Advice on House Valuation and Building Warranties

jc92

Hello,

We're in the process of buying a house. The vendor bought the property in July for the purpose of renovating and then selling on. He has had the property rewired, new heating system and new glazing. He has also removed an internal wall and has all the BC certs and commissioning certs.

We are currently in a fixed 2 year mortgage with Halifax which we've been told we can port over for the new mortgage. The valuation took place in December and the results came back this month with the comments that they were unable to provide a valuation as the property is not acceptable to the lender due to no building warranty being in place at the date of valuation.

Now, what I, my conveyancer, the estate agents and the vendor are disputing is that this property needs a building warranty at all (NHBC or similar). My conveyancer spoke to the surveyor and asked the Seller’s solicitors to advise what works were carried out and how these were undertaken as the valuer seemed to think that works of a structural nature where it has been necessary for the owners to vacate the property classify as requiring either an Architect’s certificate or build warranty together with a CML form. My conveyancer does not agree with the surveyor at all and thinks in no way does a removal of an internal wall justify a warranty or CML form. If this was the case then this would be required on every refurbishment property.

My mortgage broker has spoken to other lenders who have said they will lend against the property without the building warranties as these are not required for the type of work that have taken place. This is all good, but if we leave Halifax we will need to pay an early exit fee of over £3000, we have also been told we will not be refunded the £350 for the valuation.

We will be speaking to the surveyors asking for a second opinion, but does anyone have any knowledge of this, and what constitutes as requiring a building warranty?

kingstreet

From Halifax criteria;-

An initial occupancy/new build property is classed as any property being occupied and/or sold for the first time on the open market in its current state and includes converted and refurbished properties. These will fall into one of the following categories:

Newly built property.

Refurbished property i.e. refurbishment of an existing residential property, typically a re-furbished property will be considered as initial occupancy where the vendor is a builder/developer and the property has been vacated to allow for the refurbishment to be undertaken.

Newly converted property i.e. conversion of an existing non residential property, e.g. an existing mill converted into flats.
A property, either new or converted (as above), that has been tenanted and is now offered for sale by the builder/developer.

Property must be subject to one of the following building control and monitoring requirements:

Building Standards Indemnity Scheme from a warranty provider accepted by Lloyds Banking Group (see below for acceptable warranty providers)

Professional consultant where small, solely residential development of no more than 15 units – consultant must meet qualifying criteria
An acceptable guarantee from a development corporation or local authority where they are the vendor.

pinklady21

How much would it cost to get the warranty or certificate that the lender is asking for?

davidmcn

Refurbished property i.e. refurbishment of an existing residential property, typically a re-furbished property will be considered as initial occupancy where the vendor is a builder/developer and the property has been vacated to allow for the refurbishment to be undertaken.

That's a bit broad - it could have been vacated simply because e.g. there wasn't a fitted bathroom for a while, but you're not going to get an architect's certificate saying they supervised the fitting of the new toilet!

I would agree with the OP's conveyancer that should only be relevant where there's been a wholesale gutting/rebuilding of the property, but they'll probably have to confirm with Halifax given their stated policy.

jc92

pinklady21 - This would have been up to the vendor to find out. The estate agent and vendor have spoken to the mortgage broker that we will be using and as it seems that most other lenders will lend against this property without needing these warranties (as they do not class the property as a new build or converted property) because of this, the vendor will not pay for a retrospective warranty as it doesn't see it as needed.

I've now got a 2nd opinion from the surveyors and they are classing warranties as needed due to the initial occupancy, and that it was a developer that renovated the house. Hopefully other lenders do not have the same view

betsie

I only thought you needed a warranty for a new build. Did the works ger signed off by the building inspector at the local council? If yes I would argue this was sufficient.
Have you asked if they will accept indemnity insurance to cover the risk? We have bought these before to progress a sale and only ever cost between £100-£200 ask your solicitor to see if this is an option.