Indemnity - Sellers didn’t get planning permission

CodeMatcha

I found my dream home 6 months ago and chose it due to a rather amazing lounge extension which would be an great play area for my kid. One of the first things I asked the solicitor to confirm was that the seller had obtained all the correct planning permission.

Unfortunately it took ages to get responses and we are about to exchange. I have finally heard that the lounge did not have the correct planning permission due to the area they are in. This was extremely annoying as it is a big reason I am buying the house, and I am not sure what the council would do if they found out. The seller is insisting that they don’t need planning permission and so won’t buy indemnity, but my solicitor is telling me that they do. 

I asked how much indemnity would be and was given a quote for about £200. Considering that the seller failed to get planning permission, I do feel they should pay.

My solicitor is going back to them  to explain why they needed planning permission.

I was wondering people would do here. I don’t want to back out after waiting 6 months, but since the extension is only 2 years old I believe I could still be asked by the council to  remove it? I am assuming I really do need indemnity in this case. 

Shall I stick to my guns regarding them paying, or just give up and pay? We already have a long impatient chain at this stage...

Cakeguts

Did they cut any corners building that extension?  They obviously didn't apply for planning permission either because they knew it would be refused or because they didn't want to pay for it. 

I hope you have had an extensive survey done on the house and not just a homebuyers report.

Mickey666

Firstly, I understand your point of principle that the vendor should pay for the indemnity policy and I agree that they should.  But they don't HAVE to.   However, I really don't think this is a big issue either way.  £200 is peanuts and I wouldn't waste too much time worrying about it.  Are you REALLY prepared to lose the house over £200?

What would worry me is the lack of PP.  In that respect I'd want to read the proposed indemnity policy VERY carefully to find out EXACTLY what it covers.  For example, what if the extension DOES need PP and what if the council WON'T grant retrospective PP?  Suppose they issue some sort of demolition order?  How would the indemnity policy protect you from all that?

So, forget the £200 and decide what you're going to do about the PP position.  Seems to me you have three options:
1. Buy the house and the insurance policy but be prepared for upheaval in case the council finds out your new house has no PP for the extension.
2. Ask the council to confirm if the extension needs PP and would they be prepared to grant retrospective PP
     2A - Yes, then buy the house and apply for retrospective PP
     2B - No, then walk away
3.  Walk away

PS: presumably the extension has no building regs certificate either.  How can you be sure it conforms to the building regs?  if it doesn't in any significant way it might be impossible to get retrospective PP

Slithery

Cakeguts said:

Did they cut any corners building that extension?  They obviously didn't apply for planning permission either because they knew it would be refused or because they didn't want to pay for it. 

I hope you have had an extensive survey done on the house and not just a homebuyers report.

Or the vendors builder told them they didn't need it just to get the job and they didn't look into it any further.

CodeMatcha

I believe it was a more extensive survey than the homebuyers.

I am obviously not an expert but it looks like they have stuck to the building regulations and have certificates for the work done.

The confusion seems to be that our new-ish build estate as has extra limitations on what you can build. Apparently in most areas it wouldn’t need planning permission.

I am hoping they just didn’t realise this, but it is odd that they are refusing to concede that they were incorrect - unless my solicitor is somehow wrong. 

davidmcn

Mickey666 said:

In that respect I'd want to read the proposed indemnity policy VERY carefully to find out EXACTLY what it covers.  For example, what if the extension DOES need PP and what if the council WON'T grant retrospective PP?  Suppose they issue some sort of demolition order?  How would the indemnity policy protect you from all that?

Ultimately the insurance would pay out the loss in value to the property (cover is usually for the full price of the property) if any legal challenge or other cheaper solutions don't work.

CodeMatcha

Mickey666 said:

What would worry me is the lack of PP.  In that respect I'd want to read the proposed indemnity policy VERY carefully to find out EXACTLY what it covers.  For example, what if the extension DOES need PP and what if the council WON'T grant retrospective PP?  Suppose they issue some sort of demolition order?  How would the indemnity policy protect you from 

Thanks, this is very helpful. I will carefully read the proposed indemnity insurance, although our solicitor said that it would cover us if we were forced to remove it.

I was also told that after 4 years it was OK and it was unlikely the council would notice unless a neighbour complained.

It has been up for two years and so far no one has noticed.

If I had known this at the start I wouldn’t have made an offer on the house, but I am not in a position where I can really wait longer to move. It would be a massive loss if it was taken down, but I guess I am now willing to risk it as long as indemnity covers the costs and it is a small chance of happening anyway. 

Buying a house is stressful! 

princeofpounds

Is the extension not covered by permitted development rights? You describe it as single storey; how is it positioned relative to the main house and how large is it? (A diagram would help a lot)

CodeMatcha said:

The confusion seems to be that our new-ish build estate as has extra limitations on what you can build. Apparently in most areas it wouldn’t need planning permission.

For the avoidance of doubt, are these really planning restrictions, or are they covenants on the title deed? The latter would be a more usual restriction than the former, and are handled differently.

CodeMatcha

I can’t see anything on the title deed, but the solicitors said ‘it is in an area where the council would have restricted ‘permitted development rights’.

edit: it doesn’t say ‘would have’, I couldn’t copy and typed it incorrectly. It says they have restricted permitted development rights.

It is definitely small enough that it is usually covered by permitted development rights - and that is why the sellers are saying they didn’t need planning permission.

I have checked and it does have a building regs certificate. 

princeofpounds

CodeMatcha said:

I can’t see anything on the title deed, but the solicitors said ‘it is in an area where the council would have restricted ‘permitted development rights’.

Have you double-checked this? Don't speak directly to the council about this because it will stop the possibility of an indemnity, but it should be in the planning documents that you can access. The solicitor is probably right but 'would have' sounds slightly more ambiguous. 

£200 isn't too much to get hung up on when it comes to a transaction, but you're right to say that the sellers should pay. They will have this problem whoever they try to sell the property to. I wouldn't be surprised if they cave in, if you were to pull out (but can't guarantee it). 

Also bear in mind that the indemnity does not necessarily protect the extension until the planning enforcement period ends, but it would compensate you if you have to lose it.

Having said that, I think it's unlikely to be enforced given it's been there two years already. 

I know the owners have been stupid, but why oh why do councils do silly things like removing PD rights on new build estates? Do they think it makes life better for anyone? 

macman

What they are referring to is an 'Article 4' direction, which removes your rights normally allowed under PD. Check to see if that is in place for your estate. These are usually reserved for Conservation Areas, rather than new-build estates. On that basis, I'd expected the issue to be a covenant prohibiting certain types of extension to the property.
They LA can enforce up to 4 years from the date of the works, so you do need to resolve this.