Mortgage for a repo flat with a planning issue

sean222

Does anyone know of how one would could get a mortgage for the following property.

The flat in question is a repo garden flat, the problem is a room (kitchen ) was built onto the rear of the flat without planning or permission of the freeholder. The land the kitchen was built on belongs to the freeholder and is not part of the leasehold.

Once the property is purchased the purchaser will have to make good the alterations and return the flat to its previous condition.

Has anyone ever had anyluck getting a mortgage in this situation.

Thanks

silvercar

Will there be no opportunity to get the correct permissions?

Putting the mortgage issue aside, the true value of the flat at the moment is the cost of the flat without the extension less the costs of removing the unlawful extension less the costs of putting a kitchen into the position less a hassle factor.

sean222

Thanks Silvercar for your reply.

I'm unable to get permission for this room, as I can't contact the freeholder.

I've tried a couple of mortgage advisers and they've said unless I was a cash buye it would be impossible to purchase this property.

silvercar

I wonder if you could get an indemnity policy, to cover you if the freeholder ever returned. As far as planning permission goes, if the extension has been in place for over 4 years you can't be asked to undo it.

If it is unmortgeable it devalues the property even more; its market value must drop through the floor. Could you raise funds elsewhere?

If I bought something like that, I would be tempted to keep the extension until forced to remove it.

sean222

The idea of getting PI was mentioned by my solicitor but because the land that the room is built on is the freeholders and not part of the leasehold this means you can't use this route.

If the land was part of the leasehold the solicitor said getting PI would have worked.

silvercar

Looks like you can only do it if you can borrow elsewhere and have money to remove the extension and make good.

Sounds like the sort of property that would end up at auction; even then I would suspect that the auction package would need to state that there is this problem.

Will probably end up being bought by a cash buyer as a BTL. The rental value would include the extension and so the yield will be higher, given the low value for the property in its current form. If and when the freeholder appears a tenant could be given the required notice to leave. I can't imagine an absent freeholder demanding the removal of the extension; if they were that interested in the property they would have kept an eye on the place and know about the extension. More likely the freeholder will negotiate on the sale of the lease of the land in question.

How long before "squaters rights" apply?

sean222

I think it's squatters rights after 7 years.

I think I'll have to give up on this, I've tried a few more mortgage advisors to see if I could get a mortgage with a clause in the contract that would allow the works be carried out within a certain amount of time after the sale had been completed.

Each of the advisors said I was wasting my time trying to get a mortgage for it.

silvercar

Does the sellers HIP mention the problem? Does it show up on searches? If not you could use one of the ultra cheap online conveyancers and hope they don't notice the problem. Allegedly they insure against any comeback from problems rather than use resources to identify problems.

Then your next problem is the valuation. If your LTV was really low (less than 50%) chances are a lender would do a drive buy valuation, comparisons online and not actually enter the property.

Risky and you would have to have the money set aside to correct the problem if you were ever called to do so.

Is this going to be a home for you to live in? Or an investment opportunity? If the latter could you borrow against your main home to do it?

You could try the forum on singingpig.co.uk; guys on there claim to be able to get mortgages for anything.

sean222

They property is advertised with the planning issue highlighted.

As it's my first time buying I don't have another house to put up against it.

I'll try that other website thanks very much for your help.