It is not uncommon for people to only become aware that the houses they are buying come with loft conversions without building regulations when obtaining the local authority search. This often comes up during the process of conveyancing. This may cause primarily three issues:
- The loft conversion might be inhabitable.
- The property’s worth my not match the matching price, more so if this loft conversion is inclusive of a bedroom.
- You may not get a mortgage offer from a mortgage lender in case you want to get a mortgage.
In most cases, sellers create illegal loft conversions for purposes of value addition to the property while creating more living space. However, if the loft conversion does not meet the building regulations and doesn’t have a completion certificate, a seller and an agent don’t have the authority to market it as a bedroom.
If you buy a house with an illegal loft conversion will often pose a serious issue when buying a property with a mortgage. Before a mortgage lender signs off on a mortgage, it is required that they carry out a mortgage valuation. Sometimes the valuer may not accurately assess whether the sign-off on the loft conversion is correct, especially if they only believe the word of the estate agent and choose not to carry out any further assessments. It is during a legal enquiries stage that a buyer may discover that the mortgage valuation is technically inaccurate. This technicality often arises because the valuer overvalued the loft conversion as an extra bedroom.
However, if a mortgage lender becomes conscious of the fact that a buyer wishes to purchase a house with an unapproved loft conversion, the lender must persist that the purchaser either finds a building indemnity insurance or a regularisation letter. Furthermore, the lender can also instruct a structural engineer to survey the building to decipher if they it is safe. It is not atypical for a lender to abrogate a mortgage offer. This is done until they get an update on the mortgage valuation basing it on the market price. This priced is obtained from valuing a house that has an accountable number of bedrooms and an unauthorised conversion.
Cash buyers have the option of buying the property and choose not to take any action concerning the authorised works because the law allows it. In this case, the problem will be transferred to the new buyer when they look to sell it. In future, however, they may disprove any insurance of the buildings that they may claim on. Consequently, if the work is not safe, they easily risk possible disaster if the building collapses. The risk will possibly be uninsured too.
Is it possible to build a loft conversion into a habitable bedroom without getting a building control sign-off and informing the local authority?
A building regulations consent is necessary for the conversion of an attic or loft into a habitable space. Some of the issues the regulations cover are:
- Safe fire escape.
- Sufficiency of the new floor’s structural strength.
- Rational sound insulation between the rooms below and the conversion.
- The structure’s stability is not jeopardized (including the roof).
- The new stairs to the floor are designed safely.
Non-compliance with your local authority’s building regulations may result in the local authority ordering for the taking down the conversion. If you refuse, they will alter the works and do it themselves and transfer the charge to you. They have the right to use this authority up to one year after the completion of the works.
Consequently, the contractor responsible for the installations will be liable for a fine. A local authority is vested with this power for up to 2 years after the completion of the work.
Is it possible to sell a loft conversion with no appropriate building control sign-off?
It is possible. However, it may work the whole process difficult, mostly if the buyer uses a mortgage because
- A lender naturally downgrades the much they are willing to lend on the property when they discover if a significant portion of the building doesn’t have a building control sign-off. It easily causes a shortfall.
- The lender might need a structural engineer to investigate the building if they suspect any sign the that the work is either dangerous or defective. This cost automatically falls on the buyer but. However, this buyer will expect you to reimburse part or all of the amount.
- You are technically misselling if you don’t describe the conversion as a bedroom that is yet to receive a building control sign-off. At some point, this discrepancy will be noticed, if not by the estate agent or mortgage valuation, then by the local authority.
How to find out a loft conversion’s building control certification is lacking
This issue easily arises from any of these situations in chronological order:
- If you wish to purchase a property but you notice something amiss with the loft conversion, particularly if it is designated as a bedroom, you can make enquiries to the local authority.
- It can arise from a survey as a result of mortgage valuation and is present in a report after research by a surveyor.
- A home buyers survey by a RICS surveyor may also pick up suspicions on the lack of a sign-off as they carry out their inspections.
- The lack of supporting evidence or finding evidence by a buyer’s conveyancing solicitor in the local authority as they carry out investigations during legal enquiries.
How a letter of regularisation for may help you
This involves contacting the building authority that will arrange for an inspection to help you get the correct sign-off. The inspections can be intrusive. The sign-off is subject to making in modifications that you will be instructed to carry out.
Advantages of the letter
This helps you get the stamp of approval, which is a measure of ‘gold-standard’. This means that you now describe this conversion as a bedroom when you choose to sell. This also gives you peace of mind knowing that the conversion meets the fire safety standards.
The process can prove to be expensive and may take a long time thus can collapse or disrupt your sale.
How the buildings regulations indemnity insurance can help you
The insurance can cover the purchaser and mortgage lender against any possible financial losses in case any enforcement action is taken against them in future. In most properties, the premium is around £180 and £500 and it is usually a one-off payment done by a seller. In theory, a seller can refuse to make this payment, but it will only delay the sale.
Mortgage lenders often advice buyers to take out this insurance to cushion them if they notice that a house has an unauthorised conversion. The insurance cushions the buyer if the local authority chooses to carry out enforcement action.
However, there are certain things you should bear in mind:
- This insurance doesn’t cushion you against the collapse of a loft conversion.
- It only covers you against the enforcement action costs of the local authority. The authority has only a year to after completion to serve an enforcement notice (Section 36) and 4 years for a new property.
- It is only granted if a survey is carried out by a RICS surveyor or structural engineer.
- You will not be eligible for receiving this insurance if the local building authority already refused the offending works.
- You can only receive the insurance if the house has been in use for at least a year.
- You should not inform a third party of you move to take out this insurance because it will be invalidated.
- You should get permission from the insurer in case you want to do any building works because the local authority will have to inspect your works. If it is unauthorised, consent may not be granted.
- You won’t be insured if you already made enquiries from the local authority concerning the building sign-off.
One significant advantage of this insurance is that it will be cheaper than most other remedies and quicker to get. You can go on with your sale faster and the costs will be slightly lower too. A major disadvantage is that your conversion won’t be insured from collapsing.
How to get Building Regulations Indemnity Insurance
Your acting solicitor would normally arrange the indemnity insurance for you.
If you are buying a property with a loft conversion without building regulation approval, we would recommend that you get a home buyers survey as the RICS surveyor can raise suspicions if they think the conversion does not comply with building regulations.