Problems with moving to temporary accommodation while refurbishing?

SouthLondonUser

What exactly, if anything, should you tell your bank if you plan to buy a property, but not move there right away, and either continue renting (if you are renting) or moving to a temporary rented accommodation for a period of 2 to 3 months, while you have the new property refurbished? I am not talking about buying a property which is uninhabitable – I’m talking about fitting new floors, refurbishing the bathrooms, fitting some bespoke furniture, etc, all things which could easily take from 2 to 3 months.

I had a slightly surreal conversation with a broker who, although he didn’t say it explicitly, basically implied that borrowers are better off not telling their lenders about this, because otherwise most lenders would consider the rent as an additional financial commitment (rather than just a temporary, and very limited outgoing) and reduce the amount they’re offered to lend accordingly.

What is your experience? Do mortgage contracts typically have clauses preventing borrowers from living elsewhere for a few months while they refurbish the property? There would probably be clauses requiring that to be the main residency, but I’d think it is arguable whether moving elsewhere for a few months while refurbishing would be a breach.

ACG

I wouldnt go as far as to say they will consider the rent as a commitment but your home insurance would normally be invalid if empty for more than 30 days/nights and the lender would also be concerned about an empty property for such a long period. Infact a lot ask if you ar emoving in immediately on completion.

SouthLondonUser

Are there insurance policies which allow for void periods while refurbishing?

I mean, surely I'm not the first, nor will I be the last, who's considering refurbishing a property, and living somewhere else while this happens. Is there a way to do this without breaching the terms of the mortgage and of the insurance?

Also, if it's a leasehold, then the insurance will be arranged by the freeholder, so, unless the terms of the lease require the property not be void for a period of X days, the leaseholder should be fine.

ACG

If its a leashold then its a little different and so you would need to speak to the management company.
Your broker needs to run it by the lender before applying.

SouthLondonUser

I would not speak to the managing company unless I absolutely need to.
I would confirm with my solicitor if the refurbishment, and my living temporarily elsewhere in the meanwhile, are compliant with the terms of the lease. If they are, I see no reason to speak to the managing company. Should I require consent (and maybe pay a fee) to the freeholder and/or the managing agent, that would be a huge red flag of potentially predatory behaviour by these parties, which would make me think twice about buying the property. I know of leasehold flats which are very hard to refurbish because all kinds of consents are required, not just for structural changes, as would be reasonable, but also for minor things like replacing filthy carpets with more elegant wooden floors.

By the way,my question is general: I have not found a property yet.

Thrugelmir

SouthLondonUser wrote: »

I’m talking about fitting new floors, refurbishing the bathrooms, fitting some bespoke furniture, etc, all things which could easily take from 2 to 3 months.

2-3 months sounds a very long time for a flat.

Westminster

Yes you can get a non-vanilla insurance policy.

We had something like 7-8 weeks between exchange & completion (I can't remember why now) so contacted a broker and paid a very tiny amount over and above what a standard policy would have cost. The difference was so small that we let the same policy run for a full 12 months rather than cancel it (incurring something like a £30 admin fee before pro-rata refund).

We used these people: http://www.gsi-insurance.com but I'm sure there are plenty of other options out there. I probably googled something like 'unoccupied property insurance'

SouthLondonUser

Thrugelmir wrote: »

2-3 months sounds a very long time for a flat.

Not if the builders are ****bags and take on multiple jobs at once so are never at your place. Something which has happened to many people I know.