Trying to purchase commercial to residential conversion - a timeline

anxioussquirrel

This is not a question. I'm just sharing this story to warn others about the things that can go wrong in the process of buying an unusual house (because it will) and also as a therapeutic vent as I'm trying to swallow my angry tears and turn them into maniacal laughs as I'm pulling my hair out one by one. Strap in and let's start.

July 2020 - when the first lockdown in Scotland was lifted and viewings reopened, we found a lovely dream house that ticked all the boxes. We are arty people, we like unusual buildings and this was an old industrial building with lots of character, newly converted into flats. This was the first mistake. Do not do this. Do not be different or have snobby requirements to live at an interesting place and do not try and do and live anywhere different than a bog standard house. I'll explain why.

Still July 2020 - we were delighted to have our offer accepted and we started the mortgage application promptly. The offer was not outwith our budget and although I was on furlough, we are both employed, we have saved up, have no credit, car loans, anything else at all and we expected it to go smoothly. The only thing we weren't doing is putting our existing flat on the market because we wanted this house so badly that we weren't really organised, however our current place is so small that this would still be very affordable. (Absolutely do this. Do not enter a chain if you don't have to.)

August 2020 - we were informed that the bog standard mortgage lenders prefer bog standard houses and very few have a category for a conversion that is not a new-build as a building but is a new-build as a residential development. One of these lenders were the notoriously slow ones, however, they had a good product, reasonable rates, and we were happy to restart our application with them. At this point, they also had a guaranteed turnaround of 2 weeks because they tried to shake off their notoriously slow image, so we were dreaming about getting it through fairly soon. Haha! HAHAHAHAHA! 

October 2020 - we were informed that the valuation on the property was impossible to carry out, because the developer had no certificate of completion, and the CML forms were missing. This was obviously a big deal as it meant that no mortgage lender will ever lend on the house. Why were we not walking away at this point, you might ask? Because we are insane. Indeed a sane person would live a happy bog standard life in a bog standard house by now, but we are not those kind of normal people with that kind of sanity and to be fair, we were not in a chain and were happy to wait (although by this point half our clothes were in bags as we weren't going anywhere in lockdown, we argued to ourselves.) But we were not ready to give up on this place and were trying to get this developer to sort something out for our mortgage to go through because we thought that if we don't get it, noone else will anyway, he will find it difficult to sell it to anyone else but a cash buyer. So we waited patiently because we were insane. In the meantime, the developer's solicitor had paid for a home report (not required for a new home) and tried to get our mortgage broker to say that it was not a new-build (illegal), as he tried to dodge paying for the architect's survey that was required for the completion certificate and the CML form. 

At this point, the lenders also contacted our mortgage broker and told him not to use them ever again. Why were we not give up at this point for god's sake, you might ask again, but you cannot argue with insane people I guess. Other buyers on the same development fell out but we were insane and we were not in a chain so we waited.

December 2020 - our mortgage broker has found the one lender who would lend on the property, but they required one specific surveyor to provide a full on building warranty that they would lend on. And the developer was ready to go through it. Finally. We have sent our application.

February 2020 - after an agonising wait and endless chasing from the developer who did, eventually get this survey done, we have received our mortgage offer. Full amount, no issues, hurrah! Yay! Maybe the insanity was worth it? Haha! HAHAHAHA! 

April 2020 - with the mortgage papers, it's time to get the title deeds, which took again some chasing from our solicitor, a few times these were being "typed up as we speak", only to receive them weeks later. Our solicitor has informed of various issues that needed to be clarified as we went along. Eventually, it looked that we could settle last week, we have paid our deposit and our mortgage was also released, we signed title deeds and mortgage papers in the office and were getting boxes. 

PLOT TWIST (PUN INTENDED) - at the last minute, it turns out that there is an issue with the building site / plan on the title deeds. The mortgage was transferred back to the bank and the developer's solicitor has now put in an application to the Land Register. I have looked up their website - standard applications can take up to 20 days. Complex ones may take up to six months. I'm going to take a wild guess which one this will be, at which point of course our mortgage offer will expire. While our mortgage broker thinks we could apply for an extension if we go beyond this date, who knows how smooth that might go. 

On the plus-side, if we reach the one year from offer to moving date, we might get into the Guinness World Record or something.

But still waiting because we're insane and we have paid our deposits now and signed papers so there is nothing more that we can do, although I'm currently googling ways on how to spontaneously combust. 

