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.

I'd offer less then if you want the rooms to be up to safety and insulation standards. The minimum level required.

Get a quote from a structural engineer.

@ThatAgileMintBiscuit to do the remedial works will cost way in excess of 60k.
RUN from this unless you have very, very deep pockets - and lots of patience.

I’m afraid I’d drop the sale. The seller will need to pay to get building regs approval. We’re currently getting it for our place as their extension turned out incredibly dodgy. Tell them you’re happy to buy for a drop of X to cover getting regs or for them to contact you after they have got the regs themselves.

Either walk away, or adjust your offer to be the value that the house would have if neither of these irregular extension-spaces existed, minus the costs it would take to put the house back to that state. It is unlikely to be possible to actually regularise the work economically. Your estimate of £20k-£40k is far too low - it would be more like £100k to make the spaces fully legal and signed off, but it's relatively unlikely that the council will take action against you. If they do, it will be to make you remove the changes and reset the building to how it used to be, not to upgrade the changes to meet specs.

Do not have any truck with indemnity policies they are pretty useless anyway.

@ThatAgileMintBiscuit this could be a total shit show. I would be offering one of three options:

1. Price reduction of at least £100k
2. Seller undertakes all works to your surveyor's satisfaction, and obtains necessary permissions
3. Walk away

Op says it’s been be valued already to reflect this

They have only just found out

@ThatAgileMintBiscuit Be very cautious.

This is a comprehensive site to look at.

For resolution your conveyancing solicitor should be all over this.

Where building regulation approval or sign off to works was not sought and the works contravene building regulations a local authority can issue an enforcement notice under section 36 of the Building Act 1984 but breaches can only be enforced within twelve months of the works.

However, the local authority can apply for a Court injunction order to require the alteration or removal of works that do not comply with the regulations and there is no time limit for a Court application

I'd walk away, it might turn out ok but it could also turn into an expensive nightmare and I wouldn't want to take the risk.

Plus the seller has shown that they're a liar so you can't trust what they say.

I'd pull out of this house. It all sounds a bit dodgy to me. No mortgage company will le.d without indemnity anyway and that's probably why previous offer was withdrawn.

What do you want to use the loft for?

No buildings regs and a cellar- I would be getting a structural survey.

I bought a house like this (with a mortgage) years ago now. After 10 years I knocked down the loft and rebuilt it to building regs and it was a huge job involving dropping ceilings and installing fire doors through the whole house. My builder said the original loft conversion was really badly done. It cost me about £50k back in 2015 but it was worth it as it added more value to the house as it was now an official room. I did make sure I got all the paperwork so when I sold the house the sale went through without a hitch.

Indemnity only covers any legal costs. It doesn’t cover putting right or compliant. So yes, you will have this issue when you come to sell unless you invest to sort it out.

I wouldn't buy it even with a further 60k discount. Sounds like a fire hazard.
Our seller had to pay for a patio door indemnity before our bank would give us the mortgage and that was just minor works.

“Owners have spent a lot of money on renovations” doesn’t sound right to me. No reputable builder would have done the work without building regs. It sounds like the vendors have done the work themselves or on the cheap so the house looks good cosmetically but it’s probably all a complete mess beneath the surface.

as others have said, it is not worth what you have offered given costs of rectification required and impact on future sale without having done such works

pull out.

The reason they've managed to spend a lot of money making it look so good is because they specifically didn't spend money doing the work correctly! Think on that...

Pretty simple. Either reduce your offer to cover the cost of remediation or they remediate before you exchange.
When I bought my place there was a sort of similar issue, I insisted vendor remediate. They knew it was unsellable until they did so they paid for the remedial works and they paid for a structural surveyor instructed by me to confirm works were completed to appropriate standards. They knew I was being reasonable. As I was waiting for the works to complete. And they knew any other purchaser would require the same.
Stand firm OP. Every purchaser will have the same concerns as you

How does the price stack up as a 4 bed house forget the loft and cellar

Walk away - with the amount of unapproved work done already who knows what else has been done without the proper permissions/certificates.

Don't buy it at that price. If you really love it then offer whatever a basic 4 bedroom with a cellar and loft would be worth in your area. Treat the loft and cellar as if nothing has been done to them.

I agree. This is the only way round it. Otherwise it's just storing up trouble for the future.

I agree with this - it's not just about what you've uncovered. They could have done any number of things without approval/on the cheap which you haven't found yet. It could then cost a fortune to put right