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A house we want to buy was extended without planning permission

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We went to view a house for sale that seemed to offer lots of potential as someone had done the building work for an extension and not finished off the inside, but we then discovered it had no planning permission.

The estate agent advertised it as having been extended over time but work was incomplete – and it appears to be a bungalow that has been converted to a two-storey chalet house.

When we went to look at it and asked some questions, it turned out that the current owner had done the work without planning permission or building regulations approval.

The home this reader is considering buying used to be a bungalow, but has been extended to two storeys without planning permission (stock image)

The home this reader is considering buying used to be a bungalow, but has been extended to two storeys without planning permission (stock image)

We’ve looked into this and discovered that planning permission may be possible retrospectively, as it seems work that is more than four years old could get a certificate of lawfulness, but if work is deemed unsafe due to building regulations there is no time limit.

Where would a purchaser of such a property stand on planning permission and building regulations and what would be the risks and worst case scenario?

The property seems priced too high for the situation, but if we could negotiate enough money off we are thinking this might be an opportunity. LS 

Helen Crane, of This is Money, replies: Taking on such an ambitious renovation project without getting the proper approvals was a bold move from the current owner of this house. 

Not only could the extension potentially be poorly constructed or unsafe, but the local council could force them to take it down again if it was deemed to contravene regulations. 

With the work left unfinished, you have the opportunity to complete the project yourself and hopefully add some value in the process. 

But understandably, that could backfire and end up being very expensive and you are keen to ensure everything is above board before you commit to buying the house and resuming the renovations. 

The good news is that there are several different avenues that you can take in order to get the green light from the local council. 

However, how laborious this process will be – and the costs involved – depend on when and how the work was carried out.  

The best case scenario is that the work comes under something called permitted development rights, which would mean it never required planning permission in the first place. 

On the other end of the scale, you may need to apply for planning permission and then have it refused. This would make you responsible for restoring the property back to how it was before the second storey was built. 

If the extension does stay, you will also need to make sure it is in line with building regulations. And this is a very important element that shouldn’t be overlooked.

I asked architect Tamsin Bryant, who has worked on many home extensions, to explain the rules in more detail. I also spoke to mortgage broker Mark Harris and solicitor 

Check the rules: Home owners should ensure an extension is in line with their local authority's planning guidelines before they start the work

Check the rules: Home owners should ensure an extension is in line with their local authority’s planning guidelines before they start the work

Tamsin Bryant of architects Adams & Collingwood replies: When it comes to planning permission, we have three key tests: what, when and how. 

Obviously every property presents different issues, so please use this list as guidance, and if in doubt contact a professional. 

What: Certain types of work can be done without needing to apply for planning permission. These are called ‘permitted development rights’. 

Check if the works involved in your property can be applied under permitted development rights. These are detailed in The Town and Country Planning (General Permitted Development) (England) Order 2015. 

Bear in mind that the permitted development rights which apply to many common projects for houses do not apply to flats, maisonettes or listed buildings.  

Architect Tamsin Bryant says that finding out when the extension was built will be key

Architect Tamsin Bryant says that finding out when the extension was built will be key 

If the property is listed, it is a criminal offence not to seek consent when it is required. If this is the case, be sure to be thorough and obtain the relevant consents prior to your ownership. 

Not knowing a building is listed is not a defence to any criminal proceedings. This makes it very important that any doubt is investigated and discussed with the local planning authority. 

When: If the work that has been done does not fall under permitted development rules, the next thing to consider is when the extension was built. 

If the work was done more than four years ago, you can make a formal application to your local authority for a certificate to determine whether your unauthorised development can become lawful through the passage of time, rather than through compliance with space standards. 

This would mean you could continue without the need for planning permission.

If it’s been less than four years, or if the application for the certificate is declined, this would mean applying for full planning permission. 

This will cost you in consultant fees and application fees, and the extension may also invalidate your insurance. 

