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Loft conversion only for storage purposes

2

Comments

  • user1977 said:
    user1977 said:

    What if someone dies in there or get injured?

    What do you mean? Why are they going to die in there and not elsewhere in the flat, and why do you think it makes a difference?

    I'm not sure how much the indemnity insurance helps you if you're both (part) freeholder and leaseholder (as normally the insurance wouldn't be valid against action by the freeholder if they were made aware by the leaseholder of the problem).
    It would legally make a difference if I rent this property as a 2 bedroom. It is an unlikely event but for example if someone dies/injured as a result of a fire/smoke in the building while sleeping in the loft conversion... As my deed of variation in the lease says it should be used a storage only.
    Why would the lease make a difference to anything in that scenario? You've said it complies with building regulations (by which I presume you mean there's no reason why building control would care about it being used as a bedroom?)
    Maybe you are right, but I always thought lease would make it illegal for me to rent it as another bedroom.. I think we should understand why this is the case, which I am trying to :)
  • user1977
    user1977 Posts: 13,934 Forumite
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    user1977 said:
    user1977 said:

    What if someone dies in there or get injured?

    What do you mean? Why are they going to die in there and not elsewhere in the flat, and why do you think it makes a difference?

    I'm not sure how much the indemnity insurance helps you if you're both (part) freeholder and leaseholder (as normally the insurance wouldn't be valid against action by the freeholder if they were made aware by the leaseholder of the problem).
    It would legally make a difference if I rent this property as a 2 bedroom. It is an unlikely event but for example if someone dies/injured as a result of a fire/smoke in the building while sleeping in the loft conversion... As my deed of variation in the lease says it should be used a storage only.
    Why would the lease make a difference to anything in that scenario? You've said it complies with building regulations (by which I presume you mean there's no reason why building control would care about it being used as a bedroom?)
    Maybe you are right, but I always thought lease would make it illegal for me to rent it as another bedroom.. I think we should understand why this is the case, which I am trying to :)
    It would be a breach of the lease, which is a matter between you and the freeholder (and potentially other leaseholders). It's of no relevance to the rest of the world.
  • Grumpy_chap
    Grumpy_chap Posts: 14,859 Forumite
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    Hello all, 

    Would love to get some expert opinion on a matter. I am in the process of buying a flat with loft conversion. It is a share of freehold - effectively a leasehold - and I will be a director in the freeholder company. The flat includes a loft conversion on the top floor. The lease (deed of variation) & our solicitor indicates that we have the full ownership and the loft conversion has been done with necessary permits and building regulations by the council. 

    However, the deed of variation to the lease states that the loft space has been included in the property but the lease requires it to be used only for storage purposes, this is definitely not the case when this was marketed to us as an additional bedroom, a decent one to be honest. It even has a small toilet. 

    I raised this to the solicitor but I am curious a) why do you think the lease (deed of variation) has this restriction? b) the current owner provided us with a leasehold restrictive covenant insurance as they violated this, however if I want to rent this property in the future, I cannot market as a 2 bedroom, right? What if someone dies in there or get injured? 

    I am very puzzled and any help is really appreciated.


    I cannot give an expert opinion as I am not an expert.
    I am giving an opinion that varies from the other responses.

    There are two different things here and they are unrelated:
    • Permission to use the loft space so far as the lease is concerned
    • Compliance of the loft conversion for planning and building control purposes.
    Let's consider the latter of the two things first (as it is the more straightforward).

    Planning permission is usually required for conversion of a loft space in a block of flats as this is usually excluded from Permitted Development rights.  Does your phrase "done with necessary permits" mean that the Planning Permission is in place?  If not, which "permits" does that phrase refer to?

    Building regulations and the associated building control approval (by the Council or a private approved company) is the verification that the work has been done to a standard that meets the regulations.  Having this Completion Certificate should give you the surety about the suitability / safety to use the loft conversion as habitable space.

