Buying a House with Loft Conversion Without Building Regulations

16/04/2018

Worried about whether a bedroom loft conversion isn't building regulations compliant?

There could be issues, particularly if your mortgage valuation assumed (incorrectly) that the loft conversion bedroom is building regulations compliant - you may find the bank retrospectively undervaluing your property if they discover this absence. 

You should instruct experienced conveyancing solicitors from the outset who can discover this issue at enquiries stage. 

You are also well advised to book a home buyers survey because your RICS surveyor can raise suspicions if they think an installation isn't building regulations compliant.

* Structural Engineers – Specialists in Regularisation **Fixed Fee – No Sale No Fee – On all Major Lender Panels

You may sometimes only become aware that you're buying a house with a loft conversion without building regulations once you obtain your local authority search during the conveyancing process. This is a major issue for three reasons:

  • the property may not be worth the full asking price (especially if the loft conversion included a bedroom)
  • the loft conversion may not be habitable; and
  • (if you are getting a mortgage) the mortgage lender may not give you a mortgage offer.

Sellers often create a new bedroom out of a loft conversion with a view to add value to the property and to offer more living space. However, the seller and their estate agent cannot market the loft conversion as a bedroom if it does not have a building regulations completion certificate.

Buying a house with an unauthorised loft conversion can prove a serious issue for someone buying with a mortgage. The mortgage lender always carries out a mortgage valuation but the valuer may or may not pick up on whether a loft conversion has the correct sign-off, particularly if they simply take the selling estate agent's word for it and don't carry out further checks. A buyer may find out, during the legal enquiries stage, that technically their mortgage valuation is inaccurate because it has overvalued a loft conversion as an additional bedroom.

If the mortgage lender is made aware that a buyer is looking to buy a property with a loft conversion which hasn't been approved then they will normally insist that the buyer either gets a letter of regularisation for retrospective building control approval or building regulations indemnity insurance, discussed below and may additionally require a structural engineer to conduct a survey on the works to determine whether they are safe. It is very common for the mortgage lender to rescind their mortgage offer ad only supply a mortgage offer based on an update mortgage valuation based on the market price of a property with the legal number of bedrooms and an uninhabitable loft conversion.

If, however, you are a cash buyer  then you can opt to buy the property and take no action regarding unauthorised works - cash buyers are legally allowed to do this. In this case the new buyer would inherit the same problem when they come to sell but they may also invalidate any buildings insurance that they claim on in future. And of course, if the work is unsafe, they risk possible - and uninsured - disaster should the building collapse.

Is Planning Permission required for Loft Conversions?

Most loft conversions normally do not require planning permission because they fall under permitted developments, so buying a house with a loft conversion without planning permission isn't normally an issue. But loft conversions do require planning permission if:
  • Your space addition is going to be equal to or greater than 50m³ (40m³ for a terraced home); or
  • You live in a listed building or conservation area; or
  • You are going to alter the roof height or shape
For more information, click to access the loft conversion page on the Government's Planning Portal


This article looks at the following:



    1
    Can you build a bedroom loft conversion without informing the local authority and getting building control sign-off?
Building regulations approval is required to convert a loft or attic into a liveable space.

The regulations address matters such as whether:
  • the structural strength of the new floor is sufficient
  • the stability of the structure (including the existing roof) is not endangered
  • there is safe escape from fire
  • there are safely designed stairs to the new floor
  • there is reasonable sound insulation between the conversion and the rooms below
If you do not comply with building regulations for your loft conversion (click to find out more about what these are) your local authority may order you to take down or alter the works and if you refuse, they can do this themselves and charge you for their work. the local authority can use this power up to and including one year after you've finished the works.

The builder or contractor who installed the works faces an unlimited fine. The local authority has up to and including 2 years after the work has been completed to use this power.

Fixed Fee, No Sale No Fee with a 5 out of 5 rating

 
    2
    Can you sell a bedroom loft conversion which doesn't have the correct building control sign-off?
Yes you can although the issue may make your sale difficult, particularly if the buyer is using a mortgage.

