Just found out my house is of non-standard construction -- liability of seller/agent?

alexanderalexander

I completed on my 1920s-era house in February 2014 having had an offer accepted in October 2013.

I applied for a mortgage and was offered it (I never saw the valuer's report though). No issues regarding the construction were raised during the conveyancing process (I didn't get a homebuyer's report or buildings survey done; yes I know doing so would probably have avoided this problem....). The exterior of the house was completely covered in a thick rough render, and I suppose I just always assumed it was bricks underneath the render.

I have recently applied for a remortgage. The new valuer's report stated that the property is of a non-standard construction, as underneath the render it is a steel-framed concrete building. This came as a complete shock to me (I didn't even think such techniques were used in the 1920s). My mortgage application has now been declined as the new lender won't lend on non-standard construction.

For various reasons, I am probably not going to end up pursuing a claim against either the seller or estate agent. However, I am curious as to what their obligations might have been as I understand from various articles in the property trade press that the principle of caveat emptor has within the past few years been softened with regard to residential property transactions, and there are now some proactive disclosure obligations on both sellers and estate agents. I cannot, however, find any decent summary of the new law, nor even the date on which the law changed!

With regards to their knowledge in this case, the sellers would certainly have known about the non-standard construction as they did a substantial renovation and extension a few years before I bought. I don't know about the agents' knowledge, but it turns out the whole estate of which my house forms a part is of this same non-standard construction and I know they had sold several other of these properties, so I think it likely that they would have known about it (albeit that I couldn't prove this).

anselld

IFAIK the change was introduced by The Consumer Protection (Amendment) Regulations 2014 in force from October 2014.

Davesnave

One thing you have not mentioned is whether the price you paid reflected the non-standard method of construction.

It seems to me that if the house was valued at the figure you offered, you have, on paper at least, made no loss.

As you surmise, proving what the seller and the agents knew, or could reasonably have considered relevant, would be hard, no matter when stricter rules re disclosure arrived.

The fact that the house wasn't flagged up as non-standard at valuation surprises me if it's one of many on an estate, as I thought that sort of information is shared by financial services, just like insurance risks are in that industry. The valuer, however, would just have given it a cursory 'drive-by' type of inspection.

Thrugelmir

alexanderalexander wrote: »

I completed on my 1920s-era house in February 2014 having had an offer accepted in October 2013.

I applied for a mortgage and was offered it (I never saw the valuer's report though). No issues regarding the construction were raised during the conveyancing process (I didn't get a homebuyer's report or buildings survey done; yes I know doing so would probably have avoided this problem....). The exterior of the house was completely covered in a thick rough render, and I suppose I just always assumed it was bricks underneath the render.

I have recently applied for a remortgage. The new valuer's report stated that the property is of a non-standard construction, as underneath the render it is a steel-framed concrete building. This came as a complete shock to me (I didn't even think such techniques were used in the 1920s). My mortgage application has now been declined as the new lender won't lend on non-standard construction.

For various reasons, I am probably not going to end up pursuing a claim against either the seller or estate agent. However, I am curious as to what their obligations might have been as I understand from various articles in the property trade press that the principle of caveat emptor has within the past few years been softened with regard to residential property transactions, and there are now some proactive disclosure obligations on both sellers and estate agents. I cannot, however, find any decent summary of the new law, nor even the date on which the law changed!

With regards to their knowledge in this case, the sellers would certainly have known about the non-standard construction as they did a substantial renovation and extension a few years before I bought. I don't know about the agents' knowledge, but it turns out the whole estate of which my house forms a part is of this same non-standard construction and I know they had sold several other of these properties, so I think it likely that they would have known about it (albeit that I couldn't prove this).

How many lenders have you tried ? If it's just the one consult a local mortgage broker. As you say yourself properties are being sold which suggests mortgages are available.

alexanderalexander

Davesnave wrote: »

One thing you have not mentioned is whether the price you paid reflected the non-standard method of construction.

It seems to me that if the house was valued at the figure you offered, you have, on paper at least, made no loss.

I have done some digging around on Land Registry sold prices (quite easy as there are some otherwise near-identical houses which are brick built in the vicinity), as well as asking around with neighbouring property owners, and I would estimate I overpaid by at least £10k, and possibly as much as £20k, due to the non-standard construction.

