lenders criteria

chappers

Hi all put this on the mortgage board but wondered if anyone on here had any ideas

I am about to develop a property and am at the point of investigating the possible need for a new home warranty.

Basically I have an existing building which will be converted into two self contained flats, in addition to this attached onto the side of the existing building will be a newly built, third self contained dwelling.
All three dwellings will be sold as leasehold, with the outside communal areas being part of the freehold.

I have been having a scan through some of the lenders criteria on the CML website and it appears that conversions generally do not need to be gauranteed under a newbuild scheme. Is this correct
Also what would be the status of the newly built part of the development , considering it is essentially an extension to the existing property, would it require a warranty ?
Would the relevant planning consents and Building Control certificates, be sufficient
Obviously I need to make sure that the correct cover is in place as I will be selling these properties and don't want to leave them un mortgagable.

All of the warranty providers are telling me different things from I need cover for all three to just needing cover for the new element.

What generally would be a lenders position on this.

Many thanks
gareth

Richard_Webster

CML Handbook says:

6.6 New Properties - Building Standards Indemnity Schemes 6.6.1 If the property has been built or converted within the past ten years, or is to be occupied for the first time, you must ensure that it was built or converted under a scheme acceptable to us (see part 2 for the list of schemes acceptable to us and our requirements).

and

6.6.4 Where the property does not have the benefit of a scheme under 6.6.1 and has been built or converted within the past 6 years check part 2 to see if we will proceed and, if so, whether you must satisfy yourself that the building work is being monitored (or where the work is completed was monitored) by a professional consultant. If we do accept monitoring you should ensure that the professional consultant has provided the lender's Professional Consultant's Certificate which forms an appendix to this Handbook or such other form as we may provide. The professional consultant should also confirm to you that he has appropriate experience in the design or monitoring of the construction or conversion of residential buildings and has one or more of the following qualifications:
6.6.4.1 fellow or member of the Royal Institution of Chartered Surveyors (FRICS or MRICS); or
6.6.4.2 fellow or member of the Institution of Structural Engineers (F.I.Struct.E or M.I.Struct.E); or
6.6.4.3 fellow or member of the Chartered Institute of Building (FCIOB or MCIOB); or
6.6.4.4 fellow or member of the Architecture and Surveying Institute (FASI or MASI); or
6.6.4.5 fellow or member of the Association of Building Engineers (FB.Eng or MB.Eng); or
6.6.4.6 member of the Chartered Institute of Architectural Technologists (formally British Institute of Architectural Technologists) (MCIAT); or
6.6.4.7 architect registered with the Architects Registration Board (ARB). An architect must be registered with the Architects Registration Board, even if also a member of another institution, for example the Royal Institute of British Architects (RIBA); or
6.6.4.8 fellow or member of the Institution of Civil Engineers (FICE or MICE).

So it does appear that conversions and new build do require these warranties or certificates and various lenders have differing views about what warranties and whose certificates they will accept.. If an extension became a separate dwelling unit then i do not think it would be classed as an "extension" and would require to comply. Interestingly, the point is often ignored/forgotten by solicitors, so you might get away with it, but it is something of a risk you might not want to take!

chappers

Cheers Richard I was initially thinking that but then I looked into part 2 under some of the lenders criteria and several seem to expressly say that they don't require this for conversions. For example Halifax

6.6.1- Please provide a list of new home warranty schemes acceptable to you.

NHBC (including NHBC Solo for self build)
Zurich Municipal (including Zurich Self Build scheme for self build)
Premier Guarantee (including LABC Hallmark & LABC New Home Warranties), but the certificate must not contain any 'reservations', i.e. items not covererd by the individual policy.
Building Life Plans You must ask and receive confirmation from BLP that the sum insured is adequate when compared to the rebuilding costs;
The certificate must not contain any 'reservations', i.e. items not covererd by the individual policy.

We only require cover under a building standards indemnity scheme for a new property being occupied for the first time.

Please note we do not require cover under a Building Standards Indemnity Scheme or architect supervision for newly converted properties.


6.6.4- Will you proceed if the property does not have the benefit of a new home warranty scheme?

Yes, provided there are no more than 15 properties on any one development site and construction has been monitored by a professional consultant.

We only require this where the new property is to be occupied for the first time.

(Please note we do not require monitoring by a professional consultant for newly converted properties)

I was basically thinking along your lines particularly with regards to the additional third property and will obviously put these gaurantees in place if necessary.

cheers for your time
Gareth