Does indemnity insurance mean you can't do any later work on a house?

cathy_s_93

We're first time buyers very near completion on a house that we absolutely love, however there is a loft conversion (not a bedroom, but an office/hobby room) that has never had building regulations applied for. Our solicitor is investigating and says that if it's more than 20 years old, it's basically a non-issue. We're yet to hear back on that. It's a bit concerning as in the Property Information Form, our buyers said 'no' to has there ever been any building works on the property - when there is clearly a loft conversion! The only explanation I can think is that they misinterpreted the question as being during their time there (they bought in 2000, in which case the conversion would be 20+ years old) or they're trying to hide something.

Our solicitor has mentioned us taking out indemnity insurance as an security measure. I've done some research into this and although I'd be generally happy to go for it (it's cheap, allows us to reach completion quicker...) I have found a few articles that have raised concerns. As a new poster I can't post links unfortunately but here are the quotes...

"Indemnity insurance is not appropriate where the purchaser intends to carry out works following completion for which building regulations approval will be required as they will need to approach the local authority about the new works, which would be likely to bring the insured works to their attention, thereby invalidating the policy."

"However, the policies become invalid if anyone makes an approach to the local council to ask about a lack of a building regulation certificate, therefore on no account should the local council be notified or contacted, since to do so will cause a far greater problem."

"Indemnity insurance is invalidated if you reveal the defect to a third party, which in practice usually makes it impossible to remedy the defect without invalidating the insurance"

This makes it sound like if you were to ever apply to do any further work on this property, your indemnity insurance would become invalid. I'm concerned by this as the house has an integral garage which a later buyer might one day want to convert, and other properties in the road have had a conservatory added. We don't have any plans to do this but what if a prospective buyer in the future did? Would we need to inform them of the indemnity insurance which could then put them off buying as there's no chance of doing upgrade work to it ever again...?

I spoke to my solicitor about this and he said it's debatable, the building regs. apply to that specific piece of work and it's very unlikely that an application for a garage conversion, for example, would bring up an investigation into a loft conversion. I'm not convinced though.

My parents, who are gifting a large proportion of our deposit, are having kittens as they're saying this could really put off future buyers. Having no experience of buying/selling houses I have no idea how true all of this is and just wanted to hear some other's opinions!

davidmcn

If it is over 20 years old (presume your surveyor can make an educated guess if you can't) then I really wouldn't worry about it. The council aren't going to demand you do something to make it comply with a version of building regulations which don't even apply any more.

cathy_s_93

Thanks @davidmcn...

Our survey was done over a month ago and our surveyor actually made very little mention of the loft space at all. We actually had a homebuyers survey + valuation done all in one by our mortgage provider, so I'm a little hesitant about letting him know about the lack of building regs. right now in case they drop their valuation.

Do you know if it could be possible to prove that the work was not done by the present occupiers? Or if they are liable if they say it wasn't them, then later on it transpires they had lied?

davidmcn

They won't change the valuation, the valuation will assume any works have all the consents and they leave it to the solicitors to check any paperwork / obtain indemnities / take a view on it. Have you really no idea how old the conversion seems to be?

If you're not even planning to do any works yourself, then it's even more likely to be ancient history by the time a future owner wants to contact the council.

hazyjo

Are they selling the space as a bedroom?


If not, they obviously would say 'no' as they're basically just admitting to having a boarded loft.

cathy_s_93

@hazyjo

They're not selling the space as a bedroom. It's described as an 'attic space' in the EA property description. The house is valued as 3 bed by the surveyor - I have checked on Zoopla and next door actually sold for the same price as we're buying it for last year, it is a 3 bed without any loft conversion.

My main worry is that we take out indemnity insurance and then later find out that purchasers are put off because this means they can't do any further work on the property, without invalidating the indemnity insurance? I was under the impression there is no time limit on when the council can ask you to alter works: "The Council have a 2 year window for enforcement, but unlimited injunction powers if there is danger to health and safety."

davidmcn

cathy_s_93 wrote: »

I was under the impression there is no time limit on when the council can ask you to alter works: "The Council have a 2 year window for enforcement, but unlimited injunction powers if there is danger to health and safety."

If the property is a danger to health and safety then you'd be worried about that before the council come round! The existence of consents doesn't necessarily mean it won't become a danger. But I've never heard of such powers being used other than for seriously dilapidated old buildings or where there has been e.g. storm or fire damage.