As the previous owner technically broke the rules, it wouldn’t be fair for you to pay the price for it. This may be a bargaining chip to negotiate a lower price. 

How: You can apply for a retrospective planning application for the work that has been carried out. 

Although a local authority may ask for a planning application to be submitted, it does not mean that planning permission will automatically be granted. The application will be treated in the usual way. 

If the retrospective application is refused, the local authority can issue an enforcement notice which requires you to put things back as they were. 

If it is a complex case, you may ask the seller to apply for this retrospective application prior to your purchase, or negotiate a purchase subject to retrospective planning consent. 

All building work must comply with building regulations. These are minimum standards for design, construction and alterations which are set by the Government

All building work must comply with building regulations. These are minimum standards for design, construction and alterations which are set by the Government

Building regulations: As well as ensuring the extension is in line with planning rules, you also need to make sure it meets building regulations. 

There are minimum standards for design, construction and alterations which are set by the Government. 

If the previous owner doesn’t have the relevant completion certificates, you can apply for ‘regularisation’ or retrospective approval. 

This involves a local council building control surveyor visiting the site and assessing the work to see if it’s up to standard. 

If not, they will recommend improvements to bring it up to standard so they can issue the appropriate certificates.  

There is also a time limit on the repercussions that can come about from contravening building regulations. 

After two years, contravening building works gain established use. Therefore prosecution is possible up to two years after the completion of the offending work. 

However, within the first 12 months from the date of completion, the local authority may serve an enforcement notice on the building owner requiring alteration or removal of work which contravenes the regulations. 

If the owner does not comply with the notice, the local authority has the power to undertake the work itself and recover the costs of doing so from the owner. 

Will the extension cause mortgage problems and do I need indemnity insurance?    

Mortgage broker Mark Harris says lenders should accept indemnity insurance as a protection against legal action resulting from a non-permitted extension

Mortgage broker Mark Harris says lenders should accept indemnity insurance as a protection against legal action resulting from a non-permitted extension

Mark Harris, chief executive of mortgage broker SPF Private Clients, replies: There could be an issue with getting a mortgage depending on what work has been done, when it was done and what action has been taken.

Do the works fall under permitted development? If the work was completed more than four years ago and no enforcement action has been taken, then the right to do so may have been lost. If within the four years, retrospective planning may still be obtained.

During the process of selling a home, the vendor’s solicitor will have to complete a form declaring any works and consents. The liability will pass to the new owner but the purchaser’s own solicitor should highlight this.

A common way to address the absence of the necessary consents is to obtain indemnity insurance. This is accepted by most mortgage lenders and should cover the cost of any considerations resulting from any potential action brought.

Lucy Barber, partner and head of residential property at law firm Forsters replies: If you are buying a property which has had work done more than 4 years ago without planning permission, there are usually 3 options. You can apply for retrospective planning permission, you can apply for a certificate of lawful use, or you can purchase indemnity insurance. 

The indemnity insurance would cover the costs or loss of value to the market value to the property, if the local authority ever sought to take issue with the work being done without planning permission. 

Most indemnity insurance providers will require that at least 12 months should have passed since the completion of the works and that there has been no enforcement action taken by the local authority in order to insure. 

Most lenders will also accept indemnity insurance in these circumstances as well. To apply for a certificate of lawful use you should obtain a statutory declaration from the seller confirming when the works were done and verifying the use of the property from that date.

For works done without building regulation approval, you can either seek to obtain this retrospectively or obtain indemnity insurance again.

In both cases the indemnity insurance would likely be invalidated if approaches were made to the council. So, if you are thinking of doing further works which require planning permission or building regulation approval, this is worth bearing in mind. 

That said if you do so once the enforcement period (4 years for planning permission and 12 months for building regulations) of the local authority has passed, the local authority will not be able to take any enforcement action anyway. 

With regard to the health and safety issue for works done without building regulation approval, you would be best advised to obtain a structural survey to ensure that the works done to the property are structurally sound. 