    If there is the necessary Planning Permission (or within Permitted Development rights) plus the building control sign-off (Completion Certificate), that side of things is all as it needs to be and nothing to worry about.



    Now, let's consider the deed of variation for the lease.

    What is the date of the deed of variation for the lease?
    What is the date of the loft conversion being constructed?  (Or the appropriate permissions / sign-off.)

    I suspect the block of flats originally did not have the loft space assigned to any flat but was shared (and quite likely hosted some utility services that benefitted all flats in the block).  There was likely access from a shared landing but also no-one from any flat could actually use the space.

    Then assume that the owner at the time sought to take ownership of the loft space and create an access (loft ladder) from the flat and seal the access from the communal landing.  This was done properly and the deed of variation written.  It likely included an update as to who was responsible for the maintenance of the loft space and roof - transfer from all flats to just the one flat. 

    The restriction to use the space just for storage is to do with the added value and the consideration payable to the other flat owners in return for sole access and use of the space in perpetuity.  With the "storage only" restriction, that consideration was quite likely low value.  There is limited impact to the rest of the building from one flat owner being able to store their Christmas decorations (or whatever) in the loft void.  No increase in number of occupants, no increase in wear and tear on the communal fabric, no increase in noise to the other residents.

    As well as the practical factors related to the "storage only" restriction, the low consideration would reflect that having access to the loft void for storage only makes quite a low difference to the value of the flat.  A lease that permitted the loft void to be used as habitable rooms will increase the value of the flat and would likely have meant a far higher consideration to be paid to obtain that right.  The other flat owners will have expected a partial share of the increase in value / benefit to be shared to all flat owners.  The other flat owners also might have expected some increase in compensation to reflect increased burden on communal assets by the increased number of residents.

    Essentially, the cost to obtain use of the loft void area for storage only would be far lower than the cost to obtain the use of the loft void area for conversion to habitable space.


    I think this is something to push hard on and I would not settle for an indemnity insurance over the deed of variation to the lease.  Far better to push for the current leaseholder to obtain an updated deed of variation to the lease that reflects the reality of the conversion having been undertaken.  All at the cost of the current leaseholder.

    As you noted, there could be a future difficulty when you come to sell the property on at whatever time in the future.

    Be clear to your Solicitor that the loft space is not just for storage (as per the lease and deed of variation to the lease) but is a full loft conversion into habitable / sleeping space.  (The Solicitor has not seen the property, remember.)

    The EA will have marketed the property as two-bedroom if that is what they saw and were not advised to the contrary by the current owner.  The EA will not have gone into the detail of restrictions in the lease.  This mis-description seems to lie wholly with the current vendor.
  • Jenniefour
    Jenniefour Posts: 1,393 Forumite
    First Anniversary First Post Combo Breaker Mortgage-free Glee!
    Agree with above 100% - too much ambiguity here, and too much (e.g. your money and possible legal future use of the loft space) at stake. Do not be fobbed off and if it's not sorted out properly then you need to consider whether to go ahead. A space for storage, even if it now demised to the flat you're buying, is miles away from a loft extension which constitutes habitable space (with a corresponding big price difference too). What your solicitor needs to ask for and scrutinise is the planning permission and the completion certificate - then, as above, if all that is in order get the present owner to sort out the related restrictions in the lease.
  • Grumpy_chap
    Grumpy_chap Posts: 14,859 Forumite
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    Another item I should have mentioned in the post I put a bit earlier but overlooked.

    The OP needs to ascertain whether party wall agreements were required in connection with the conversion of the loft space from storage to habitable use.  Typically, such conversions require reinforcement of the joists to full load-bearing and that imposes the additional loads on the building structure so the party wall agreement would be required.  I am being cautious in my phraseology as I am unsure as to how party wall agreements work with a block of flats.  If the party wall agreements are required, then the OP needs to verify that these were al in place prior to the loft conversion.  I do not know whether it would be just with the freeholder, or just with leaseholders (all or some of them), or with all leaseholders plus the freeholder.  Where the freeholder is the same individuals as the collection of the leaseholders (as I understand to be the case here), the party wall agreement may be needed twice with each party - which sounds kind of illogical but (I think) makes sense.