Thank you for reading. 

davidmcn

anxioussquirrel said:

PLOT TWIST (PUN INTENDED) - at the last minute, it turns out that there is an issue with the building site / plan on the title deeds. The mortgage was transferred back to the bank and the developer's solicitor has now put in an application to the Land Register. I have looked up their website - standard applications can take up to 20 days. Complex ones may take up to six months. I'm going to take a wild guess which one this will be, at which point of course our mortgage offer will expire.

Don't know what you mean by "the mortgage was transferred back to the bank", but the Land Register will expedite applications if there's a good reason (and this sounds like there is one) - my experience is they can push it through very quickly once expedited (assuming the application is actually competent in the first place):

https://www.ros.gov.uk/support/contact-us/expedite-requests

anxioussquirrel

Mortgages can't sit with solicitors for an unlimited time, they have to be used within a few days or they are returned. I'm told they can be released again if before the offer's expiry date.

Thanks for drawing my attention to the expedited requests.... "assuming the application is actually competent in the first place" haha! HAHAHA!  

dell12

I don't think there's anything wrong with buying a conversion as such - it's just that the developer clearly didn't know what they were doing and hadn't got their paperwork in order. That said I've bought a few flats where new leases have been drawn up for an existing building, and the process is painful and the number of lenders who will accept them is very limited (as you've discovered).

Given that they will have to jump through all those hoops to sell it to anyone (with a mortgage), you're probably in a stronger position than you think, as frustrating as it is. If you walk away the developer will have to find someone else willing to go through some of what you already have.

anxioussquirrel

Yeah we're not going to walk away now but it is immensely frustrating to have to wait again for something that was their negligence. The last time it happened we had to wait 6 months. Our own flat is falling apart in the meantime but there is no space for us to remove our stuff to, to do the repairs before putting it on the market. I know we are nearly at the finish but the uncertainty of how much longer it's going to take and the helplessness that I cannot do anything about it, is really, really, REALLY hard to bear and I cannot, I honestly can physically not wait for months again. 

There's no lease, this is Scotland, it's just a new development in an old industrial unit. I honestly have no idea why it is so difficult. The developer definitely comes across that they haven't done this before (apparently he has), and the only thing I can say about their solicitor is that he must have had a mental breakdown and/or has become a day drinker because there is simply no other explanation of this scale of negligence. 

Apodemus

Sounds like you have hit an unhappy confluence of three less than competent agents here.  Your solicitor should have checked the title earlier in the process and given the sellers opportunity to resolve any title anomalies with RoS.  The seller/developer should have had the properties in sale-ready condition, which includes all completion certificates and titles.  But your mortgage broker sounds like the least competent, as there are a large number of such properties and they are by no means only sold to people who have the whole sum in cash...

Hopefully it will all move on quickly from here! 

anxioussquirrel

Our mortgage broker was actually the most helpful and competent of them all. The cash buyer argument only became one for us to remain patient when it turned out that our developer had no way to obtain the CML form (I believe it stands for Council of Mortgage Lenders) because of the missing completion certificate. All lenders would have wanted it.

Of course there are more lenders that lend on such properties in general but due to circumstances created by the developer's negligence, it was difficult to find one after all this, while he also had to find a good deal who would take both our incomes into account etc. He's not really at fault here, in fact I think he played a role in pushing the developer to get the paperwork sorted when he found a lender who worked with their own surveyors to get this sorted.

I completely agree about the developer the solicitors though.... There is a further complication because we have two solicitors actually because our own one is not on the panel of the lender. So our mortgage is handled by a different one, who are also working for another buyer in the same development (we are in touch with them luckily and stress together haha.) They really did believe it was going to settle last week and I believe that they may have requested the funds a little too early and our own original solicitor was not yet done with the titles. Our solicitor kept saying that she wasn't happy with something for a while so I think that again it was the developer's solicitor's stubbornness that lead us here. I don't know how early they started  checking the titles. But it took the developer and his solicitor about 6 months to understand that he needed an architect's survey to get anyone to lend on it so it could be possible that again he took his while to understand that he needed to sort the title issue at the RoS at their end. But yeah all of this should have been waaaay faster. In my head the blame is 75% the developer and solicitor and 25% our own solicitors. 

I'm just scared that it will be some ridiculous and long process at the register and our mortgage offer expires so they can't just request the funds again but we have to go through some more hoops. If that happens I'm out and I'm moving to an island on the Pacific lol. I just can't help but think of the worst even if I still want to be optimistic - the other commenter said they can be done quickly and our solicitor did say that they were writing to expedite the matters but I don't trust them that they did it in a competent way because there's very little so far that he has done right.