Incorrect planning permission and building regs on newly built outbuilding

tatasai24

Hello
We are looking to buy a detached house with a newly built outbuilding (home office).
Our surveyor noted the following about this outbuilding, and said it requires bldg completion and bldg regs for the following reasons:
1. It is 37 sq.m
2. It is less than 1m from the neighbour's boundary AND possibly made of uPVC/timber (possibly a flammable material)
3. It has a toilet connected to the main drain

The seller doesn't have bldg completion certificate or bldg regs for the outbuilding.
The seller's 1st planning permission for this outbuilding doesn't show toilet and is 1m away from the boundary. This was approved.
The seller filed 2nd planning permission to add windows to this outbuilding facing the neighbour's boundary, to which the neighbour objected. This was again approved by the council.
The seller then built the outbuilding around Dec 2019 and this is 37 sq.m, is less than 1m from the neighbour's boundary, has a toilet and has no windows facing the neighbour's boundary.
The seller then retrospectively applied for a non-material amendment to the 2nd planning permission to indicate no windows on the outbuilding. This decision is still pending.

This outbuilding is about 18 months old. The seller is now offering an indemnity insurance with will include litigation, removal or repair in case of council action.
The seller has declined to apply for a retrospective bldg completion certificate or bldg regs certificate.

Now my questions are:
1. This outbuilding is clearly flouting govt guidelines on bldg regs. Would an indemnity insurance still cover this outbuilding as its still quite recently built?
2. This outbuilding is not built per plan, it now has a toilet. Would an indemnity insurance still cover this?
3. If there is a council action, will we be prosecuted for negligence wrt this outbuilding?
3. If there is a council action, will we have to remove this as its not built per plan?
4. Is council action still possible in the near future due to the neighbour's objection and the above mentioned 
5. Will my home insurance be affected by this?
6. Does exercising the indemnity insurance (as a result of council action), does this affect the future sale of the house?

Thank you.

user1977

tatasai24 said:

The seller is now offering an indemnity insurance with will include litigation, removal or repair in case of council action.

I very much doubt (unless you know more) that they can obtain valid indemnity insurance if there's been any recent contact with the council (and certainly not if there's a pending application!).

Insurers generally want the "dust to have settled" for at least a year before they'll cover.

k3lvc

How long has the property been on the market ? Have other buyers already walked away because of this issue ? Is the 'shed' a key selling point for you and is its existence reflected in the price ?

IMHO you tell them to sort it out (i.e. with permission/building regs) and you'll proceed or, if the 'shed' isn't important to you then tell them to remove it and you'll proceed, presumably at a reduced price.

Any other solution is likely to lead to a whole load of pain in the coming months and a potentially bad start with neighbours

andy444

I'd suggest that the outbuilding seems a whole lot more trouble than it's worth.

Tell the seller to sort out the situation or look elsewhere.

Windofchange

37m squared is a pretty substantial size - there are stand alone properties on sale with similar. Your surveyor is right as I'm sure you know by now - needed planning permission for that to be built, and it is a habitable space as has water mains and presumably electricity too. If the seller has been in touch with the council, then to my knowledge, indemnity insurance is now a write off - they won't touch it. Whether the council will take action is a bit of a gray area - they may, they may not. Their first port of call isn't going to be to summons you to court - you will be served with some sort of notice to remove the building and a specified time scale within which they expect this to happen. If you don't play ball, then yes, they will likely enforce it.

Not sure about your question with home insurance - I would imagine that they would still insure your main residence, but that that shed would be excluded. I would imagine that the most pressing concern would be that the bank are not likely to lend on a property where there is an issue - best case they may lower the offer to exclude the outbuilding which presumably attracted a premium? Worst case is they just pull out as your surveyor (or the one appointed by them) will flag that it is not adequate security and there are outstanding issues. Probably not the news you want to hear, and I'm a regular punter like yourself rather than a legal beagle, but seems a large hurdle to me.

The advice above about demanding the building is pulled down before completion is unlikely to work  - we couldn't get our sellers to pull down an old 2m by 2m garden shed let alone a significant outbuilding. Why would they I guess when you could just get cold feet and pull out leaving them with a pile of rubble in the back garden and no purchaser. Sounds to me like they need to pull the house off the market, get all this sorted, and then start again...

tatasai24

k3lvc said:

How long has the property been on the market ? Have other buyers already walked away because of this issue ? Is the 'shed' a key selling point for you and is its existence reflected in the price ?

IMHO you tell them to sort it out (i.e. with permission/building regs) and you'll proceed or, if the 'shed' isn't important to you then tell them to remove it and you'll proceed, presumably at a reduced price.

Any other solution is likely to lead to a whole load of pain in the coming months and a potentially bad start with neighbours

The property was 1st sold w/o coming to the market. The 1st buyer then walked away after the searches came through. We learnt from the agent that the buyer went on to buy another property nearby.

This property then came back up a month ago when we offered to buy it. Now we are going over the past searches a see few red flags:
* outbuilding not built per plan
* neighbour's objection to this outbuilding
* pending non material amendment
* seller has no completion, no compliance w/ bldg regs

When we asked for more clarity the agent has offered us indemnity and threatened to pull of the sale when we asked for more clarity on the pending issues

StandingInTheSun

tatasai24 said:

k3lvc said:

How long has the property been on the market ? Have other buyers already walked away because of this issue ? Is the 'shed' a key selling point for you and is its existence reflected in the price ?

IMHO you tell them to sort it out (i.e. with permission/building regs) and you'll proceed or, if the 'shed' isn't important to you then tell them to remove it and you'll proceed, presumably at a reduced price.

Any other solution is likely to lead to a whole load of pain in the coming months and a potentially bad start with neighbours

The property was 1st sold w/o coming to the market. The 1st buyer then walked away after the searches came through. We learnt from the agent that the buyer went on to buy another property nearby.

This property then came back up a month ago when we offered to buy it. Now we are going over the past searches a see few red flags:
* outbuilding not built per plan
* neighbour's objection to this outbuilding
* pending non material amendment
* seller has no completion, no compliance w/ bldg regs

When we asked for more clarity the agent has offered us indemnity and threatened to pull of the sale when we asked for more clarity on the pending issues

Avoid. They've created a problem for themselves and are trying to turn it into your problem.