Do We Have Any Recourse?

[DontWantToBeHomeless]

Long story short(ish):

Landlord is being forced to sell the house we've rented for 9 years, wants us to buy it, DH and I have been approved for a 100% mortgage - all good so far...

Valuers turn up to inspect the house, discover the loft conversion isn't up to regs and can't be classed as a 3rd bedroom - we can sign something to say we "won't use it as a bedroom" to allow the mortgage to go ahead, even though we have been using it as a bedroom for the past 9 years, that was the whole fecking point in moving to a 3 bed house! FFS

Things are progressing, solicitor has sent contracts for us to sign etc.

But here's my query - shouldn't the value of the house now reflect that it is NOT a 3 bed and is actually a 2 bed with "loft storage"? Surely we can't be expected to pay 3 bed price for a house that isn't.....????

No idea as yet what it will take to make the loft "liveable" but I don't see why we should have to pay for a 3 bed house AND pay to make the loft meet regs! If that's even something we would have to do, but if we didn't wouldn't that make any buildings insurance invalid if the worst was to happen?

DH is happy to proceed, doesn't see an issue, can't see why I'm making a fuss - I guess he's just relieved we a) meet the criteria for the mortgage on this house (specific circumstances) b) don't have to move 9 years worth of stuff and c) won't end up homeless as there is nothing else to rent in our area and no guarantee we'd get a mortgage on another house.

I'm just so confused by the whole sodding thing, and angry that the landlord misrepresented the house in the first place by advertising it as a 3 bed when he knew the loft conversion was dodgy!

Any insight/advise welcome

Sounds a totally frustrating situation. I have heard of this happening before where lofts are converted but not signed off.
I've recently moved house and from my experience you can ask for a reduction in price at any point, the seller can say yes or no. It's a gamble. My buyer asked for twenty grand off the week of exchange. He said he'd had a shortfall in his cash flow and could I 'absorb' his loss so I wouldn't lose my sale. Funnily enough I couldn't 'absorb' 20K and said it was either agreed price or I'd pull out. He asked, I said no. You can ask and get told no and proceed, get told no and either one of you back out or you can ask and get a price re-negotiated. Good luck!

How much would it cost to put it right? How much are 2 beds going in your area? Do your research and then say that you need a reduction in price as this is only a 2 bed, and it will cost you to put right. If they need to market it again they will run into the same problems, so they might be willing to accept a lower offer.
your mortgage company might value the house lower as a 2 bed too.
be careful you don’t invalidate your insurance if you do use it as a bedroom.

Of course the price should now drop.

You're buying a two bed house now and will only be able to sell it in the future as a two bedroom house.

You'll therefore lose out on lots of money!

It's a tricky situation because, from what we can gather, the Landlord is being forced to sell all his properties (we're guessing he hasn't been keeping up with his payments... he was charging us well below market value for the rent).

Therefore there has been no wiggle room on the price as the bank need to get as much as possible to clear Landlord's debts.

The house has been valued at £150k but we are paying £135k (90% - don't ask me how or why or who is paying the 10% shortfall as we have no deposit - hence the 100% mortgage, I honestly have no idea and DH has been dealing with the mortgage broker/estate agent as they're a joint venture) and I was getting so stressed out about us being made homeless he has kept me out of it. I do tend to catastrophise, but that's a whole different thread.

Anyway, 2 beds in our area range wildly from £90k up to £140k depending on the condition and which specific part of the town they are in, so I just don't know.

We also don't know as yet how much it would cost to get the loft up to regs, but I imagine it won't be cheap!

There's just too many variables and not enough info from the estate agent/mortgage broker!

We looked at a house like this and a builder said to get it up to building regs standard as a proper bedroom to basically budget for a new loft bedroom as probably everything would need redoing.
But if yours is in a nice party of town could it be worth what you’re paying for a 2 bedroom?

Is the valuation given by the surveyor/valuer lower than what you'd agreed to buy the house for?

If so, you can/should negotiate a lower price.

If not, then it was already priced to factor in the fact that it wasn't really a third bedroom.

I'm sorry but I can't answer your question about the loft extension but your comments about the mortgage broker worry me.

The estate agent is working for your landlord and will have the landlord's best interests at heart. The broker works for the estate agent.

Personally, I would never use a broker working for an estate agent, I would always use an independent broker.

Have you discussed this with your solicitor? I would worry about using it as a third bedroom if it has failed building regs. Why has it failed? When we had ours done, building regs was just a formality but we did use well recommended builders.

If the house is valued at £150k and you are paying £135k you are already paying less than market value for the house. And the £150k will have been based on it being a 2 bedroom house if it was the value given by the surveyor.

I'd formally ask for the house to be revalued and put an offer a lower amount in

Where has the £150k valuation come from? If it's a surveyor then it will be based on the property being tow bedrooms because the loft does not meet regulations but if it's the estate agent then they will be looking to maximise sale price.

