Selling a Property with Unregulated Changes

Right at the top of the list of things that can bite you on the arse when you come to sell a property is unregulated alterations.

They will range from relatively minor things like a new door opening right up to full scale loft conversions; but what they all have in common is that buyers, and their solicitors, will make a fuss when they come to light.

The types of alterations that require Building Regulation Consent include:

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

The idea is that you inform the Building Control Office at the Local Authority before you start work (usually in the form of a Building Notice) and your friendly local Building Inspector (still referred to as the DS by builders) will come and inspect the work before it gets covered up for ever and issue a completion certificate to confirm that it complies with current Building Regulations. Now, it may be down to the ignorance of many homeowners (or their cowboy builders) or even a foolhardy cost saving exercise but in many cases work gets completed without being checked and it’s only when a sale has been agreed that the S hits the F.  So, if you can’t find a Building Regulations completion certificate for your changes what’s to be done?

Start by checking your property’s records at with Building Control, it may be that the work was checked but the final certificate was never issued. Final certificates cost extra so they are not always applied for by builders but can be obtained later if the work was checked.

If it is confirmed that the changes were never inspected there are 3 options available:

• Apply to Building Control for a Certificate of Regularisation
• Agree a reduction so that option 1 can be carried out later
• Take out ‘Title Insurance’ to indemnify the buyer against enforcement costs

1. Regularisation Certificate

This can be applied for on work completed after 11th November 1985 and is similar to making a normal full plans submission, but after the event. The Building Inspector may ask you to open up or uncover work so that it can be properly examined. Once the Building Inspector is satisfied you will be issued with a Regularisation Certificate. Although this is a step below a completion certificate it will be acceptable to most buyers and their lenders. The drawback of this option is that it can take up to 8 weeks – enough to kill off many sales.

2. Negotiated Reduction

To avoid delays it may be possible to agree a reduction with the buyer so that they can pursue option number 1 after completion. If the buyer has had a survey carried out the report may have provided guidance on the likely costs of upgrading any unregulated work. If work has been covered up the buyer will want to allow for the worst case scenario in any reduction. You may want to temporarily uncover the work and have it checked by an appropriate professional to prove that the Regularisation Certificate will be a formality. If the buyer is taking out a mortgage their lender may insist that they also follow option 3.

3. Title Insurance

This is an insurance policy that indemnifies the buyer against the costs of enforcement action taken by the Council. It covers the costs of defending the case, undoing the work, reinstating to the former condition and any loss in value as a result. It requires a one-off premium based upon the purchase price (usually somewhere between £100 & £300) which common sense would say should be paid for by the seller but is often the cause of arguments. If you intend to take out Title Insurance don’t pursue option number 1 as you cannot obtain insurance if you have notified the Council of a possible problem.

I’ve always looked at Title Insurance as a bit of a fudge as the real problem is not that Building Control might take enforcement action but that the alteration was not supervised originally. 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 persue.

You can find more information on Building Regulations at The Planning Portal.