when is a listed building so damaged that it is delisted ?

[silograms]

I am the owner of Grade 2 star listed office building in a city centre which was almost totally destroyed by fire. All that remains is the front wall to the building, and certain interior features; but the building does require a total rebuild (from the basement up). The fact of the matter is that the building's location is such that the rest of the building is land locked and that the rebuild will have to be done by lifting everything over the front facade - which is 3 stories high; meaning that in this economic climate it is totally uneconomic to rebuild in the way that the planners would like me to rebuild it and so finance is not available. The insurance company have paid out but the insurable value did not envisage a total loss destroying the building in this way which would require the rebuild in this way (the cost increase is about 20%). So the question is - does anybody have any experience as to when a listed building has been so badly damaged that it is uneconomic to rebuild and one can apply for it to be delisted

 

[Gervase]

You can apply for listed building consent for permission to demolish a listed building, and can appeal to the Secretary of State if that permission is not granted. As the building is Grade 2* listed you may find little sympathy, however, as your own personal circumstances are not held to be relevant.
I'm afraid it's a salutary lesson in the dangers of under-insurance. Your broker or the insurance company should have recognised the potential significance of the listed status of the building when calculating rebuild and repair costs.
If you were to be granted permission you would also be obliged to inform the Royal Commission on Historic Monuments and give them the opportunity to visit and record the surviving features of the building before demolition.

 

[Pford75]

meaning that in this economic climate it is totally uneconomic to rebuild in the way that the planners would like me to rebuild it

Surely the building is insured for fire damage and will be covered for whatever rebuild the planners insist upon? This is why listed buildings insurance is priced at a premium and the cover required often exceeds the value of the property if sold

 

[Flyfisher]

I agree with both points above and would push back on the insurers. Listed buildings have special constraints, which they should surely have known about, especially for a G2* building and, as Gervase points out, personal circumstances and/or preferences for reparis/rebuilding cannot be guaranteed to be taken into account.

 

[Penners]

Obviously I'm not familiar with the particular circumstances of this case, but it's my experience that insurers will always require you to specify a rebuild cost for the building that you want covered. If you understate that rebuild cost, whether by mistake or design, they will adjust the policy payouts accordingly.

It may be that the freak results of this fire, which unfortunately make the rebuild cost higher than it would have been in the event of a total loss, were never envisaged when the policy was bought.

I don't think any insurer would ever adopt an open-ended "blank cheque" policy to a rebuild, simply because the planners required a rebuild that was more costly than the insured valuation of the building.

I hasten to add that this is an amateur opinion - I'm no kind of expert.

 

[middi]

I agree with everybody's comments, ultimately you are the responsible party if a listed building is damaged or needs extensive repairs. Cost does not enter the equation from an heritage point of view. As to "de-listing" the building it appears that it would be quite difficult in your case because as you describe it forms part of a " group of buildings" facade.

Good luck.

 

[skier-hughes]

We questioned the value put on our house for insurance purposes, but were told if it was "not quite totally destroyed" for some reason than it would be very expensive to rebuild in the same manner, using similar materials with high quality tradesmen.

 

[Pford75]

insurers will always require you to specify a rebuild cost for the building that you want covered

Aaaah...you have spotted one of the insurers' "tricks". They ask the policyholder (in most cases a general householder with no experience of building, surveying and perhaps not even listed buildings) to provide a rebuild cost. If they overspecify....the insurer wins, they take the premiums and provide cover for something which will never be claimed on. If they underspecify....the insurer wins, since they reduce the claim by the underinsurance.

My strong recommendation (given my history on insurance claims), is to insist that the insurer provides the figure for buildings cover themselves. If the insurer refuses....then go on record that you have provided the figure yourself in good faith (perhaps also documenting how you calculated it). In the event of a claim, you would be on strong ground with the FOS if the insurer reduced your claim because of underinsurance.

I don't think any insurer would ever adopt an open-ended "blank cheque" policy to a rebuild, simply because the planners required a rebuild that was more costly than the insured valuation of the building.

I agree that they will squeal...but in the end, if you have a good relationship with your Conservation Officer and they are insisting that the rebuild is done in a certain way, the insurers have no option. I went down this road on my own claim. Furthermore, if you have a 'guaranteed value' policy, the insurers are basically saying that "whatever it costs to rebuild....you are covered".