Helen Crane of This is Money adds: There are plenty of things to consider before going ahead with this house purchase. 

At the very least, you will want the current owner to give you more information on the extension so you can work out whether it might come under permitted development rights or be eligible for a lawfulness certificate.

If you believe a full retrospective planning permission is needed, you could ask the owner to apply for it as a condition of the sale. 

As any other potential buyer is likely to ask the same questions you are, they may agree in order to get the home sold. However, going through the planning process could take months. 

The other option is to make a substantially reduced offer for the home, with the knowledge that you will need to apply for planning permission yourself.  

You would need to compensate yourself not only for the fees associated, but for your time, your trouble, and ultimately the potential need to get rid of the extension in future. 

If you do decide to go ahead with the purchase, taking out indemnity insurance could be a wise move – but only if you don’t plan to apply for any planning permission. 

This would protect you financially if the local authority takes any action against you – but approaching the council for planning permission would invalidate it. 

All of this could be a lengthy and stressful process, so only you can decide whether this home is worth it.  

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

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Could equity release be used to help more younger homebuyers?

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Younger first-time buyers could be given more financial help from the Bank of Grandma and Grandad, through the use of improved equity release products, a new report suggests.

The document written by Tom McPhail, of consultancy The Lang Cat, claimed that younger buyers are missing out because older members of their family are unable to satisfactorily tap into their property wealth.

Mr McPhail said: ‘Releasing some of the equity in a property means older homeowners can choose when and how they share their wealth with younger generations.

‘An equity release by grandparents of say £20,000 now, could be transformational for a 20 something struggling to raise a deposit and get on the housing ladder but would make only a very modest dent to the value of the grandparent’s house.’

Releasing some of the equity in a property means older homeowners can choose when and how they share their wealth with younger generations, says new report

Releasing some of the equity in a property means older homeowners can choose when and how they share their wealth with younger generations, says new report

The report acknowledged that equity release has endured a poor reputation in the past after customers suffered ‘severe’ financial knocks.

The sector has been criticised for encouraging people to take on debt, particularly later on in life.

There has also been other concerns about equity release, such as customers falling into negative equity where the value of a property is less than the loan taken out against it when house prices fall.

The report suggested that while the equity release sector has since begun to put ‘its house in order’, it is ‘still not perfect’ and some regulatory safeguards need to be strengthened.

It called for several issues to be looked at, including early redemption charges on equity release products.

It said that most providers apply a simple sliding scale of charges, for example 10 per cent in year on to 1 per cent in year 10.

However, it claimed that some providers apply an early redemption charge based on prevailing gilt rates at that time, putting customers at an ‘unfair disadvantage’.

This is because the fees are not transparent as there is no way a customer can know in advance whether they’d be liable for a charge and if so, how much. 

In the past, customers have also fallen foul of the small print on their equity release loans when it comes to early-redemption penalties – such as couples who must pay an exit fee unless both of them need to go into care.

The report also raised questions about interest rates on equity release products. It said providers should be consistent with their lending criteria and not move the goalposts after customers have taken out a loan, as this can make it harder for them to access a top-up loan in the future, potentially forcing them to remortgage. 

Equity release products could help people access their property wealth to help younger members of their family onto the property ladder

Equity release products could help people access their property wealth to help younger members of their family onto the property ladder

The report argued that equity release products could help people access their property wealth to help younger members of their family onto the property ladder.

Mr McPhail added: ‘Raising a deposit has become an increasingly significant barrier to getting on the housing ladder, with increasing numbers of first-time buyers having to rely on financial help from older generations.

‘Releasing some of the equity in a property allows older homeowners to choose when and how they share their wealth with the younger generation.

‘This more targeted approach gives them greater control to use their assets to the maximum benefit at the point of need.’

Raising a deposit is a barrier to getting on the housing ladder, with increasing numbers of first-time buyers having to rely on financial help from older generations, says the report's author Tom McPhail

Raising a deposit is a barrier to getting on the housing ladder, with increasing numbers of first-time buyers having to rely on financial help from older generations, says the report’s author Tom McPhail

Equity release: How it works and advice

To help readers considering equity release, This is Money has partnered with Age Partnership+, independent advisers who specialise in retirement mortgages and equity release. 

