Does invalidating an indemnity policy risk your mortgage? And can you ever do future works?

Londonite864

We are looking at buying a house which doesn't have building regs approval for a loft room (boarded for storage use, work carried out 15-20 years ago, it's not considered a bedroom), and a ground floor rear extension (work carried out in 2009, so 13 years ago) that doesn't have any proof of planning permission being granted or an application having been submitted. There are also no party wall notices from when the ground floor extension was done. It could be the case that it fits permitted development, however we haven't been able to confirm this and we're working on the assumption that its over 3m off the back of the house (terraced), so bigger than would meet permitted development.

We had a survey carried out and the report stated everything looked to be in good condition, and having discussed with the surveyor he didn't see any issues with safety of the works. Considering they've been in place for this long he suggested it would be a reasonable decision to carry on with the purchase.

We are planning to take out an indemnity policy for the lack of party wall notices, and an indemnity policy for the lack of planning / building regs approval.

Our main concern at this point is whether we'll actually be able to do any work on the house ourselves that would require engagement with the council, either for planning or building regs. We have aspirations to properly convert the loft; potentially open up the kitchen / living room by removing a partition on the ground floor; add in full width sliding doors to the garden on the rear extension instead of the single door and windows currently there.

We understand from our solicitor that any contact with the council would invalidate the planning / building regs indemnity policy. What's the risk to the mortgage if this is invalidated (considering the lender would be aware of the indemnity policies in place)? 

If we were to go for getting a Certificate of Lawfulness for an Existing Use or Development (CLEUD), and also sort out a proper loft conversion that gets building regs approved, it seems like these together would resolve the issues that the indemnity policies are covering against the costs of dealing with. Is this scenario of future work something that could do?

I'm also not quite sure if engaging with the council, for example on knocking through the kitchen wall to the living room, would invalidate just the planning / building regs policy, or also the party wall policy?

Frustratingly our solicitor is really lacking in helpful input on this. Looking online there also seems to be a lack of information on these types of situations, outside of other posts similar to mine on forums.

We just want to have a clear picture of whether we can actually do any work on the house once we buy it with these indemnity policies in place, and if there's a significant risk with the mortgage if they're invalidated.

Any and all input on this would be appreciated.

Londonite864

To clarify also, the ground floor rear extension does have a certificate of completion from LA's Building Control. 

propertyrental

• The local authority has 4 years to enforce planning law and take action for most breaches. That time limit appears long past.
• The local authority has 12 months to enforce Building Regulations and take action for breaches. That time limit appears long past.
  
• The Party Wall Act applies prior to, or during, any works to a party wall. Once work is complete no action can be taken under the Act

So unless your lender insists, there is no point in indemnity insurance.

Contact with the council now, ie prior to taking out these pointless indemnity policies, would invalidate them. A bit like getting a cancer diagnosis and then taking out a private health insurance. Contact with the council in the future (ie applying for new permissions) would not invalidate the pointles policies (like getting a cancer diagnosis some time after taking out the health insurance)).

Any future work you undertake that requires Planning or Building Refs would require new applications - the LA would evaluate them on their merits irrespective of the prior work.

As for your mortgage lender(and assuming it is them that is insisting you take out the indemnity policy - after all, why would you choose to pay for a policy on which you will never make a claim?), they would not be happy if you invalidated the policy by contacting the LA now (eg to regularise the current extension).

But since contacting the council in, say, 12 months about a new/unrelated works would not invalidate the worthless policy, why would your mortgage lender be concerned?

user1977

You're overthinking this. The works are pretty historic by now - if they were going to stir up trouble, that would have happened. Neither the planning nor the building control departments are at all likely to be interested, or even have the legal ability to do anything about a mere lack of consents for the alterations now.

Applying for consents for new alterations (as long as you don't jump up and down and point out the unconsented past alterations) isn't going to excite the council, and shouldn't in itself invalidate the indemnity policies.

And in reality there is no "risk to the mortgage" after you get past the completion date. Lenders don't go around demanding their money back just because there's some perceived breach of an indemnity policy.