Has your DIY voided your insurance?

As the property market cools, homeowners are tempted into renovating their existing properties rather than upping sticks. But these people don’t just face the risk of having to repair bad DIY work. By changing their property, owners could be invalidating their insurance, breaching their leasehold agreement or risking the addition of thousands of pounds to their mortgage debt.

While installing a new bathroom or kitchen can usually be done without the consent of an insurer and mortgage provider, moving a wall or converting a loft without notifying the insurer could leave homeowners unprotected should they make a claim. As well as internal changes, insurers must be told about external works such as adding a porch or conservatory.

Yet almost half (47pc) of people doing work on their property failed to check their policy before undertaking such works, according to research by price comparison website uSwitch.

The number of residential property transactions dropped by 2.6pc in the year to August, the most recent month with data available, according to HMRC. Many of those who decided to stay put will instead spend their cash upgrading their current property.

Heather Smith of LV=, an insurer, urged homeowners to notify their provider before starting any works. “It is difficult for a customer to know exactly when to tell their insurer, or whether they should tell them at all. But if any structural work is being done, our advice would be for customers to speak with their insurer in advance,” she said.

“Typically, an insurer will need to know information such as the type of work being done, how long it’s planned to take and whether the home will remain occupied.”

A customer’s premium may rise for the duration of the works, depending on the extent of the changes. It could also increase permanently on completion, Mrs Smith warned.

Leaving the property unoccupied may also have an impact on a policy. Direct Line, another insurer, will add exclusions to a policy if a house is unoccupied for 60 days or more. This means that claims for theft, malicious damage and escape of water would not be accepted. This time limit varies

Don’t move, improve – but make sure you have the right cover, warns Adam Williams

between insurers.

Jeremy Bristow, of Direct Line, said any works that involved walls being knocked down, floors being taken up or electrics being changed were potential problems. “Having scaffolding erected or builders coming and going with spare keys also increases the security risk,” he added.

There are some discrepancies between what rival insurance firms want to know. Direct Line said it needed customers to tell it when doors or windows were replaced, while LV= customers do not.

Even if it is not required under the terms of the insurance contract, Mrs Smith said homeowners should tell their insurer if minor changes have improved the property’s security. For instance, having better window locks fitted could bring down the cost of Heather Smith of LV= says that homeowners should notify an insurer of structural changes such as:

Building a porch

Adding a conservatory to your home

Building another type of extension

Doing a loft conversion

Carrying out internal structural work, such as building a new wall.

She said the insurer did not need to be notified when:

Replacing interior or exterior doors

Adding built-in wardrobes

Changing a garage door

Adding a shed to your garden

Replacing windows (if locks have improved, consider telling your insurer)

Insurers have different policies, so check before you start work. insurance when a customer renews.

Making changes to a property can also cause problems with mortgage lenders. Nick Morrey, of mortgage broker John Charcol, advised homeowners to get written permission from their lender before making any major changes to the property.

If unapproved work is carried out that later needs to be repaired, banks have the right to send builders into a property at the owner’s expense.

“This clause is in the terms and conditions of the vast majority of lenders,” said Mr Morrey. “If the borrower makes changes to the property which have an adverse effect and refuse to fix it, then lenders reserve the right to send in the builders and get it put right. The cost of which will simply be added to the outstanding mortgage balance and have interest duly charged on it.”

He said there was a particular issue for people adding a second kitchen in their home. Some banks do not allow it, as part of the property could be rented out separately, breaching the mortgage terms.

Extra bathrooms would not fall foul of a lender’s rules, but a large extension may if it is big enough to host a commercial business. “I have also seen cases where changing windows that were structurally integral to the property has caused a problem,” Mr Morrey added.

Owners of leasehold properties face further restrictions. These owners must also notify and agree any changes with their freeholder, in accordance with the lease. Mr Morrey said he was aware of cases where freeholders have notified a mortgage lender of “illegal” alterations made by the leaseholder.

“The situation has to get pretty bad for that to actually happen – but I have seen it come to that in a few instances in the past,” he said.

It is not just DIY disasters that owners risk when doing work on their property