another question about indemnity insurance

Vixprincess

Hi,

we are hoping to buy a house with a loft conversion that was done 2 years ago. The seller did not contact the council so has no planning permission or building regs. We are happy to get this retrospectively if she can prove that the work was done properly in the first place i.e that the loft conversion is safe.

If we ask her to get indemnity insurance now but we actually invite the council to inspect the work, in say 1 year, in order to get a building regularisation certificate would this invalidate the policy if extra work does need to be done?
Because we have asked the council to come rather then them just turning up and telling us that extra steps have to be taken or the windows have to be moved for example...or have I got completely the wrong idea in the first place?:o

Richard_Webster

The policy only pays out if the Council take enforcement proceedings. If you get the Council round then the policy is invalidated but frankly once they have been round it isn't much use anyway.

Either they will give you a regularisation certificate or they will tell you what you have to do to put it right. They might take enforcement action, but really this is pretty unlikely - they are more interested in getting you to do the work.

They could put a reference to no completion certificate being issued for work in their records so it would show on a future buyer's ;local search - that would perhaps frighten a future buyer and would mean that you might have to go possibly considerable expense of getting it right.

It will be difficult for you to get a surveyor to tell you definitely now whether the work complies because he may not be able to carry out disruptive investigations e.g. removing plaster to see what is behind. So he would tell you in general terms if he thought there was a major issue in terms of safety just as he should if you were e.g. buying an older house with a loft used as a bedroom for 100 years. That is not the same as telling you that the work actually complies with all the present detailed regulations.

So most people if they were going to take the risk would get a surveyor to tell them if he saw any major issues with the work but then would not contact the Council and when they sold would perhaps offer a policy and hope that the buyers would accept the position - not ideal but its your choice!

Vixprincess

Thank you for that. We are still awaiting the survey results but hopefully they won't show any major issues.
I think that the conversion has probably been done well and correctly but it is an issue for us that there is no paperwork whatsoever. We just want to know that for now we aren't going to go through the floor or that the electrics won't burst into flames!
We do plan on getting the building regularisation certificate ourselves at a later date so that we can sell on without issue.

sonastin

Building regulations covers a number of issues. The big concern with loft conversions that aren't certified is the structural safety of the property. If your surveyor gives you an opinion on this, you can take a view on whether to go ahead. He won't be able to give you a definitive answer as to whether or not it is sufficiently strong to comply with the regs as he won't be able to see all of the structural elements e.g. rafters, purlins, etc but he'll tell you if he sees any warning signs or grounds for concern. Have you told your surveyor of your concerns before his visits the property? He'll give the loft a bit more attention and give it more thought if you pre-warn him but if you don't, you'll probably get a line telling you to make sure your solicitor gets the BR certs.

After structural stability, there is the fire escape question. Building Regs is about making sure that anyone can escape a fire and firemen can get access to rescue folk. If the conversion doesn't have a fire escape that complies with the regs, you can form your own view on who will use the space and the risk you are willing to take in relation to fire safety but in order to regularise the space, it will need to comply with the regulations. Your surveyor can tell you whether it currently complies and if not, what you'd need to do to bring it in code.

The 3rd major expense associated with loft conversions is insulation. The surveyor probably won't be able to do anything to tell you whether or not there is sufficient insulation to meet the current U-value requirements. If you are planning on getting it regularised, you should do it sooner rather than later as the insulation spec is increasing all the time. You'll have to accept that this aspect of the regularisation process is going to be pretty intrusive and chances are you won't have enough insulation up there. For your own pocket, it is worth putting in but make sure you budget for the additional expense.

Then there are all the other "little" things as well - wired in smoke alarm, electrics up to code, drainage approval if there is a bathroom up there, etc. Even down to, is there sufficient headroom. If you want the regularisation certificate, you need to be aware that it isn't just a matter of the building inspector coming out and having a look at your lovely room - there could be loads of work involved. Our vendors applied for a regularisation certificate but sold it to us without doing the work. We've decided it is easier to submit an entirely new building regulations application and start the whole conversion again from scratch as there is so much wrong with what is already there.

Vixprincess

Thanks sonastin that's really helpful - if a little scary, lol.
I must admit that the structural stability is our main concern at the moment and we realise that there will be no definitive answer until we can move in and take the floor up.
How would other people proceed?
What about asking the seller to look at getting the regularisation cert before we proceed and then we either (a) have the certificate, (b) can renegotiate the offer based on work that needs doing or (c) walk away

sonastin

In your shoes, I'd get the surveyor's professional opinion on what might need doing and the indemnity policy from the vendor. Provided you are happy with what the surveyor says and your mortgage company is happy with the indemnity policy, I'd then proceed with the purchase. After completion, I'd expose all the important stuff and find out what needs doing to bring it into code - WITHOUT involving building control at this stage.

Once you are in a position where you know what you might need to do and how much it might cost, you can make an informed choice on whether the regularisation certificate is worth the hassle or whether you want to share the info you've discovered with future buyers and hope that they are as open minded as you are.

As soon as anyone talks to the council, indemnity insurance comes off the table and it can make mortgages harder to come by. My solicitor had a helluva job getting my lender to confirm that we could proceed on the basis that we were going to sort out the regularisation ourselves - their answer was so equivocal that he insisted on exchange and completion on the same day in case they changed their mind.

Some aspects of building regulations are there to protect us all, some are there to protect the vulnerable and some are there to protect the environment. It isn't strictly legal and therefore I cannot advise you to take this approach, but I personally would make an informed choice on which aspects of the building regulations mattered to me and make my decision to buy based on those. The decision on whether to follow the rest would be pure economics of dealing with the council versus dealing with future buyers.

Vixprincess

Thank you so much, I really appreciate the advice.
Final question...

The policy only pays out if the Council take enforcement proceedings...Either they will give you a regularisation certificate or they will tell you what you have to do to put it right.

what exactly does indemnity insurance cover you for? The cost of removing the conversion in case of enforcement but not for works to put it right?

Richard_Webster

It will cover you for the cost of works to put it right but the crucial point is that enforcement happens. The Council are more likely to leave you in a limbo where, if asked, they tell others it doesn't comply and do nothing more but won't clearly say they are not going to take any action.

So in that kind of case you can't claim on the policy because they haven't actually taken any action, so it is very likely that you would end up having to pay for the work yourselves to get a regularisation certificate to satisfy a buyer.

If you don't contact the Council at all it is very likely indeed that nothing will happen while you own the property but the issue will come up again when you sell.

Vixprincess

Understood. Thank you both

Richard_Webster

I hadn't read Sonastin's comments but they certainly make sense here.

jimbog

The council may want to re-assess your council tax banding too