 

[biffvernon]

The insurance company have paid out...

There's something fishy here. What have the "insurance company have paid out" and to whom? I'm surprised that the insurance company paid a penny before getting an invoice from the builder.

 

[silograms]

Thank you for all your responses - In answer to some of the comments and questions :

1. The building was assessed for its rebuild costs by leading and renowned surveyors

2. The building was then insured for the amount that the surveyors specified on an index linked basis

3. The fire occured and the insurance company paid out what was the insured "rebuild costs"

4. This money was largely taken by the bank who had a security interest over the building and insurance proceeds

..so for the reasons previously stated (i.e. the cost of the rebuild) - because the rebuild is so extensive it is now uneconomic for a bank to relend (in these credit crunch/property value times times) to enable the rebuild as the planners/heritage would like it - it currently doesn't make commercial sense for anybody to rebuild as required in this climate

So, yes there is a potential claim against the surveyors for under assessing the rebuild costs but then we have to prove negligence etc. and all that is involved with litigation

Which then brings me to the original question - when is a building so destroyed that the "listing" is no longer really relevant .....

All that is really left is the front facia and a destroyed lobby/front door access - which in itself is the only access to the site (as their is a well (gap) between the pavement and the building) - once inside the damage goes down to the basement

By the way, we are not anti- heritage - the building was bought because of its "period appeal etc." - but the obvious thing to do right now would be to knock down the facia and rebuild in its style and look to preserve some of the internal features ensuring at all times that it doesn't become some pastiche

 

[Flyfisher]

Why is it "the obvious thing to do" to knock the remainder of the building down? I appreciate it might not make simple commercial sense but that isn't the first consideration for preserving listed buildings is it?

I've seen plenty of building projects in London where the facade of a building is supported on a steel framework while everything behind is rebuilt/redeveloped. I'm sure this is more expensive than just demolishing everything and rebuilding a replica of the facade, but that's not good conservation practice is it?

I'm certainly no expert but, as Biff points out, the insurance co seemed keen to pay out before restorative works were completed, perhaps because they were happy to minimise their costs and wash their hands of the whole thing as fast as possible. Pford has some personal experience of difficult negotiations with insurance companies but ultimately holding them to their responsibilities.

 

[Penners]

if you have a 'guaranteed value' policy, the insurers are basically saying that "whatever it costs to rebuild....you are covered".

"If". It's a very small word, but often one of immense importance.

if you have a good relationship with your Conservation Officer and they are insisting that the rebuild is done in a certain way, the insurers have no option.

I'm still sceptical about that. If you've insured for a rebuild value of, say, half a million, and the CO wants rebuild works that will cost three-quarters of a million, I don't believe that an ordinary buildings cover policy will win you that extra £250k.

Under 'guaranteed value' maybe, but I'm not sure how many policies carry this clause.

However, Pford75, given your extensive personal experience of this topic ( ), I'm sure you're more knowledgeable about it than I am.

 

[Stephen]

This raises many issues and the case is too complex for a definitive answer here.

On the matter of original assessment. It is impossible for anynoen assessing the rebuild cost to anticipate every possible scenario that might lead to full or partial rebuilding and therefore to assess the absolute worst case scenario. In any event, I have had clients who have stated that the cost of the premium is too high and they insure for less (i.e. the premium they can afford) anyway. I doubt you would have much success in pursuing the surveyors unless you can show that they did not allow sufficiently for full rebuilding anyway; I cannot see any chance of trying to argue that they should have allowed for a more expensive partial rebuild scheme at the time of the original assessment.

I must admit I include a clause in my reports for insurance that warns about the possibility of partial rebuild costing more than full rebuild, but I do not believe it to be a required caveat in such reports.

There is no hard and fast rule about when so much of a building is lost it no longer has to be retained. It used to be said that when over 2/3 had been lost one would question whether one should then rebuild because you end up with a replica not the real thing. Each case on its merits I am afraid to say and therefore no real answer to your basic question. English Heritage did have some publications (free) about insurance, but they are quite old and may have been withdrawn as I know they were in the process of being re-written. In those it did give some practical advice in such situations.

