Considering purchasing a property without building codes compliance? Here's what you need to be aware of.
When purchasing a house, it's crucial to ensure that all necessary building regulations approvals are in place. Failure to do so can lead to significant legal, financial, and practical problems for the buyer.
Enforcement Action and Financial Penalties
One of the key potential implications of purchasing a house without building regulations approval is the risk of enforcement action from local authorities. This can include fines, stop-work orders, or even demolition of unauthorized structures. 1, 3, 5
Difficulties in Insuring and Selling the Property
Insurance companies may exclude coverage on buildings without approved plans or certificates, making it challenging to insure the property. Similarly, an approved completion or occupancy certificate is usually required for sale and mortgage approval; lack of approval can delay or complicate the transaction. 1, 2, 3
Financial Liabilities and Legal Disputes
Buyers may face financial liabilities such as penalties, costs to bring the building up to code, and possible costs related to rectifying or demolishing non-compliant construction. Additionally, legal disputes and liabilities may arise if contractual conditions for building approvals were not met, potentially allowing termination of contracts or claims for damages. 3
The Need for Retroactive Approvals and Impact on Property Valuation and Loan Eligibility
Retroactive approvals involve inspections, preparing as-built plans by professionals, and compliance with zoning and building legislation. The municipality may refuse approval, leaving the buyer with an illegal structure on their property. Lenders often require proof of regulatory compliance before approving mortgages, which can impact property valuation and loan eligibility. 1, 2
Indemnity Insurance and Its Limits
Taking out indemnity insurance can provide cover if a home does not have building regulations approval. However, it's important to note that indemnity policies cannot prevent enforcement action being taken, and they aim to cover the buyer financially for the consequences of that action. 4
The Difference Between Planning Permission and Building Regulations
There is a difference between planning permission and building regulations. While planning permission focuses on the design and appearance of a building, building regulations ensure a home is safe, comfortable, and energy-efficient. The enforcement period for building regulations is normally 10 years. 6
In summary, buying a property without full building regulations approval exposes the buyer to enforcement risks, financial penalties, insurance exclusions, resale difficulties, and potentially costly rectification requirements. It is typically advisable to ensure all building approvals and certificates are in place before purchase or negotiate appropriate conditions to manage these risks. 1, 2, 3, 5
1 It's vital to confirm that building regulations approvals are obtained prior to purchasing a home to avoid enforcement action from local authorities, possibly leading to fines, stop-work orders, or even demolition.2 Insurance companies might not provide coverage for buildings lacking approved plans or certificates, making it tough to insure the property. Similarly, selling the property could be delayed or complicated without an approved completion or occupancy certificate.3 Buyers might encounter financial liabilities like penalties, costs for bringing the building up to code, and expenses related to demolishing or rectifying non-compliant construction. Additionally, legal disputes and claims for damages may arise if contractual conditions for building approvals were neglected.4 Indemnity insurance can offer financial protection if a home lacks building regulations approval, but it does not prevent enforcement action and only covers the consequences of that action.5 Purchasing a property without full building regulations approval may subject the buyer to enforcement risks, financial penalties, insurance exclusions, resale difficulties, and potentially costly rectification requirements.6 Planning permission and building regulations are not the same. Planning permission deals with the design and appearance of a building, while building regulations ensure the home is safe, comfortable, energy-efficient, and compliant for a period of 10 years.7 It's recommended to confirm that all building approvals and certificates are in place before making a purchase or negotiate appropriate conditions to manage these risks effectively.8 An extension or renovation project could require sports-related regulations, as well, to ensure the new space complies with safety and design standards, further adding to the importance of proper building regulations compliance.