    The building control sign off will only have assessed whether the work was undertaken to meet legislative standards, not whether the legal permissions were in place.
  • If the loft is now a bedroom and that's not been declared openly to the other parties to the freehold I expect the buildings insurance isn't correct either, in that there's another bedroom in the building.

    It could seriously impact on everyone if there was a fire and subsequent insurance claim!
  • Hello all, 

    Would love to get some expert opinion on a matter. I am in the process of buying a flat with loft conversion. It is a share of freehold - effectively a leasehold - and I will be a director in the freeholder company. The flat includes a loft conversion on the top floor. The lease (deed of variation) & our solicitor indicates that we have the full ownership and the loft conversion has been done with necessary permits and building regulations by the council. 

    However, the deed of variation to the lease states that the loft space has been included in the property but the lease requires it to be used only for storage purposes, this is definitely not the case when this was marketed to us as an additional bedroom, a decent one to be honest. It even has a small toilet. 

    I raised this to the solicitor but I am curious a) why do you think the lease (deed of variation) has this restriction? b) the current owner provided us with a leasehold restrictive covenant insurance as they violated this, however if I want to rent this property in the future, I cannot market as a 2 bedroom, right? What if someone dies in there or get injured? 

    I am very puzzled and any help is really appreciated.


    I cannot give an expert opinion as I am not an expert.
    I am giving an opinion that varies from the other responses.

    There are two different things here and they are unrelated:
    • Permission to use the loft space so far as the lease is concerned
    • Compliance of the loft conversion for planning and building control purposes.
    Let's consider the latter of the two things first (as it is the more straightforward).

    Planning permission is usually required for conversion of a loft space in a block of flats as this is usually excluded from Permitted Development rights.  Does your phrase "done with necessary permits" mean that the Planning Permission is in place?  If not, which "permits" does that phrase refer to?

    Building regulations and the associated building control approval (by the Council or a private approved company) is the verification that the work has been done to a standard that meets the regulations.  Having this Completion Certificate should give you the surety about the suitability / safety to use the loft conversion as habitable space.

    If there is the necessary Planning Permission (or within Permitted Development rights) plus the building control sign-off (Completion Certificate), that side of things is all as it needs to be and nothing to worry about.



    Now, let's consider the deed of variation for the lease.

    What is the date of the deed of variation for the lease?
    What is the date of the loft conversion being constructed?  (Or the appropriate permissions / sign-off.)

    I suspect the block of flats originally did not have the loft space assigned to any flat but was shared (and quite likely hosted some utility services that benefitted all flats in the block).  There was likely access from a shared landing but also no-one from any flat could actually use the space.

    Then assume that the owner at the time sought to take ownership of the loft space and create an access (loft ladder) from the flat and seal the access from the communal landing.  This was done properly and the deed of variation written.  It likely included an update as to who was responsible for the maintenance of the loft space and roof - transfer from all flats to just the one flat. 

    The restriction to use the space just for storage is to do with the added value and the consideration payable to the other flat owners in return for sole access and use of the space in perpetuity.  With the "storage only" restriction, that consideration was quite likely low value.  There is limited impact to the rest of the building from one flat owner being able to store their Christmas decorations (or whatever) in the loft void.  No increase in number of occupants, no increase in wear and tear on the communal fabric, no increase in noise to the other residents.

    As well as the practical factors related to the "storage only" restriction, the low consideration would reflect that having access to the loft void for storage only makes quite a low difference to the value of the flat.  A lease that permitted the loft void to be used as habitable rooms will increase the value of the flat and would likely have meant a far higher consideration to be paid to obtain that right.  The other flat owners will have expected a partial share of the increase in value / benefit to be shared to all flat owners.  The other flat owners also might have expected some increase in compensation to reflect increased burden on communal assets by the increased number of residents.

