Dealing with Unregulated Changes

Alterations to properties that do not have Building Regulation approval have the potential to fatally derail the conveyancing process and cause the parties to incur wasted costs if not addressed early.

It’s an area where solicitors, surveyors and agents should work together to try and find a solution which will allow the sale to progress.

The types of alterations that require Building Regulation approval include:

• All extensions – including loft conversions
• Internal structural alterations
• Changes or additions to drainage
• All but the most minor electrical alterations
• Changes that affect escape routes in case of a fire

In an ideal world, changes of this type will have been notified to Building Control (or an approved inspector), inspected whilst in progress and a completion certificate issued that can be passed on to the prospective purchaser. Unfortunately, either as a result of cost cutting or ignorance that does not always happen and the matter only comes to light when either a Property Questionnaire is completed by the seller or it is flagged up in the surveyor’s report (Section I – ‘Issues for your Legal Adviser’ in the HBR).

At the time the surveyor inspects he will not know whether the alteration has been approved but even if a return visit were arranged the lack of access generally makes a full inspection impossible. If I were to suggest to an owner that they dig up a section of their patio to establish the depth of the foundations to their rear extension or rip out the boxing in around the steel beam where the structural wall used to be they would tell me where to go.

If it is confirmed that there have been alterations that were never approved there are generally 4 options available to the purchaser:

• Do nothing – this is obviously risky but if the potential liability is only a tiny fraction of the purchase price and there is no mortgage the purchaser may be willing to take a view. One thing to bear in mind is that should the unregulated works lead a buyer to put in a home insurance claim, the insurance company may refuse to pay out on account of the lack of certification.
• Apply to Building Control for a Certificate of Regularisation – this is not so common because of the difficulties with works being concealed referred to above and the associated delay. The longer a property is under offer the greater the possibility that it will fall though for other reasons.
• Agree a reduction so that the works can be regularised later – this is the solution that I would recommend but it does rely on the willingness of the buyer to undertake the remedial works later. The surveyor should be able to assist with assessing the potential cost liability. If the buyer is taking out a mortgage their lender may want some assurance that the work will be carried out later.
• Take out ‘Title Insurance’ to indemnify the buyer against enforcement costs – this is popular, especially with Estate Agents, as it is quick and relatively cheap but is a bit of a red herring as it only indemnifies the buyer against the costs of enforcement action taken by the Council and the time periods in which enforcement action can be taken by Building Control are actually very brief – normally between 1 and 2 years depending upon which type of action they pursue. The policies also come with a number of conditions and restrictions which will need to be carefully read.

Unless the buyer is happy to take a view there has to be a willingness on the part of the seller to deal with the issue and that is not always the case – too often the seller’s reaction is to remind everyone that the buyer ‘already got £x off the asking price’ which is less then helpful and ignores the fact that any subsequent buyer will inevitably reach the same stumbling block.