the replies. I suppose my first concern was that I didn't know it was an issue since I wasn't asked (never had been). Bit of a scunner if the place burnt down and the insurance didn't pay out.... When you think about it there must be thousands of flats in Scotland above shops/bars/restaurants/banks etc. I'm surprised it's not a standard question in a mortgage or insurance application. If a shop wanted to change to a (eg) chip shop wouldn't they need planning permission? Mind you I suppose if they got it not much you could do.... Link to comment Share on other sites More sharing options...
Walter Payton Posted October 3, 2012 Share Posted October 3, 2012 Planning permission would probably prevent that from happening. Not according to this account on Pie and Bovril. Link to comment Share on other sites More sharing options...
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