Lack of Planning Permission?! Ahhhh!! But what does this really mean for Sellers and Buyers…
So you are trying to sell your property or attempting to purchase one and this issue raises its ugly head. First off, DO NOT PANIC! Ok panic a little, but not as much as if you had just learned that Kevin Bacon is your new step-father (genuine fear of mine) or the zombie apocalypse is upon us. Secondly do NOT overreact and take it upon yourself to march down to the local authority and demand they resolve this. For reasons I will explain later on, this can potentially be disastrous and you do not want to become the example your conveyancer uses to scare future clients away from making the same mistake.
So what are the risks of not getting planning permission when carrying out building works?
Not only can it potentially reduce the value of the property, but if the local authority ever finds out about it, they can take enforcement action against you. This applies even when you didn’t even carry out the works and it was the owner before you who did! The local authority can require you to get retrospective consent for the works carried out, or carry out minor works to ensure everything meets their safety requirements. The local authority can also require you to remove the entire structure and return the property to its original state. If you fail to do so within 6 months, they local authority can enter your property and carry out the works themselves, at your expense. They can also fine you for failing to carry out the remedial works and ultimately, you could face imprisonment if you were to let it go that far.
How not to fall foul of the local authority?
First things first, find out exactly what works were carried out. This can be tricky to ascertain especially if you are a Seller and if the works were carried out by the previous owners some decades earlier. However, a chartered surveyor should be able to ascertain what work would most likely have been carried out. If you are feeling cheeky and you know that the Buyer is getting a building survey (not a valuation survey!) carried out, wait until their surveyor states what works have likely been carried out.
Permitted development – what is it?
Once you have established what works have been carried out, check with a surveyor or architect whether these fall under permitted development e.g. works you are allowed to carry out without planning permission. A surprising amount of works from conservatories, small extensions and porches to name but a few, often fall under the bracket of permitted developments, If permitted, you can relax! However, property that is within a conservation area or is a listed building will require planning permission for any level of works you wish to carry out.
Assuming that the works carried out did not fall under permitted developments, you need to establish when the works were carried out. Under legislation, if a local authority fails to take action within 4 years of works being carried out, they can no longer do so. You are in effect off the hook! This of course does not apply if the works have caused structural problems. Also, it does not apply if you have attempted to obscure or hide the works being carried out. This time limit is increased to 10 years if you have changed the use of the property, for example, turned a residential home into a fish and chip shop.
What if the 4 or 10 year rule does not apply in your situation?
One option is to get retrospective planning consent from the local authority for the works carried out. Local authorities are only obliged to give retrospective consent if original application had fulfilled all the criteria for consent. If the local authority refuses to grant you retrospective consent, they can also take enforcement action against you. Furthermore, it can be quite a timely process. Once you have alerted the local authority to the lack of planning permission, you can no longer obtain an indemnity policy for lack of planning permission. Making a retrospective planning application should be a last resort unless you are absolutely certain that retrospective consent will be granted.
Where does indemnity insurance come into all this?
If you have sold or bought property before, it is likely you have heard the phrase “indemnity insurance” mentioned. These are insurance policies that will reimburse the policy holder a certain amount in prescribed situations. Local authorities can and do take enforcement action against someone who has purchased a property without proper planning permission. An indemnity policy will reimburse the property owner for any and all costs for works required to secure retrospective consent. Due to their increasing popularity and low level of claims, these policies are relatively cheap (a few hundred pounds. The cost is usually a one off payment which can be passed to future owners. Lenders are usually happy to accept them in situations when planning permission has not been obtained.
Be warned – Even if you have an indemnity policy….
They have their limitations!! You can only get an indemnity policy for two reasons. One, the works were carried out are over 12 months old. Two, the council has not been alerted to the fact that works were carried out without planning permission. If the local authority is alerted the indemnity policy is instantly invalidated. If you intend to carry out further works after you have purchased the property be cautious. Your planning application to the local authority show your planned works and any unplanned previous works. If this happens indemnity policy is void.
Furthermore, indemnity policies cannot be relied upon if the works have caused structural issues. The same applies if inadequate construction has led to future problems. Remember, it is an insurance policy, if the insurer can avid havingto pay out, they will certainly attempt to. You will pay the entire cost if the insurer does not have to pay . This can meant the entire cost for any remedial works the local authority deems necessary. Costs can easily fall into the tens of thousands.
The bottom line is…
Buying a property without planning permission for works carried out can become your worst nightmare. At all times you must remember to be cautious, do not to act rashly. Never be afraid to walk away from a potentially risky purchase. A word from the wise, sell your property. It could take you forever if you postpone the sale of your property waiting for issues to resolve themselves. At the end of the day you could face months of untold aggravation, trying to resolve this issue. The outcome is not definite and there is little or no guarantee that you will succeed in doing so.
If I have not scared you off completely, please contact me, Luke Corby-Owen on 020 3150 1919.