If you’re planning to sell a property without building regulation approval, there are important considerations to be made. Often, there are two common situations that can be attributed to not having building certifications.
First, there are cases where homeowners forgo the official approval. Maybe you’re just converting a space in your home or installing a solar panel. These alterations sound simple enough, but they are covered in the building regulation requirements. Then, you can go years without filing an application for the appropriate certifications and eventually forget about it.
The more complex cases are when you are not the original owner of the property. If they made changes before you even owned the house and they don’t have certifications, it’s your responsibility to come up with solutions. Note that the property has to be inspected before, during and after the alterations.
It is not wise to ignore building regulations. There are a lot of factors that are affected when proper building standards are not followed. And when you’re selling, it can even devalue the property.
What happens if I don’t comply with building regulation requirements?
While this issue is not uncommon, the repercussions of forgoing building regulation approvals can be undesirable. Essentially, there are three ways it can go:
1. Enforcement action
When building authorities are notified of your lack of certification, they may carry out enforcement action against you. Yes, you, even if the previous owner was the one who made the building alterations.
This means that if you don’t make the appropriate actions and the building regulation standards aren’t met, you can get fined or even face court proceedings.
2. Extra expenses
After the inspection, if the alterations fail the building standards, you will have to re-do them to be able to comply. This means more expenditure, effectively reducing your profit and devaluing your property.
3. Almost impossible to make a sale
Selling an undervalued property already isn’t the best thing. What’s worse is that in some cases, you can’t even sell it at all. There is a strong possibility that buyers won’t be able to acquire a mortgage if the property’s structural works don’t adhere to building regulations. After all, they need to ensure that the building, and any alterations made, are up to the set standards.
How do I solve this problem
There are, however, a few options to choose from in order to finally sell the property. It’s not the end of the world! If you carefully weigh your choices and the amount of effort, time and money you’re willing to exert, then maybe you can get a great deal out of your property.
Here are two possible routes to go:
1. Retrospective building control approval
This is a valid way out. You can get building control approval for works that have already been done. This process is called ‘regularisation,’ where a building control surveyor conducts an inspection of your property and assesses if it’s in line with the regulations and standards.
While the process can be complicated and time-consuming, this is your best bet for getting out of such a hairy situation. If your property passes the standards, you will have a regularisation certificate.
This is not to say that this method is perfect. There are limitations and more considerations to make for this workaround. First, private inspectors aren’t allowed to conduct the assessment. You would have to engage with the Local Council to get a regularisation certificate. Secondly, you will be charged with higher fees than you would have for a regular building control approval. This policy encourages homeowners to get an approval in a timely manner.
2. Indemnity insurance
The more common method is to apply for indemnity insurance. This is perceived to be the easier and cheaper option. Because this is a legal procedure, you may have to consult with Property Lawyers to fully grasp the risks and benefits of this option.
Fundamentally, an indemnity insurance policy “offer[s] protection to a buyer (and a lender) where there is a defect in the title which cannot be resolved.” It differs to conventional insurance policies in that it is only paid once.
In the case of building control approvals, indemnity insurance covers you from the enforcement action issued by the authorities. The insurance only covers the selling cost of the property. For example, if the properly sells for £500,000, you can pay for a £175 insurance policy.
Some considerations to be made
The option for indemnity insurance is the quickest way to be able to sell a house without building regulations approval. However, there are some caveats that you must keep in mind before proceeding.
It is important not to notify the local council of your situation. If an enforcement action is already in order, you won’t be able to acquire the insurance policy.
The insurance policy also doesn’t cover the cost for remediation of substandard words (i.e. building alterations that don’t pass the building regulation standards). This means that if you or the previous owner have made alterations that aren’t up to par, then you will have to personally cover the expenses for rectifying them.
There is also the matter of the payment for the insurance. There are cases that the fee can be negotiated with the potential buyer. However, it may be in your best interest to pay it yourself. If you let the potential buyer shoulder this responsibility, they might be turned off.
You also need to keep an open mind about the changes in your property’s value. It’s easy to sell properties with no strings attached. However, the extra trouble will inevitably affect your market value.
Whichever of the above options you choose, there will be benefits and disadvantages. It’s up to you to pick what’s best for your property. Just ensure that potential buyers are in the loop when it comes to your property’s situation. For example, you can inform them about the property surveys that were done for the house to keep them comfortable.
If you need any more assistance or have questions, don’t hesitate to give us a call! 0191 486 2386