Seller contacted council about unregulated loft/basement – indemnity now impossible. Are we being unreasonable to renegotiate?

[ThatAgileMintBiscuit]

Hi all,

Looking for some advice because I’m really stressed about a house purchase and need some outside perspective. Inspired by great advice given to a fellow Mumsnetter today re building regs. I thought I’d ask your opinions as we also can’t speak with solicitors till at least tomorrow.

We offered £445,000 on a Victorian semi. It was originally marketed as a 5‑bed, then dropped to a 4‑bed as the first sale fell threw as the 5th bedroom had no building regulations and the mortgage company weren’t willing to accept an indemnity policy.

The four bedrooms are all proper legal bedrooms. There’s also a loft room and a basement cinema room, but both were done years ago without Building Regulations approval.

Our solicitor has now told us (in writing) that the seller contacted the council to ask about retrospective approval but did nothing more (I expect the cost) . Because of that, indemnity insurance is no longer possible. The council is now aware of the unauthorised works.

The estate agent and seller are acting like this is nothing, but from what I understand:

• Indemnity is only valid if the council is unaware
• Once the seller contacts them, indemnity is permanently off the table
• This affects mortgageability
• This affects resale
• This affects the value of the house

We haven’t exchanged yet.

My husband loves the house, but I’m really worried about possibly resale and us been out of pocket. If we buy at £445k, we’ll face the same issue when we sell – no indemnity, council aware, buyers asking questions, lenders hesitating, and probably having to drop the price.

We’ve been told that making the loft/basement fully compliant could cost at least £20k–£40k which we can’t justify. We don’t have to do the work, but it will affect future offers.

I also don’t think the seller realises they’ve caused this problem. The solicitor’s letter clearly states that he contacted the council, but the seller and estate agent are just ignoring that part and acting like we’re being unreasonable.

i imagine the sellers already feel like that have lost 15k as the property was down valued.

Any advice appreciated. We asked about building regs prior to putting in an offer and estate agents told us the ‘paperwork was lost’ all very frustrating. We asked why the previous buyer pulled out and they said ‘sorry we can’t tell you that’.

it’s a stunning house, but owners have spent a lot of money on renovations so it looks amazing but sadly the basics haven’t been covered. I.e Regs!

Has anyone dealt with this before?
Are we being unreasonable to renegotiate?
Would you walk away?
Or is this something buyers just accept?

Any thoughts or advice valued.

Thanks.

The seller has screwed himself then if he’s not willing to do anything about it but has now made his property effectively un sellable

you are very much in the stronger position here.

We’ve been told that making the loft/basement fully compliant could cost at least £20k–£40k

I would not move unless seller reduced accordingly
and no one would buy knowing this

Surely, you could adjust you offer by 40K to enable you to do the work yourselves?

I know nothing about building regs. What would the value of the property be if the basement and loft weren’t renovated? Could you offer that price? Is it sellable later if loft and cellar are not living areas?

If you cannot get indemnity insurance (and I ca. quite see why not) then you will bear the costs of whatever the council insist is done.

the sellers no doubt feel very stupid and are trying to put pressure on you because if they can sell the house it is no longer their problem.

either cost up what it would take to get to building regs (if possible!) and take that off or walk away

If you need a mortgage then the lender is unlikely to release funds without either the works done or an indemnity

Really If you want the house and are happy there are no fundamental structural concerns with the improvements (ie if they have been there for 20 years without issue they are likely fine) then I would go for it. Indemnity insurance is utterly worthless - it basically an industry work around to allow sales to progress in your situation. I wouldn’t worry about resale if you plan to be there for a long time - in 20, 30 years the old work would be a distant memory, and will likely be a eclippsed by the ton of building regs approved work you will likely do in that period. You will just say it was done be previous owners before you moved it and you were never given any details.
Also remember it’s a Victorian property. The entire house is not built according to building regs.

@ThatAgileMintBiscuit your assessment is accurate but expect the building work to cost more than you expect - what will the builders uncover while they do the work?

Also, you need to factor in the hassle factor of living with major building work when renegotiating the price.

The EA is down playing it as their job is to sell the house but you don't want to be in the same position as the seller in 5 or 10 years time or what happens if the LA decide to actually act and you have not got the spare 40K to fix the problem ?

Remember if you don't do the work straight away then in 5 or 20 years time the building quote could be 40 to 80 K

This.

The previous sale undoubtedly fell through for the same reason. Who did your survey / valuation? Could you contact them and ask what they think it is now worth given that neither the building regs or the indemnity are an option?

You've not done anything wrong here and you need to ensure you don't pay over the odds and get stuck with a property you will need to sell at a loss.

I did buy a victorian terrace where a back extensions were built pre building regs and were single skin. The fact that the council won't issue them retrospectively means they haven't been done to the right spec and will likely cause issues down the line.

