Loft conversions and building regs

molouwh1777

Hi experts, I'm hoping for some advice. Long story short, we had an offer accepted on a 4 bed semi, with 2 of the 4 beds being on the second floor which consists of a loft conversion with front and rear dormer, and a shower room.

The house was advertised as a 4 bed, but when it came to our lender valuation, they wouldn't value it as a 4 bed without evidence of building regulations. Some back and forth later, it was determined that the conversion took place in the 80s, so no such documentation either exists, or was passed on to the current vendor (who has lived there for 11 years). 

Lendor advised they would value as a 2 bed OR, vendor could apply for regularisation via Building Control. Vendor applied, BC visited and said they wouldn't issue regularisation as the conversion was done so long ago.

We decided not to take the risk (not just due the onward selling issues it may have caused us, there were other red flags) but my question is; there must be a plethora of properties that have been extended/converted many moons ago, for which there is no official documentation. Is this the direction of travel in terms of risk assessment for lenders, or is this just an unusual case?

DE_612183

I didn't realise they would refuse on the basis of age - reg are regs - I have heard that the surveyor could ask for work to be carried out to bring them up to regulation.

molouwh1777

DE_612183 said:

I didn't realise they would refuse on the basis of age - reg are regs - I have heard that the surveyor could ask for work to be carried out to bring them up to regulation.

I guess we are only taking the vendors word that the refusal was the response from BC - they may have asked for work to be carried out and the vendor didn't want to fund it so possibly hoped we take the risk. We'll never know for sure, but it just got me thinking about other properties and if we could be faced with the same response from a lender (this was a big lender too).

DE_612183

Lenders are quite rightly more risk adverse than they used to be - so if the property is a 2bed - then thats what they'll value it at - they will assess the risk of BC coming round and telling whoever owne the property to make good or take down the extension. A few years back they might have been more accomodating - but in todays world noone will take a risk they don't need to for a bit of business

I'm sure there are lots of others, who either get the work done, reduce the price, or the BC does pass the extension.

Section62

DE_612183 said:

I didn't realise they would refuse on the basis of age - reg are regs - I have heard that the surveyor could ask for work to be carried out to bring them up to regulation.

There's a cutoff for regularisation certificates - the work has to have started on or after 11 November 1985.  In this case it may be the BCO has deemed the work to be earlier than this date.

In principle - if the work complies with the regs current at the time - then the LABC can't refuse to issue a certificate for work started after the cutoff date simply because it was done a long time ago.

In response to the OP's point, I think this will become a bigger issue as a result of corporate risk aversion, and also individual buyers doing their own online research and getting the wrong end of the stick.  Cheap indemnity policies are going to win out over proper professional advice, until there are no proper professional advisers left.

Albermarle

 there must be a plethora of properties that have been extended/converted many moons ago, for which there is no official documentation. Is this the direction of travel in terms of risk assessment for lenders, or is this just an unusual case?

There are lots of threads on here about extensions with no paperwork.

Normally it does not cause any real issues, but the fact that it is loft conversion, with bedrooms on the second floor means there is more at stake.

Fire risk for one, and the fact that it can not be called officially a 4 bed property.

Even if it was newer and BC came around to inspect, they would probably need to cause quite a lot of damage to get to see if the structure was OK.

molouwh1777

Albermarle said:

 there must be a plethora of properties that have been extended/converted many moons ago, for which there is no official documentation. Is this the direction of travel in terms of risk assessment for lenders, or is this just an unusual case?

There are lots of threads on here about extensions with no paperwork.

Normally it does not cause any real issues, but the fact that it is loft conversion, with bedrooms on the second floor means there is more at stake.

Fire risk for one, and the fact that it can not be called officially a 4 bed property.

Even if it was newer and BC came around to inspect, they would probably need to cause quite a lot of damage to get to see if the structure was OK.

My gut feeling is they know inspection and any rectification would at least cause damage and disruption, and at most would cause both of those plus significant cost to get up to standard if issues were identified. They accepted the lowest offer they could afford to due to their forward purchase, so we know they can't afford to do any rectification work or lower the price to encourage us to take it on and do so ourselves. Might've dodged a bullet on this one I think!

Section62

DE_612183 said:

Lenders are quite rightly more risk adverse than they used to be - so if the property is a 2bed - then thats what they'll value it at - they will assess the risk of BC coming round and telling whoever owne the property to make good or take down the extension. A few years back they might have been more accomodating - but in todays world noone will take a risk they don't need to for a bit of business

I think there may be some 'Grenfell effect' involved in the risk aversion.

I can picture a scenario where someone is killed as a result of a fire in a converted loft 'bedroom' and it comes to light that the lender knew that the conversion didn't have BR certification.

Despite the lender not being responsible for how people use the rooms I don't see (post-Grenfell) the lender being able to avoid finger pointing by saying it wasn't their responsibility.... 'they knew the bedroom was a deathtrap but still gave us a mortgage' (or similar words to the same effect).  In effect the lenders will become quasi-regulators/policemen, in much the same way they are now when it comes to customers and payment fraud. (i.e. being responsible for refunds even where the customer fell for a quite obvious scam)

Certainly if I was working for a lender I'd be telling colleagues we need to be far more wary when it comes to BR issues that have safety implications.

molouwh1777

Thanks all for your input and insights. I agree with the lenders caution and it would have been the same outcome even if we'd been offered the mortgage as it would have come up in the enquiries process at which stage we'd have walked away. Interested to see when it's relisted as a 4 bed as BC have now been made aware of the non-compliance, so the EAs know rooms 3 & 4 can't truly be listed as habitable space. But then I'm assuming some sort of moral compass exists here... *eye roll*