Davesnave wrote: »

As you surmise, proving what the seller and the agents knew, or could reasonably have considered relevant, would be hard, no matter when stricter rules re disclosure arrived.

It can be shown beyond reasonable doubt that the sellers must have been aware due to the renovations and extension they did to the property a few years before I bought (it's impossible that they could've done that sort of work and not discovered the non-standard construction). I agree that I can't prove what the agent knew.

Davesnave wrote: »

The fact that the house wasn't flagged up as non-standard at valuation surprises me if it's one of many on an estate, as I thought that sort of information is shared by financial services, just like insurance risks are in that industry. The valuer, however, would just have given it a cursory 'drive-by' type of inspection.

I never saw the original valuation report, so I don't actually know whether or not it was flagged up as non-standard (I have since been made aware that my original lender is, by chance, one of the more liberal lenders when it comes to non-standard construction houses, so it's perfectly possible that it was flagged to them and they just weren't bothered!).

TBagpuss

Did the seller or their agents state specifically that it was of standard construction?

I think you would only have a claim if they had specifically stated something which they knew to be untrue.

As you say, had you had a proper survey this should have come up (and if it hadn't, you might have had a claim against the surveyor)

alexanderalexander

I think I might've almost found the answer for myself -- it looks like it is the Consumer Protection from Unfair Trading Regulations 2008 which is the relevant regulation: http://blogs.lexisnexis.co.uk/purposebuilt/consumer-protection-in-the-property-sector/

From reading a couple of pieces of guidance, it does seem that this could well be a "misleading omission" under these Regulations. However, it is not clear to me whether it is only agents who are bound by this, or are sellers bound as well?

Thrugelmir wrote: »

How many lenders have you tried ? If it's just the one consult a local mortgage broker. As you say yourself properties are being sold which suggests mortgages are available.

I believe that there are some lenders which will lend on these properties, but it is a greatly restricted number and would mean paying a notably higher interest rate.

Cakeguts

Is the property an ex local authority house? There are some local authority houses that were built at a certain time I can't remember what the date was that tend to be non standard construction and this seems to be fairly common knowledge. You can tell by the way they look. It is possible that the agent and the seller thought that you knew because it is often common knowledge and you didn't have a survey. There are sometimes house on the same estate that have been updated to brick construction. The ones that are still non standard construction tend to be rendered on the outside. The brick ones are the added evidence of the non standard construction of the others.

It sounds as if you have bought a house in an area that you didn't really know much about.

davidmcn

alexanderalexander wrote: »

It can be shown beyond reasonable doubt that the sellers must have been aware due to the renovations and extension they did to the property a few years before I bought (it's impossible that they could've done that sort of work and not discovered the non-standard construction). I agree that I can't prove what the agent knew.

But I don't think reasonable to presume that sellers ought to know that it's something they should be disclosing, if you've had a surveyor round (albeit only for your lender) and you didn't ask them any questions about the construction.

Also, presuming your lender's surveyor did spot the non-standard construction, they were still happy to sign off to the lender on the value and/or any adverse effect on marketability - so maybe it isn't all that significant? You haven't told us the value so I don't know what £10k is in percentage terms.

lemon26

We had similar problems when selling our last house. I'd bought it and the survey said that it was of standard construction, the remortgage said it was of standard construction yet, when we came to sell, the same surveyor (purchase and remortgage) then turned round and said that it was of non-standard construction (Dorran - PRC concrete). Whilst the buyer could get a 'defective homes' mortgage (the council couldn't provide proof that remediation had been carried out, even though it had been), she couldn't afford the interest rates for such a mortgage.


We disputed the survey with the surveyor, as in how come it took three surveys for the same surveyor to recognise the house was of non-standard construction (?!), and they agreed to settle the difference between a cash sale (the buyer couldn't afford the mortgage) and market value for a equivalent standard construction house - albeit without admission of liability!

teneighty

The trouble you will have is proving the agent knew it was non-traditional construction. It is not always that easy to spot, especially the early ones.

I made an offer on a 1920's non-traditional house in Wiltshire and it was incredibly difficult to identify. The agent swore blind it wasn't non-trad and even sent an email from their in-house valuer/surveyor which stated in writing that non-traditional houses were not built before 1945. This is the caliber of most agents and valuers, they really haven't got a clue. But it is not the agent's job so why should they have known.

The trouble is you did not have a survey, that would have been your saviour, even if they missed the construction they would have been liable.