  • A mortgage lender will naturally downgrade how much they will lend on a property on discovering that some significant building work in a building hasn't received building control sign-off; this can create a shortfall between what your asking price is and what the buyer can afford to pay - you can read more about this situation here in this article - Bank Undervalued Property: What You Can Do

  • If there's any sign or suspicion that the work carried out is defective or dangerous, the lender might also expect a structural engineer to carry out a survey to investigate this further; the cost of this will fall in the first instance on the buyer but the buyer may reasonably expect the seller to reimburse them for part or all of this. At the very worst, the lender may refuse to lend, meaning your attempted sale falls through entirely.

  • You cannot describe a loft conversion that hasn't received building control sign-off as a bedroom; technically you are misselling, however the discrepancy is always likely to arise before exchange or completion (this is discussed further below), even if the estate agent describes the conversion as such and the mortgage valuation misses the issue. The local building authority, if aware of the conversion, will list it as non-habitable, according to a local authority spokesman we questioned about this matter.

    3
    How do you find out that building control certification for a loft conversion is lacking?
This fact can arise from any of the following in chronological order:
  • As a potential purchaser, you may notice an issue with the build of the conversion itself, particularly if it's been designated a bedroom. You can yourself make enquiries to the relevant local building control authority.
  • The fact may arise from the mortgage valuation survey and subsequently be typed up in the report after the surveyor has researched the matter.
  • A RICS surveyor, carrying out a home buyers survey, may pick up suspicions about the lack of sign-off during their inspection and draw attention to this in their report, advising further research into the matter.
  • A buyer's conveyancing solicitor can find evidence - or lack of supporting evidence - in the local authority search carried out for the property, during the legal enquiries stage prior to producing the final report on title.

Don't rely on the Mortgage Valuation Survey flagging up unauthorised building works

Although it is possible that a mortgage valuation inspection and subsequent report can result in a buyer finding out that a vendor has a loft conversion bedroom with no building regs, an examination of a sample report flags up that it is assumed that compliance with building regulations has already been secured:

"5. In carrying out the inspection it has been assumed: (...)

e) That all Planning and Building Regulations and other consents have been obtained and complied with.

Additionally, within the 'Property Description' section, the reference to bedrooms merely presents a box for the numbered to be filled in:

Number of bedrooms x



    4
    How can a letter of regularisation for unauthorised building works help you?
Essentially a letter of regularisation means retrospective building control sign-off: you contact the local building authority who arrange an inspection - which may be intrusive - and you receive the correct sign-off subject to carrying out any modifications you are instructed to make. This is likely to cost in the £100s, not including any costs of modification.

As a buyer, you can bargain with the vendor to share or even bear all of the costs involved.

NB You cannot get a Letter of Regularisation for unauthorised building works completed before 11 November 1985

The Building Act 1984 (which came into force 11 November 1985) set out certain standards for loft conversions which were standardised more recently into the Building Regulations in 2010 (and since amended). Building Control authorities cannot grant letters of regularisation for loft conversions - and other works - finalised before 11 November 1985.

Any unapproved loft conversion finalised before this date has to remain classed as "unapproved" and can only become approved if you go through the building control process right from the beginning - and the local building authority are likely to inspect intrusively and may even require you to knock down and rebuild from scratch.

Click to read our full article on Getting a Letter of Regularisation for Unauthorised Building Works


Advantages of getting a Letter of Regularisation

You get the 'gold standard' - your conversion gets the legal stamp of approval and can be designated property (e.g. you can describe the loft conversion as a bedroom loft conversion when you come to sell up).

You can also rest assured that your conversion meets fire safety standards and is efficient from a thermal perspective.


Disadvantages of getting a Letter of Regularisation

The process, which may prove to be expensive, is likely to take a number of weeks at the very least and possibly much longer: it can therefore seriously disrupt or even collapse a sale.