    Essentially, the cost to obtain use of the loft void area for storage only would be far lower than the cost to obtain the use of the loft void area for conversion to habitable space.


    I think this is something to push hard on and I would not settle for an indemnity insurance over the deed of variation to the lease.  Far better to push for the current leaseholder to obtain an updated deed of variation to the lease that reflects the reality of the conversion having been undertaken.  All at the cost of the current leaseholder.

    As you noted, there could be a future difficulty when you come to sell the property on at whatever time in the future.

    Be clear to your Solicitor that the loft space is not just for storage (as per the lease and deed of variation to the lease) but is a full loft conversion into habitable / sleeping space.  (The Solicitor has not seen the property, remember.)

    The EA will have marketed the property as two-bedroom if that is what they saw and were not advised to the contrary by the current owner.  The EA will not have gone into the detail of restrictions in the lease.  This mis-description seems to lie wholly with the current vendor.
    Thank you very much for your detailed response.

    Yes, our solicitor ensured that planning permission is in place and I have that document, as well as the completion of work (final certificate) by the private company.

    Permission granted in Dec '16, Deed of variation (acknowledging the premium paid, ownership and the storage clause) Feb '17 and Completion is Oct '17. 

    I think the loft space had only access from the flat I am purchasing since the beginning, but not 100% sure. The landlord at that time paid a premium to have the ownership, but as you mentioned, to keep the premium low, he added the clause of using it only for storage. It has a proper fixed ladder, a small toilet, heating, 3 windows, above 2 m height etc...

    As you mentioned, I will not settle with an indemnity insurance at this point. I would ask my solicitor to confirm they agree that everything is in place to use this as a bedroom (regulations, party wall agreement, permits, approvals) and remove that restriction from the lease. I really hope the seller would be okay to do this, or else I will probably walk out of the deal, which is a shame. 
  • If the loft is now a bedroom and that's not been declared openly to the other parties to the freehold I expect the buildings insurance isn't correct either, in that there's another bedroom in the building.

    It could seriously impact on everyone if there was a fire and subsequent insurance claim!
    The building insurance documents or fire risk assessment do not show how many bedrooms in each property. Do you know how to check this?
  • user1977
    user1977 Posts: 13,934 Forumite
    First Anniversary First Post Name Dropper Combo Breaker
    If the loft is now a bedroom and that's not been declared openly to the other parties to the freehold I expect the buildings insurance isn't correct either, in that there's another bedroom in the building.

    It could seriously impact on everyone if there was a fire and subsequent insurance claim!
    The building insurance documents or fire risk assessment do not show how many bedrooms in each property. Do you know how to check this?
    I wouldn't expect a block policy to ask for the number of bedrooms. If the insurers don't care, then this point is a red herring.
  • Section62
    Section62 Posts: 7,750 Forumite
    First Anniversary First Post Name Dropper


    Thank you very much for your detailed response.

    Yes, our solicitor ensured that planning permission is in place and I have that document, as well as the completion of work (final certificate) by the private company.

    Permission granted in Dec '16, Deed of variation (acknowledging the premium paid, ownership and the storage clause) Feb '17 and Completion is Oct '17. 

    I think the loft space had only access from the flat I am purchasing since the beginning, but not 100% sure. The landlord at that time paid a premium to have the ownership, but as you mentioned, to keep the premium low, he added the clause of using it only for storage. It has a proper fixed ladder, a small toilet, heating, 3 windows, above 2 m height etc...

    As you mentioned, I will not settle with an indemnity insurance at this point. I would ask my solicitor to confirm they agree that everything is in place to use this as a bedroom (regulations, party wall agreement, permits, approvals) and remove that restriction from the lease. I really hope the seller would be okay to do this, or else I will probably walk out of the deal, which is a shame. 
    A 'ladder' isn't likely to meet the building regs requirements for access/egress to a habitable room.  What work was actually covered by the application/completion certificate?

    In terms of insurance risk, having an additional habitable floor is probably more of a concern than one extra bedroom.
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