Side extension no building regulation completion certificate - Will resell be a problem?

tristanjourney

Hi all,

I am buying a house. The house has undertaken a 2-storey side extension in around 1994. The seller provided planning permission approval and building regulations application approval. However, there is no building regulation completion certificate for the extension works.

After some my own research, I think there are three options for me:
1) Request a Certificate of Regularisation from the seller
2) Go for the building regulation indemnity insurance to satisfy the lenders and proceed
3) Walk away

For 1), I don't think seller will do it. Even they are willing to do, it is unlikely it will pass the current building regulations.

For 2), many people believe indemnity insurance is useless and mainly for satisfying the lender. More importantly, the indemnity insurance will be invalidated if someone approach the council regarding the missing completion certificate. If I go for route 2), my understanding is that future re-sell maybe a problem as lenders require indemnity insurance and this insurance can be easily invalidated. If someone approach the council, this means all buyers who need a mortgage will not be able to secure mortgage due to the indemnity insurance is invalidated. This basically makes the house unsaleable.

Am I understanding the problem correct?

Any comments are welcomed! Thanks in advance.

maisie_cat

Although completion certificates were brought in around the early 1990's, many works do not have them. If the extension is still standing I would go down the indemnity route to satisfy any lenders, if it hasn't fallen down by now it would probably need an external force to do so. If you think about it the extension is an obvious addition, but all the works that have been done over the years are not obvious. You cannot avoid all risk when house buying unless you buy new, and not even then really..

tristanjourney

maisie_cat wrote: »

Although completion certificates were brought in around the early 1990's, many works do not have them. If the extension is still standing I would go down the indemnity route to satisfy any lenders, if it hasn't fallen down by now it would probably need an external force to do so. If you think about it the extension is an obvious addition, but all the works that have been done over the years are not obvious. You cannot avoid all risk when house buying unless you buy new, and not even then really..

Thanks for your reply. Do you think that future resell would be a problem given that an indemnity insurance can be easily invalidated?

Doozergirl

1) Building Control Approval was applied for. It would only need to comply with the regulations in force at the time. People don't go to the effort and cost of applying for BCA and not carrying it through. It's probably only missing the final inspection.

2) Sort of, but in reality no one actually knows if Building Control have been contacted by a previous buyer (for example) unless BC make some sort of move to enforce. The next buyer could have one and people are none the wiser. So it's only once you need to use the policy that one might ever find out if had been invalidated.

Given that Building Control don't go around enforcing very much at all, the likliehood of there ever being an issue is close to none.

However, enforcement could only ever take place if there some serious structural concern and a court injunction is obtained. Any serious defect would be picked up by a buyer's surveyor immediately and they wouldn't lend in the first place!

Having a proper survey reduces the liklihood of enforcement close to zero - if a surveyor doesn't pick something up, Building Control will not. The problem for a mortgage company and any buyer would be a structural problem with the house, not the lack of paperwork. By having a proper survey, you're eliminating the reasons that BC might ever seek to enforce.

This house yo're looking at has saught approval but is missing a certificate. If any work is missing (and it may well be perfectly fine for its time) then it's unlikely to be anything serious.

It's all a nonsense. Quality of work is visible most of the time, and it is surveys that are important in these cases, not the actual paperwork.

Buyers may be nervous, but it's usually a lack of knowledge that makes them that way. People will always pull out sales for reasons that others wouldn't.

Is it possible that the house is unsaleable? Not really, no. Even if there were enforcement, it doesn't render the house unsaleable. It just mean the work should be done correctly...

Doozergirl

maisie_cat wrote: »

Although completion certificates were brought in around the early 1990's, many works do not have them. If the extension is still standing I would go down the indemnity route to satisfy any lenders, if it hasn't fallen down by now it would probably need an external force to do so. If you think about it the extension is an obvious addition, but all the works that have been done over the years are not obvious. You cannot avoid all risk when house buying unless you buy new, and not even then really..

The Building Act of 1984 is where Building Control was consolidated, not the early 90s.

Saying that if something hasn't fallen down it's fine is not a sensible way to persuade people that Indemnity Policies are okay. I've also replied to the OP, but the absolute key in these situations is to satisfy yourself that there is no reason for Building Control to make an enforcement order and that is to have a decent survey and satisy yourself that the property is safe. An Indemnity Policy is only okay when the question of structural integrity is answered, not assumed.

A little knowledge is a dangerous thing on this board.

tristanjourney

Thanks for your detailed explanations.

Doozergirl wrote: »

2) Sort of, but in reality no one actually knows if Building Control have been contacted by a previous buyer (for example) unless BC make some sort of move to enforce. The next buyer could have one and people are none the wiser. So it's only once you need to use the policy that one might ever find out if had been invalidated.

But if someone really directly approached the council and the solicitor aware of that council is approached, then everything is ruined, right?

Doozergirl wrote: »

Is it possible that the house is unsaleable? Not really, no. Even if there were enforcement, it doesn't render the house unsaleable. It just mean the work should be done correctly...

