Buying a house with no building regs for extension

user1977

Section62 said:

lovehackney said:

Thanks all.
To be clear, I'm not fussed about the consents but my solicitor is, on behalf of the lender.
I guess I'll wait and see the outcome of the underwriter agreeing whether to still offer the indemnity or not, before any next steps.

I'd assumed because the solicitor was going to the insurance underwriters that the lender had already flagged up an issue... but is that actually the case, or is the solicitor just working hard to sell you an indemnity policy on the off-chance the lender asks about the extension?

The standard lender instructions leave it to the solicitor to do whatever the solicitor thinks they ought to do - other than the valuation perhaps mentioning alterations as something for the solicitor to check out, it's not normal for the lender to make any specific mention of such things, or want to get into a discussion. Some solicitors will tend to be risk-averse and recommend indemnity policies for everything, even the utterly pointless. 

lovehackney

The lender (barclays) hasnt flagged up an issue - but from looking at their guidance for conveyancers, solicitors have to flag any building work without regulations, so I guess that's why our solicitor is suggesting the indemnity policy - to avoid having to go back to the lender and potentially reopen our mortgage offer?

We only knew it was an extension because the seller flagged it - our surveyor indicated he couldn't be sure if it was original or not. So at this point in time I doubt Barclays knows anything either.

I'm just looking for the fastest route to exchange.. and if thats paying for a (completely useless) indemnity policy rather than waiting for our lender to confirm they don't care about this, then I'm happy to do that (seller will be paying anyway, but if needed I would just pay it).

Given the indemnity policy will never be claimed on, given the enforcement period has passed, hopefully the underwriter will agree to underwrite the policy as from their point of view its money for nothing!

Section62

user1977 said:

Section62 said:

lovehackney said:

Thanks all.
To be clear, I'm not fussed about the consents but my solicitor is, on behalf of the lender.
I guess I'll wait and see the outcome of the underwriter agreeing whether to still offer the indemnity or not, before any next steps.

I'd assumed because the solicitor was going to the insurance underwriters that the lender had already flagged up an issue... but is that actually the case, or is the solicitor just working hard to sell you an indemnity policy on the off-chance the lender asks about the extension?

The standard lender instructions leave it to the solicitor to do whatever the solicitor thinks they ought to do - other than the valuation perhaps mentioning alterations as something for the solicitor to check out, it's not normal for the lender to make any specific mention of such things, or want to get into a discussion. Some solicitors will tend to be risk-averse and recommend indemnity policies for everything, even the utterly pointless. 

As the OP pointed out though, there are some issues specific to Hackney which (from my own experience with the borough) I'd expect might result in routine departure from the normal.

(No disrespect to the lovely borough of Hackney intended)

lovehackney

in case anyone is ever in a similar situation, I wanted to provide an update.

We shared all of the council correspondence with the underwriter, which basically said a) they couldn't find any records and b) as they've had a cyber attack they can't access lots of records.

So, the underwriter has agreed to the indemnity policy (not without adding £100 to it, mind!).

Sharing in case anyone is ever in the same situation, as all of my googling suggested that if the seller had spoken to the council there was no hope of getting a policy.

Bendy_House

lovehackney said:

in case anyone is ever in a similar situation, I wanted to provide an update.

We shared all of the council correspondence with the underwriter, which basically said a) they couldn't find any records and b) as they've had a cyber attack they can't access lots of records.

So, the underwriter has agreed to the indemnity policy (not without adding £100 to it, mind!).

Sharing in case anyone is ever in the same situation, as all of my googling suggested that if the seller had spoken to the council there was no hope of getting a policy.

Very pleased for you :-)

That's interesting regarding the indemnity policy. My understanding was that you shouldn't inform anyone, as this could prompt them to investigate/take action. But it seems as tho' in this case, they accept the party has been informed, and are not minded to act. But, a policy - just in case they change their mind...!

I'd still love to know what such a policy would 'protect' you from in practice? I guess it's things like legal costs to fight any action, but what would happen in the only scenario I am aware of where Building Control COULD still take action, and that's if they find the construction is dangerous? Would such a policy really cover the cost of making good, potentially 10's or even 100's of £ks?

lovehackney

I have the same thoughts as you, I'm not sure what the indemnity policy is actually protecting me from, as I thought it was in case of legal action..  which the council have basically said they won't take.

However, if that's what it takes to get this over the line then I'll swallow the cost!

FreeBear

Bendy_House said: I'd still love to know what such a policy would 'protect' you from in practice? I guess it's things like legal costs to fight any action, but what would happen in the only scenario I am aware of where Building Control COULD still take action, and that's if they find the construction is dangerous? Would such a policy really cover the cost of making good, potentially 10's or even 100's of £ks?

Pretty sure these policies only cover you against any legal action. The cost of any work to rectify a defect or non-compliance would be borne by yourself.

The devil is, as always, in the detail. So read the policy document to see what is covered and pay attention to the exclusion clauses.

user1977

Bendy_House said:

lovehackney said:

in case anyone is ever in a similar situation, I wanted to provide an update.

We shared all of the council correspondence with the underwriter, which basically said a) they couldn't find any records and b) as they've had a cyber attack they can't access lots of records.

So, the underwriter has agreed to the indemnity policy (not without adding £100 to it, mind!).

Sharing in case anyone is ever in the same situation, as all of my googling suggested that if the seller had spoken to the council there was no hope of getting a policy.

I'd still love to know what such a policy would 'protect' you from in practice? I guess it's things like legal costs to fight any action, but what would happen in the only scenario I am aware of where Building Control COULD still take action, and that's if they find the construction is dangerous? Would such a policy really cover the cost of making good, potentially 10's or even 100's of £ks?

They'll cover whatever the insurer thinks the cheapest solution is, whether that's successfully contesting legal action, making good the works, or just demolishing them and compensating you for any reduction in value of the property (that's why the amount of cover is the value of the property).

But only to the extent that you're actually required to by building control, they're not going to help if e.g. you discover by yourself that there's a defect, and the council aren't bothered whether you fix it or not.

The policies are cheap because in practice, even if they're theoretically within time to take any action, councils aren't all that interested (unless e.g. there's some public safety aspect to it).

Bendy_House

user1977 said:

They'll cover whatever the insurer thinks the cheapest solution is, whether that's successfully contesting legal action, making good the works, or just demolishing them and compensating you for any reduction in value of the property (that's why the amount of cover is the value of the property).

But only to the extent that you're actually required to by building control, they're not going to help if e.g. you discover by yourself that there's a defect, and the council aren't bothered whether you fix it or not.

The policies are cheap because in practice, even if they're theoretically within time to take any action, councils aren't all that interested (unless e.g. there's some public safety aspect to it).

Ah! Cool.

So in the very, very slight rare case that BC would have to take action because there was a structural or safety issue, the policy should cover the remedial costs if necessary?

That's good to know.

Denarii

When we bought a house where alterations had been completed but without building regs, etc. we had an indemnity policy issued but it was paid for by the vendor. There was no fuss, just a policy put in place.It covers us for any failings (house falls down..)  relating to the undocumented alterations.