The Sparkbrook area of Birmingham where most of the devastation occurred is one of the poorest in the city and many of the residents whose homes suffered severe damage have said that they could not afford insurance.A high crime rate in Sparkbrook would undoubtedly make contents insurance expensive but should have little or no effect on buildings cover. The disaster raises the question of whether or not lenders ought to insist on insurance cover when they grant a mortgage. Conditional lending became a dirty word in the 1970s and 1980s when lenders required borrowers to buy overpriced buildings and contents cover as a condition of a loan. Fierce competition for business eventually put paid to the practice but perhaps it is time that lenders considered offering free cover included in monthly repayments for some low-income homebuyers. It makes sense for them to protect their interests. With buildings insurance selling at around 1.25per 1,000 of cover, it would cost less than 100 a year for a lender to provide cover for rebuilding costs for the average property selling at around 160,000. When you consider the raft of giveaways ranging from free legal fees to cashbacks offered by lenders to attract business, the cost of providing buildings insurance is minimal. Of the 1,500 homes affected, the average repair bill will run into several thousand pounds which most homeowners will not be able to afford.The danger is that owners of the estimated 20 properties which are earmarked for demolition may decide to walk away from the problem rather than take on more debt. The local council is organising interest-free loans for some of those affected but even interest-free loans might be too expensive for some people to afford the repayments as well as the existing mortgage. New research from Direct Line illustrates the magnitude of the problem. Homeowners will need to spend more than 17,000 on household emergencies during their lifetime in a property but only put aside 2,700 to pay for them, according to research from Direct Line Home Response 24. And these are averages. Clearly, there are many homeowners who have neither savings put aside for repairs, nor insurance. Direct Line found that 76 per cent of homeowners have no reserve funds to pay for emergency repairs, despite it costing the typical homeowner more than 1,192 a year, and they face a 15,000 shortfall in years to come. Those who have been faced with a repair bill that they could not readily afford (66 per cent) have resorted to serious measures to cover the costs, says Direct Line. Almost one in 10 (9 per cent) have not paid other bills and the same number have been forced to borrow money from friends or relatives. Fourteen per cent have considered re-mortgaging their property to fund necessary repairs. British homeowners’ lifestyles are being affected as they are forced to make sacrifices to afford emergency repairs. Nearly 30 per cent have foregone personal luxuries such as DVDs, clothes and trips to the hairdresser, and 26 per cent have been forced to socialise less often while 19 per cent have cancelled a holiday. Far too many householders economise on insurance. Lenders should seriously consider offering it to low-income homebuyers and include it in the price of the homeloan but it is perhaps an area where the FSA could provide education on what constitutes a necessity in financial planning.