However, there must be a way of getting the relevant parties together to discuss and find a way forward. The Council cannot force you to rebuild and provided what is left is not dangerous, etc they cannot force you to do much at all. Therefore theoretically you could leave the facade and ruined building alone and no-one could do too much about it. This is probably not desirable to anyone. However, if you have not got the money to do what they want there is not much anyone can do about that either. I do have to question why insurers have paid out already - was it because a cash settlement (always less than the full sum) would be a quick easy way out for them as they could see it was going to be a troublesome project? If they had been forced to reimburse the cost as work progresses they may have had to pay the additional cost - we will now never know.

I suspect that some form of compromise will have to be reached if anything is to be done in the foreseeable future, or it will simply remain a ruin until someone can afford to do something with it.

 

[biffvernon]

3. The fire occured and the insurance company paid out what was the insured "rebuild costs"

4. This money was largely taken by the bank who had a security interest over the building and insurance proceeds

Fishier and fishier.

 

[LadyArowana]

3. The fire occured and the insurance company paid out what was the insured "rebuild costs"

4. This money was largely taken by the bank who had a security interest over the building and insurance proceeds

Fishier and fishier.

Surely it just refers to the bank holding a mortgage on the property ? If the asset is destroyed ( or largely destroyed ) and is therefore incapable of generating income and has a vastly decreased value, then the bank have probably decided to offset and walk away. If a bank had lent money secured against the property they may well have only been concerned that the insured value covered that, rather than taking into account any additional rebuilding costs associated with the heritage of the building. They could well have been the main stakeholder and taken a purely financial decision to settle with the insurance company on the basis that it recovers the amount they had lent and to leave the problem of the residual with our poster. I am sure that some fires in listed buildings are not entirely accidental, just as some deaths are not accidental. However I wouldn't wish to imply arson or murder based on facts that could be entirely legitimate.

 

[Gareth Hughes]

Which then brings me to the original question - when is a building so destroyed that the "listing" is no longer really relevant .....

That's an impossible question to answer, except that it depends on the building.

Some more info - even a photo or two, would be very useful.

Does the list description give any indication of why it was II* rather than II? I'd have thought that, unless the special interest of the building was entirely internal (which isn't often the case), then the case for treating what has survived as still being listed would be very strong.

You'd be better off applying for LBC to demolish, as Gervase said.

 

[MattW]

Surely it just refers to the bank holding a mortgage on the property.

I agree LadyArowana - its a standard condition of a mortgage that the bank's interest is noted on the insurance policy and within the loan T&Cs there will be a clause that enables the lender to deal with the insurer directly and that could require that a claim proceeds be sent to them directly to clear the outstanding loan. If the bank wouldn't have funded the development of hte site if a developer had gone to them directly on the project (which given the economics the OP mentioned, would be unlikely, especially without income to cover interest), it seems extremely likely that they would require the loan to be repaid. I think that Biff is seeing more piscine qualities than is the case on this one.

 

[middi]

It sounds fishier and fishier to me as well. I detect a few missing links ( or omitted).

 

[silograms]

Thank you again for all the answers and comments - if I may respond :

1. I am not sure why it is thought that something fishy is going on ! If there are specific questions/facts that I have not answered then please say and I will endeavour to do so

2. It was not arson, nor was anybody hurt, thankfully - everybody was evacuated safely

3. I am told that the main "listed elements" relate to the front, the hallway and staircase (which actually provides the only access to the building from the roadway), certain conices and fireplaces. The fireplaces can be preserved and put back and cornices can be rebuilt/copied; the lobby needs rebuilding anyway

The fundamental problem is the front wall - to rebuild the whole building one has to build over the front wall which involves closing the street, affecting neighbouring properties/businesses and adding 20% + to the cost such that it is currently an uneconomic proposition - if the front wall could be knocked and rebuilt then we would save the 20% and the rebuild becomes viable

We would be happy to rebuild the facia the same as before - after all from a heritage point of view, if we are being asked to rebuild the interior so that it looked like what it was before then what is the difference if we do the same with the facia which wasn't actually burnt down

What is better - that we have a building that looks like how it looked from the front and then certain features are restored internally or a wreck of a site which is sitting there currently in limbo ?

 

[Schoolmarm]

How will you finance rebuild costs if the bank have taken all the money. I don't understand.