I would pull out unless he pays for retrospective planning permission. The house is no longer worth what it was worth when you made an offer and now the council are aware, you’re open to them demanding that you sort it.
I would potentially consider just reducing the offer if a basement wasn’t involved, but badly done basements have been known to cause houses to collapse.

Your seller really needs to get it signed off retrospectively and accept that they may need to spend a little money to get it up to scratch to allow the council to issue that certificate.

We have just been through the same with a property we are purchasing. No building control sign off so our sellers have done it retrospectively. It didn't take long once the ball was rolling but for our sellers there was not too much they had to do. But the issues were identified, fixed and the certificate issued.

Your sellers have screwed themselves by contacting the council and will now need to do this if they want to sell the house, whether that is to you or another buyer.

If they won't do it then a price reduction so you can do any work required yourselves might be an option but if you don't know how much you may need to spend on it to get it up to regs then its difficult to know what to ask for. Your seller will also need to accept this.

I doubt your Solicitor would advise you to proceed without sign off retrospectively. Ours was very clear of the risk we would take if we wanted to proceed without them.

The other option is you walk away from the purchase.

Also to be clear the “cost of rectifying” the loft, basement room and bedroom would most likely be the cost of ripping it all out and starting again from scratch ie a full rebuild of these elements. As you can’t tell how it was constructed until you do so, you will need to start again to ensure it is done in a compliant manner.

I understand that indemnity insurance only covers legal costs if you are forced to correct the work not the cost of any remedial work. I'm really not sure they are worth the money.
However the fact that the loft may not meet building regulations/ planning does, in my view, affect the value of the property and I would be pressing for a price reduction.

How many years ago? Unless dangerous, council building control care a lot less than most people think. I wouldn't be alarmed by this. It just means those rooms can't be described as something they're not.

Have you had a buildings surveyor look at the work done? We walked away from a house we loved with a converted loft and found they'd removed structural beams. It's not just your basement being signed off, it needs to have been done well.

Other than that, offer less to cover your costs?

What have they actually done to the loft room and the basement? What do they need doing to make them BR compliant?

They're no longer claiming the loft is a bedroom and have reduced accordingly. Well, a bit. Don't know what an extra bedroom adds to the value.

Presumably, the basement already existed. What have they actually done, buildings wise, to convert that into a cinema room?

@ThatAgileMintBiscuit why buy work, worry and hassle? There will be another house. If the seller was sloppy enough to do these works without building control/regs being followed I’d walk away. Who knows what other horrors might be hidden?

Couldn’t they both be classified as storage rather than habitable rooms

Yes but that reduces the value of the property and if the work wasn't done properly the basement may become damp and the roof space may be unsafe if the ceiling below has been weakened.

Surely the best option is to reduce your offer by 50-60k to cover the cost of getting the regs done and any additional work.

At least the op needs a full structural survey to make sure the building is safe. If it isn't the cost to remedy could be huge.

Hello @SwedishEdith

From what our survey and solicitor have said, the loft and basement were both converted without Building Regulations approval. The seller originally told the estate agent that the paperwork “existed but was lost,” but our solicitor has confirmed in writing that the seller actually contacted the council because they didn’t have any paperwork but did nothing further.

Loft:
It looks like they’ve boarded it out, plasterboarded it, added electrics and decorated it. But they didn’t upgrade the floor joists, didn’t install fire‑rated doors, didn’t create a protected escape route, didn’t insulate it to current standards and didn’t get any structural or electrical sign‑off. So it’s a DIY loft room, not a legal bedroom.

Basement:
The basement already existed, but they’ve tanked/partially tanked it, plasterboarded it, added electrics and decorated it as a cinema room. There’s no evidence of proper damp‑proof membrane, no ventilation system, no fire escape window, no structural sign‑off and no electrical certification. So again, it’s a cosmetic conversion, not a compliant habitable room.

To make them compliant:
The loft would need structural work, fire safety upgrades, staircase compliance, insulation and electrical certification.
The basement would need proper tanking, ventilation, a fire escape, damp‑proofing, insulation and electrical certification.

We’ve been told this could cost £20k–£60k depending on what’s uncovered. And because the seller contacted the council, indemnity insurance is no longer possible, which affects mortgageability and resale. That’s why we’re questioning the price.

I would be very very concerned about the quality of the works given they are so extensive yet the owner didn't get planning or Building Control involved at any stage.

It sounds like he was relying on you to accept the "lost documents" story and leg it asap.

Well… I would not buy it, but if you want to take the risk on then you reduce the offer. 60k minimum. But it is a risk.

The issue here is lack of building control sign off, not planning permission.

OP have you had an independent building control company visit the house, speak with the sellers (who presumably did the work) and quote for regularisation? Just wondering where the figure for rectification has come from.