I am considering buying a flat that was converted in 2008 – without planning permission. The landlord tried to get retrospective planning permission two years after conversion (2010), but the Council rejected the application.
Now the property is up for sale and I think a bridging loan wouldn't be a problem, but a mortgage company would ultimately require an indemnity policy. Is there a helpful solicitor willing to scan through the papers for me before I spend ludicrous amounts of money on a no-go?
Bridging finance would certainly work in terms of securing the purchase.
A mortgage lender would require a legitimate conversion, not the current illegitimate one – in other words, a Certificate of Lawfulness.
To get a mortgage you, as the new owner, will need to get planning approval (CoL) for the flat. No planning approval = no mortgage = no way to repay the bridging loan. An indemnity policy is a red herring.
The Council planners rejected the current landlord’s application in 2010 because:
You don’t need a solicitor (yet), you need a meeting with the council planners to establish if, as the new owner, you submitted a new application for a Certificate of Lawfulness would it get approved. They will not give you a definite ‘yes’ or ‘no’, but they will indicate whether it would be viewed favourably or not. Often they can be more reasonable to a new owner than to the person who, effectively, thumbed their nose at planning regulations.
If it is clear they will still not approve it, they retain the right to issue an order to convert it back to its original state; which is why no mortgage lender will touch it.
This is only a deal if you are confident you can get a Certificate of Lawfulness; a no-go if you cannot.
If you get an indication that you can get your CoL, then your offer to purchase needs to be low enough to reflect that this property is ‘cash buyer only’ territory and cash buyers don’t pay top dollar to relieve owners of problem properties.
With the knowledge that you will be able to get your CoL, and an outrageous offer that gets accepted, there are certain bridgers that will lend against true current value, rather than purchase price; which will significantly reduce the size of deposit you need to put down.