Dream homes can turn into worst nightmares

Owning a Grade II listed Georgian manor house, with exposed beams and flagstone floor sounds like the epitome of aspirational living.

But the costs of partially rebuilding such a property if it is damaged can be astronomical, and many owners of listed properties may only find out that they have not taken out adequate insurance after it is too late. In the event of a catastrophe, such as that of the thatched listed property in Sussex which caught fire (pictured right), rebuild costs can spiral into hundreds of thousands of pounds.

According to NFU Mutual, an insurer of rural properties, three quarters of all listed properties in the UK may be underinsured.

The reason for this is that rebuild costs can exceed the value of the property. This contrasts with the rebuild costs on many conventional properties which can be far lower than the property’s market value.

For would-be buyers of listed properties, it is important to take into account annual premiums for buildings insurance which can be significantly higher.

This is because any repairs done to a listed property must be conducted in the same material, often using traditional methods. If a wall has been constructed of wattle and daub, it is not acceptable to repair it with plaster. The older the building, the more specialised the repair work, which makes it likely the owner will need to hire a skilled (and therefore pricey) craftsman to carry it out.

If you do own a listed property, try to get an insurance policy with an unlimited sum insured so that if rebuilding costs go above the original estimate you will still be covered. Specialist insurers in this area include Gauntlet, Chubb, Aon and Hiscox.

Local councils and English Heritage take this matter very seriously. Carrying out unauthorised work to a listed building is a criminal offence punishable by a fine or a prison sentence.

There are around 370,000 properties protected by listing by English Heritage, and of these the vast majority are Grade II. It is unlikely you will be able to get an unlimited sum insured on a Grade I listed building because of the complexities involved in assessing rebuild costs.

If you own a listed property, or other building with non-standard construction such as a thatched roof, the Association of British Insurers recommends you contact an insurance broker for details of specialist providers. Alternatively you could contact the Royal Institution of Chartered Surveyors (www.rics.org) and arrange for your property to be independently surveyed by a specialist surveyor.

NFU insurers offer a service that allows customers a valuation with Cunningham Lindsay. Customers can reclaim the cost of the valuation if they hold their insurance policy for five years.