Tighter insurance stalling real estate market
Wednesday 15 September 2010
House sales are becoming impossible for real estate agents in Canterbury as home buyers get hit by tougher regulations on house insurance.
By The Landlord
Braziers Property Investments principal Tony Brazier said the problem was with a stand-down period insurance companies had put on house policies in Canterbury.
Once a house is sold the new owner would have to wait 21 days before they were insured under new legislation. However, a bank would not finance a house without insurance.
"This totally stuffed all contracts last Friday. People ready to settle were unable to get insurance so they could not finance. It almost needs the Government to look at it to see if it is fair for the insurance companies to do that," Brazier said.
However, once the 21-day stand-down period was over a new home owner was not guaranteed insurance, as companies were wanting to see evidence the properties were structurally sound before they would insure them, he said.
"We don't yet know to what level that inspection will have to be.
"We have advised our sales people they will not be able to make sales unless they put in a building clause to say that it is approved by the council or has a certificate of inspection, but it is a bit early to say if that will be enough," Brazier said.
Insurance Council of New Zealand spokesman Terry Jordan predicted insurance companies would ease their regulations in about three to four weeks.
He said some companies had agreed to drop the 21-day stand-down period if the vendor and purchaser both had insurance. However, most companies would only approve insurance polices with extensive geo-tech reports.
"It is a problem insurers are acutely aware of. When they can gain some confidence in the market they will be able to relax the regulations."
However, there are no guarantees.
"If we get another big shake then we are back at square one."
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