You need to know how much it will cost to put right before you can calculate whether you are paying a fair price. If you're already living there then it will be easier to organise builders to give you quotes. If you have the surveyors report then it should give some detail about why the loft space doesn't meet regulations and your builder will know what needs to be done.

It's fine progressing with the sale but unless it's possible or affordable to get the loft to meet regulations then you will have to list it as a two bed when you come to sell.

You also need to consider insurance if the loft isn't "authorised" for use as a bedroom but you're doing it anyway.

That's the problem @Happydays321 we'd probably have to take it back to brick and start again because it's no doubt nowhere near sufficient to meet regs 😭BUT the house is a stone's throw from DH's mum and dad's, a 10 minute walk from my mum's house and it's 200 yards away from the high school DD is going to in September... so part of me does think it's worth it to stay where we are regardless of the loft.

@dcsp we haven't had anything from anyone to say it's been valued lower due to the now lack of a 3rd bedroom - I feel like we're just blundering around in the dark at this point, it's obvious the estate agent/bank want as much as possible due to the landlord's debts.

I'm just not sure what to do, because we now run the risk of not being able to get another 100% mortgage (wasn't there talk of taking them off the table because so many people applied for one?) and we've no chance of getting a deposit together any time soon

It's an absolute mess!

If it’s been valued at 150 and you’re buying for 135 I don’t really think you can argue a reduction for the 2 bed 3 bed thing? You’re paying below what is been valued as.

Ring them and speak to them about it. Tell them you want it re valuing as it is actually a 2 bedroom property and that you also want an independent valuation doing by someone else. Do not go ahead with the sale at the moment, if the house isn't worth what you are paying then you may have issues in the future and also, no one wants to pay over the odds! They aren't just going to kick you out as they have nothing to gain from that, same with the sale, they have nothing to gain from no longer selling to you just because you are questioning the true value of the property

You can get an independent surveyor to do a report on the house and then regardless of what the estate agent wants you will know where you stand.

The bank may want the landlord to clear his debts but they won't want to transfer that debt to people who can't pay or an asset that isn't worth the amount owed on it so I don't the no they are as questionable as the estate agent.

You can also easily find another mortgage broker, they only find and sell the mortgage products they don't own them.

I think you need to take a deep breath, clear your head and sit down with your husband to agree a plan to make sure you don't leave yourselves vulnerable.

When it was said that the loft wasn't up to regs, did they mean now or it never has been?

Did they say WHY it's not suitable? Headroom, build, stairs?

Rules change all the time and a loft that was suitable for bedroom use at one point is still suitable now. Just wouldn't meet the latest regs.

And surely the Landlord has been renting to out as a 3-bed.

Is it worth the hassle of moving out and finding a new house? You’re not over paying no matter how many bedrooms it has.

This

You have the mortgage, and have had a decent reduction

The cost to find someone else and move all while under pressure of ending up homeless would be too much for me, esp if you've managed with the loft as it is for 9 years!

I would just buy the house. You're already paying less than market value as it is, plus you don't have the hassle of moving and paying loads of moving costs.

I would keep going as you are. You live there and have done for years, have paid below market rates etc, so I would keep going.

Chances are that the loft conversion issue is something like headroom, or angle of stairs or something. At worst floor reinforcement.

Yes, @cinnamonfrenchtoast the rent was below market value, but the mortgage will be £300 a month MORE than the rent... Which is still probably a fair price for a 3 bed mid-terrace in a decent town - but is it still a fair price now given that we don't have a 3rd bedroom (officially) anymore?

I will have to speak to DH and see if we can get hold of the valuation report, we only know the loft conversion does not meet current fire and health and safety regs, but we don't know WHY. We also don't know if it ever met the regs but my guess is not.

Definitely lots to discuss with DH!

But the valuers have valued it for what it is, a 2 bed. The value of the house they’ve come to see is 150k and they are confident that’s what you’d get if you came to sell so they are happy to lend that to you to buy it.
You’re in a tizz because you don’t know how the process works. What’s happening seems fine in terms of the value.

The issue I have @mumlovesvodka is that we were only responsible for insuring the contents of the house, as we were renting.

But if we buy the house, and continue to use the loft as a bedroom (which we will have to as DSD needs somewhere to live!) will we then not be able to get building insurance as a 3 bed, because legally it isn't a 3 bed....?

tbh you are asking a question that non of us can answer. You need to read the survey, understand the valuation and decide for yourself the value of the house. Then you can decide if you still want to buy it

OP, stop panicking! Take a breath. You have control over your life!

First up, call an estate agent who you don't know, who your LL doesn't know, and ask them to visit to value your home.

Set up the appointment ASAP - many will come out within 24 hours.

Tell them you believe the 3rd bedroom can't be classed as one legally and ask what price they think it could be marketed at, considering the loft.

Once they've done that then you have an unbiased answer.

You could then (if you're happy with the info you have) ask a builder to visit to quote for the loft works.

TBH £135K sounds like good value especially since the location suits you... If you can afford the mortgage and you'd stay for 5+ years then I'd go ahead in your shoes, but that's just me.

Wish you all the best!