Age Partnership+ compares deals across the whole of the market and their advisers can help you work out whether equity release is right for you – or whether there are better options, such as downsizing. 

Age Partnership+ advisers can also see if those with existing equity release deals can save money by switching. 

You can compare equity release rates and work out how much you could potentially borrow with This is Money’s new calculator powered by broker Age Partnership+.* 

 * Partner link

Jonathan Harris, of mortgage broker Forensic Property Finance, said: ‘Equity release has historically been viewed as a ‘murky’, high-risk sector, fuelled by minimal regulation, poorly-qualified advisers, only a handful of lenders and extortionately high interest rates.

‘Fast forward to today and we see a dramatically transformed sector, benefiting from strict regulation, highly-qualified advisers, multiple lenders and access to very competitive interest rates. 

‘Not surprisingly, equity release is now a viable and growing market for older borrowers looking to utilise the gains seen on property prices to bolster lifestyles, as well as pass on wealth to children when they need it.

‘Those considering equity release should make sure they understand the implications and involve family in any decision-making. It is always important to seek advice from suitably-qualified advisers.’

It comes as a separate report by Legal & General suggested that one in every £90 spent by retired Britons is funded by equity release.

It said that equity release funded an estimated £3billion in retirement spending last year, although it didn’t mentioned the money going to younger generations towards buying a property.

Instead, the report’s survey of 2,000 homeowners found that those with equity release have most frequently used the product to finance home improvements, at 26 per cent.

It said equity release is also being used to support costs such as medical expenses at 17 per cent, maintaining living standards in retirement at 16 per cent, and paying off personal debt at 16 per cent, for example paying off interest-only mortgages. 

It suggested that equity release is likely to play an increasingly important role in financing care-related expenses, with 19 per cent of prospective homeowners citing it as a consideration.

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Allianz Real Estate buys prime office building in Rome (IT)

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Allianz Real Estate, advised by Dils, has acquired an office property in the centre of Rome. The transaction, worth circa €175m, is one of the most important to have been carried out on the real estate market in Rome in recent years.

 

The building, consisting of eleven storeys, comprising nine above-ground and two underground, has a gross lettable area of circa 22,000m² and has undergone a major refurbishment, offering the highest environmental sustainability and energy efficiency standards (LEED Gold Certification). The strategic location, between the CBD and Termini Station, is enjoying great success, especially among corporate occupiers. 

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NCC sells Valby office scheme (DK)

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NCC is selling Kontorværket 1 office project in Valby, Copenhagen to Industriens Pension. The building will become biotech company Genmab’s new headquarters and will meet high environmental standards for both the building and the area. The transaction will be conducted as a company divestment, based on an underlying property value of approximately €81.9m (SEK875m). Transfer of the project and payment of the purchase consideration is expected to result in a positive earnings effect in the NCC Property Development business area in the first quarter of 2023.

 

“We are now selling Kontorværket 1, the first phase of our development project in Valby in the central parts of Copenhagen. Here we have developed property with an optimal infrastructure and appealing architecture, and I am pleased that Industriens Pension is now taking over,” said Joachim Holmberg, Business Area Manager, NCC Property Development.

 

Kontorværket 1 encompasses 16,000m² of lettable area and also includes a basement featuring a parking garage next to the building, with space for 280 vehicles and facilities for parking bicycles.

 

“This is an attractive and future-proof office property, located in an area with very good infrastructure, a motorway, a nearby metro and S-train station. The 15-year lease with Genmab fits well with our strategy as a long-term owner, and we expect the property to contribute a stable return for our members for many years to come. We look forward to welcoming Genmab’s experts in biotechnology,” said Soren Tang Kristensen, Head of Real Estate Investments, Industriens Pension.

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