Letting a property without building control sign off

DrumbeldroneBZzz

Hi,  

I am nearing completion of a house purchase, I am a first time buyer and so I have no real experience in property. 

The seller has just admitted to my solicitors that the building was never signed off by building control, to give you some history on the house I am buying it started life as 3 small houses and later was converted into one big cottage, all of this work was done before building regulations where a thing, but in 2009 the owners applied for planning to turn it back to 3 small terrace cottages and it was approved, the work was completed in 2010 but building control never signed it off, and now I am buying one of those 3 terraced cottages.

The seller has also refused to get a retrospective regularization certificate, so after alot of stressing and reading up I have come up with what seem to be my only options:

1, I accept an indemnity policy that the seller is willing to pay for along with a reduction in the price to account for risk, the reduction in price means I now have enough of a deposit to consider getting a buy to let mortgage, and If this is the case I have decided I would like to rent it, it needs some work to get it up to renting standard but I am a builder so this is not a biggie. Has anyone had any experience letting properties that have no BR sign off and an indemnity policy? How does it work with insuring the house for you and tenants? 

On Monday I will be calling my lender to ask about the possibility of getting a buy to let mortgage, I'm guessing that they will only give me this if it is actually rentable, which answers that question for me.

2, If I cannot rent the property I have decided that I do not want to take on the property with the risk and work involved just to live in it, I think there are better options on the market to spend my time and money on with the hope of adding value. Being a first time buyer I have put all of my savings into my deposit and I don't want to risk that money with out some reward (this would be buying the house for a cheap price and renting it), I see this house as having some risk due to having no regs. On the other hand if Im buying a house to live in I would want it signed off and would expect to pay more money due to the fact it was built to regs, this means I no longer have a big enough deposit to get a buy to let mortgage but it also means there is no risk involved and probably less work to be done to the property.

I'm thinking that the properties value is and always will be stumped by the fact that it was never signed off by building control, and future buyers may be scared off, this is why I'm not willing to spend a lot of time and money on it unless it's going to earn me that money back. In contrast If I was to put my time and money into another house I think I would see the benefit through the value of the house rising. 

Has anyone been through anything similar? What is your advice? I guess I'm trying to gauge how much risk is involved and how easy it is to rent a  property like this. I am in a situation I did not intend on but considering the circumstances and how my options have changed, is this the best use for this property? Cheers.

lincroft1710

As you are a builder, did you not notice anything untoward when you viewed the property. It is 15 years since the conversion, so if there was anything seriously wrong, there is a good chance it would have come to light by now. What problems are you expecting to arise?

DrumbeldroneBZzz

Yes your right enough time has passed that if anything was wrong it would have already shown. I have made a list of all the obvious problems that need rectifying but nothing is serious, most of it is cosmetic. The risk for me is the insurance e.g. if the building was to burn down and they found that certain materials like fire resistant plasterboard weren't used where they should of been, or fire escape windows and so on, will they pay out? Or if a tenant was to fall down the stairs and they found the stairs weren't to regs, would it be down to me to pay out. In reality if the stairs don't meet regs I will have them out and changed before I rent it but you get what I mean. 

lincroft1710

Most of the houses in England would fail current building regs as the regs have changed over the years and as we know them today weren't even in existence when the majority of houses were built. Only your preferred insurer can answer questions regarding payouts. 

anselld

As a builder you must know the frequency and depth of BC inspections so it is surprising that you are so concerned about signoff, especially 15 years after the fact.
I doubt insurance would be an issue.  Resale might be more difficult but no more so than now.  You could reduce your offer to cover for the cost of regularisation yourself.

user1977

DrumbeldroneBZzz said:

Yes your right enough time has passed that if anything was wrong it would have already shown. I have made a list of all the obvious problems that need rectifying but nothing is serious, most of it is cosmetic. The risk for me is the insurance e.g. if the building was to burn down and they found that certain materials like fire resistant plasterboard weren't used where they should of been, or fire escape windows and so on, will they pay out? Or if a tenant was to fall down the stairs and they found the stairs weren't to regs, would it be down to me to pay out. In reality if the stairs don't meet regs I will have them out and changed before I rent it but you get what I mean. 

You only need to answer the questions insurers ask you when you take out the policy. All the "they won't pay out because it didn't comply with building regs" stuff is pure urban mythology. 

sheramber

Do you currently rent?

It may prove difficult to get a buy to let mortgage if you are  living in a rented property. 

DrumbeldroneBZzz

anselld said:

As a builder you must know the frequency and depth of BC inspections so it is surprising that you are so concerned about signoff, especially 15 years after the fact.
I doubt insurance would be an issue.  Resale might be more difficult but no more so than now.  You could reduce your offer to cover for the cost of regularisation yourself.

Sign off is very important, its proof that the work was not done by cowboys and it is a national standard so the fact that a build of this size did not have building control involved is quite concerning, and in my experience the depth and frequency of the inspections are very thorough. I am happy with my inspections of the place, it has problems but nothing I can't fix, ofcourse my inspections are only visual and so are limited to what I can see with the time I have had there. Anything could be hidden behind the plaster, wrong size steels or undersized timbers, fire resistant materials not used where they should be and so on. Knowing that these checks where never done shines a different light on cracks in the render and what the cause could be, And yes time will tell how well it was built but 15 years is not that long in the life of a house and problems could still surface. 

But this is not my concern, I am more worried about the complications it could bring up in renting or even selling the property, as I am finding out it is normal for solicitors and lenders to ask for the certificates and this can dictate wether they will lend to you, so it will affect resale and value. My question was asking about indemnity policies and people experience with them, I also wondered if anyone had been in a similar position and had problems with house insurance using lack of regs as an excuse. 

DrumbeldroneBZzz

sheramber said:

Do you currently rent?

It may prove difficult to get a buy to let mortgage if you are  living in a rented property. 

I currently rent off of my parents in a cabin I built, but it is not a registered building I live off of the same address as my parents. 

Caz3121

many BTL lenders want the purchaser to already be a property owner (not buying their only property as BTL) also you will find the deposit requirement can be higher for BTL eg 25% deposit for BTL v's 10% for residential. Are you looking to start a lettings business and understand the requirements to be a landlord...not as easy (or tax efficient) as it maybe was in the past.
https://forums.moneysavingexpert.com/discussion/6569388/becoming-a-landlord-is-it-worth-it/p1

kimwp

Best to keep some of your savings back (a year of expenses) and not put literally all of them into the deposit unless you have some other back up plan.