'New Build' Definition for Mortgage

gillpsimonb

We have converted a large house into two flats. We basically just reconfigured what was there (so no new openings or build on etc) and refurbed it completely (new CH, wiring, new kitchens/bathrooms etc).
We tried to sell them but our prospective buyers mortgage company deemed it to be a 'new build' and therefore required a warranty (we looked into this and the a cost was about £4000). We had no idea that this would apply to a house conversion.
We have now rented them both out for a period - Brexit effect didn't help with finding buyers.
What I would like to know is ... is there a way to find out what the definition of 'new build' is for mortgage companies .... can we avoid the need for a costly warranty by renting them for a period and if so what is that period?
Any and all advice gratefully received - Thanks, Gill

Slappermum

Try this. Add a w to the beginning as I am not allowed to post links.

ww.cml.org.uk/lenders-handbook/englandandwales/question-list/1919/

Also, I could swear I saw a similar list of lenders' definitions of new builds, but I can't, for the life of me, find it.

I do know that we bought a flat converted within the last 10 years and Santander was happy with the fact that the conversion was overseen by a professional accredited by one of the organisations listed. The flat had been rented for a while before we bought it (from the person who did the conversion).

davidmcn

I wouldn't regard it as being "new build" unless it involved more significant structural etc works - so e.g. a warehouse which is completely gutted and converted into flats would be, but not something as described in the OP. Might just need someone with more sense to review it.

gillpsimonb

Someone suggested that Santander will proceed without a warranty if only two flats created from conversion.
We were hoping that if the properties are occupied for a period then the 'new build' definition would have been removed... but maybe that is just common sense rather than reality. In the good old days you would have just had a structural survey done and the mortgage company would accept that.

gillpsimonb

Sensibility doesn't seem to apply. The mortgage companies seem to have become so procedural that they don't actually engage brain and look at each individual case on its merits. Lots of this process is now outsourced as well - so even more procedural and tick boxy

Slappermum

Yes, Santander is OK with it if it's less than 4 flats.

Regarding the renting bit, some lenders (Halifax being one of the high street ones"), state that they

"would lend, provided there are no more than 15 properties on any one development site and construction has been monitored by a professional consultant.

We only require this where the new property is to be occupied for the first time"

so maybe you actually ticked that box

kingstreet

Halifax criteria in full;-

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.

A final inspection is required to confirm completion of the new property unless covered by an acceptable new build warranty provider.

Barn conversions / converted properties are subject to a full retention pending completion of works and subject to new build criteria.

davidmcn

kingstreet wrote: »

Halifax criteria in full;-...the property has been vacated to allow for the refurbishment to be undertaken.

That's not really a great test, is it? It could have been vacated simply because nobody wanted to share the house with a bunch of workmen, rather than because the works are significant enough to require a warranty.

gillpsimonb

Seems a bit like a minefield - we seem to have got caught in a hammer to crack a nut situation. What we have done is not really a new build it is just a reconfiguration of an existing building. Common sense has been replaced by rigid unthinking procedure. Mortgage companies want NO risk so make it more expensive for their customers or those selling property. Thanks for your help looks like we will have to try and get a sensible lender when we come to sell.