The saleability concern from mine is more of the invalidated indemnity insurance would ruin all potential buyer's mortgage. I am not too worry about the council's enforcement as the extension looks solid and am also asking my surveyor's opinion and still waiting for the response.

Doozergirl

tristanjourney wrote: »

Thanks for your detailed explanations.


But if someone really directly approached the council and the solicitor aware of that council is contacted, then everything is ruined, right?


The saleability concern from mine is more of the invalidated indemnity insurance would run all potential buyer's mortgage. I am not too worry about the council's enforcement as the extension looks solid and am also asking my surveyor's opinion and still waiting for the response.

Different solicitor, different buyer, no. It's not ruined.
The point I am making is that the next person doesn't know and if the house is solid, it doesn't matter. Building Control already know there's an unfinished extension. Do they care? Clearly not. They don't even have the resources to chase up open applications. Nobody knows who spoke to building control about what and when, because the instructions are not to contact them! That house could have been bought and sold several times over the last 20 years with conversations every time with building control. No one knows unless they ask too. The last people to ask will be the mortgage company because they're asking for the policy to cover them!

If you're not concerned about enforcement, then there's little point being concerned about the piece of paper that covers the enforcement that you're not worried about.

The paperwork is not the important thing, the quality of the work is. The indemnity policy would only ever be important if the quality of work was exceptionally poor. You shouldn't be buying the house anyway if it is. If the house is solid, the policy will never ever be claimed on.

The indemnity policy is indeed a ridiculous exercise made to appease mortgage companies. You should satisfying yourself that the house is good with a decent survey and a structural engineer's report if necessary.

Did the vendors build the extension? If they did, they could probably get it signed off fairly easily anyway. They'll know what happened, even if it is a distant memory.

fezster

Building regulations can only be enforced in the first 12 months. Planning is 4 years, I believe.

https://www.planningportal.co.uk/info/200128/building_control/38/building_regulations/3

If the extension is structurally sound and you are happy it has been built to a good standard, then I would proceed and not worry about the indemnity nonsense. Your mortgage company may insist on it, but it will never be exercised and so building control being made aware is irrelevant. It's just a box ticking exercise. Any future buyers (who are sensible) will reach the same conclusion on an extension which is over 20 years old. Any decent solicitor will also explain what I have said above.

Doozergirl

fezster wrote: »

Building regulations can only be enforced in the first 12 months. Planning is 4 years, I believe.

https://www.planningportal.co.uk/info/200128/building_control/38/building_regulations/3

If the extension is structurally sound and you are happy it has been built to a good standard, then I would proceed and not worry about the indemnity nonsense. Your mortgage company may insist on it, but it will never be exercised and so building control being made aware is irrelevant. It's just a box ticking exercise. Any future buyers (who are sensible) will reach the same conclusion on an extension which is over 20 years old. Any decent solicitor will also explain what I have said above.

Any decent solicitor will know that there is no time limit on enforcement! Yes, indemnity policies are a nonsense, but not the for reasons that people on here are giving.

After 12 months, Building Control would need a court order to enforce. I am talking about quite serious structural defect for it to be worth it, but the threat is not entirely removed. It's exactly why I am repeating myself by saying that where you need to be satisfied that the building is structurally sound. If you are, then Building Control will be.

Planning is 4 years in most circumstance but certainly not all and there is no time limit on listed buildings. You need a better 'decent' solicitor.

tristanjourney

Doozergirl wrote: »

Different solicitor, different buyer, no. It's not ruined.

Could you please explain it more? I don't really understand this.
The worst case scenario I could image is that if I buy this house with the indemnity insurance and after a few years I want to sell it. If a potential buyer approach the council regarding the completion certificate and notice that there is no completion certificate, then this potential buyer inform me that they have found from council that there is no completion certificate and they walk away. At this stage, both this potential buyer and me are aware of that the council is approached, so my existing indemnity insurance is invalidated. Given that I am also aware of the indemnity insurance is invalidated by the impulsive behaviour of this buyer, I will not be able to sell the house to other buyers who need a mortgage, right?

Doozergirl wrote: »

Did the vendors build the extension? If they did, they could probably get it signed off fairly easily anyway. They'll know what happened, even if it is a distant memory.

Yes, the extension is built when the vender living in the house. Since it is an extension long time ago, I doubt the feasibility of getting it signed off due to 1) building regulations have changed a lot 2) It may involve open up and seller will unlikely to agree.

Hoploz

Speak to the seller. Ask the question - there was an application, but doesn't seem to be a completion certificate ... Why?

It could be something very simple that would put your mind at rest. They might have changed their plans, not received the certificate they needed from electrician then forgot about it ... (this is where I am at the moment, 2 months after the job finished I've just chased them up. It most people would've forgotten all about it!)

Just have a conversation! As already said, if they applied then it's unlikely they have deliberately set out to do things wrong, or done a bodge DIY job