    5
    How can building regulations indemnity insurance help you?
Building regulations indemnity insurance can cover both the purchaser and any mortgage lender against any financial losses should enforcement action be taken against them (or future owners of the property). The premium is a one off payment - usually paid for by the seller - and is for the market value of the property. The premium is likely to be between £180 and £500 for most properties. The seller might in theory refuse to pay the premium but this would possibly delay the sale, which would not be in their interests.

As said previously, lenders who become aware that a building has an unauthorised loft conversion will most likely insist that the buyer takes out this insurance, to protect themselves in the event the local building authority carries out enforcement action (either by a Section 36 Notice or an injunction) and the building subsequently suffers from a loss in value because, for example, the conversion has to be pulled down by order of a court.

Certain things must be borne in mind, however:
  • Most importantly, the insurance does not cover you against the loft conversion collapsing.
  • The insurance essentially protects you against local building authority enforcement action costs. However, the local building authority only has one year after the works have been put up to serve an enforcement Section 36 Notice (or 4 years for a New Build property) - yet it's a normal condition of this insurance that you can only get it after a year has elapsed (4 years if the property is a New Build).
  • The insurance may, however, cover the home owner against the local building authority taking out an injunction - which they may do at any time after the works have been constructed (there's no time limit), particularly if they believe a structure is unsafe. You should carefully read the fine print of the contract regarding this cover, however.
  • The insurance may only be granted on condition of a survey being carried out, typically by a Structural Engineer or a RICS surveyor. If either of these professionals provide evidence that work is unsafe, then the insurance will not be granted. The survey cost has initially to be borne by the buyer, but the seller may agree to reimburse them.
  • You can't get this insurance if the offending works had already been refused by the local building control authority.
  • You can only get this insurance if the dwelling has been a residential one for at least one year before.
  • Secrecy about these policies is a major feature. You normally cannot tell any third party that you have taken out the insurance; if you do, then the insurance is invalidated.
  • You need consent from the insurer if you plan to do any further building works; this is because if you have to go through building control and have your works inspected, the local building authority may find out about the unauthorised loft conversion and then choose to act. Consent may not be given.
  • You will not be insured if you've made any enquiry to the local building authority about retrospective building control sign-off for the unauthorised loft conversion.

Advantages of getting Building Regulations Indemnity Insurance for an Unauthorised Loft Bedroom Conversion

If you can get it, it's normally going to be far cheaper than any other remedy, and most importantly, it's far quicker to obtain and so less likely to hold up a sale. Additionally, the costs involved are relatively slight, meaning negotiations between buyer and seller regarding who foots the bill are likely to be cordial.

Disadvantages of getting Building Regulations Indemnity Insurance for an Unauthorised Loft Bedroom Conversion

As a buyer, you're not insured against the worst disaster of the conversion collapsing. Additionally, up to press time, no local building control authority has yet been granted an injunction to alter or take down a loft conversion so given that you can't get cover for the initial 12 months, when a Section 36 Notice can be served, it's particularly unlikely that you'll have a call on the cover.

Finally, taking out this insurance simply 'kicks the can down the road': when you come to sell up, you still have the problem of an unauthorised loft conversion, something which is likely to cause a considerable obstacle to any prospective buyer, particularly one using a mortgage.

Click read our full article on this subject - Should You Get Building Regulations Indemnity Insurance?



Worried about whether a bedroom loft conversion isn't building regulations compliant?

There could be issues, particularly if your mortgage valuation assumed (incorrectly) that the loft conversion bedroom is building regulations compliant - you may find the bank retrospectively undervaluing your property if they discover this absence. 

You should instruct experienced conveyancing solicitors from the outset who can discover this issue at enquiries stage. 

You are also well advised to book a home buyers survey because your RICS surveyor can raise suspicions if they think an installation isn't building regulations compliant.

*RICS Surveyors – Local Knowledge – Same Week Availability **Fixed Fee – No Sale No Fee – On all Major Lender Panels


Related News Articles

 
Building Regulations
10/09/2015
Letter of regularisation for unauthorised building works
10/06/2017
Should you get building regulations indemnity insurance
14/12/2018
What is a Mortgage Valuation?
04/12/2017
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