Q My husband and I have recently sold our first home in the south-east and now have £300,000 in our bank account. We would like to buy a beautiful property farther north for the agreed price of £380,000. It is a three-bedroom flat that is over two floors in the top half of a Georgian house (it includes an attic conversion) with its own private entrance. However, there are complications: first, it is Grade I-listed; second, it seems the seller, who converted it from one single non-domestic building to three separate properties (there is a flat and a proposed cafe downstairs), failed to get a conversion warranty (he didn’t know this was required).
The first bank we approached (for an £80,000 mortgage) said the property was not mortgageable because of the lack of the conversion warranty (apparently the fact that the seller bought the property more than 10 years ago and has been converting it without living in it means that the warranty is required). The seller then bought a retrospective warranty, and we approached a mortgage broker. However, the mortgage broker has been unable to find a lender who will consider the property mortgageable: some lenders are happy with a Grade I-listed property, some are happy with a retrospective warranty but none, it seems, are happy with both.
We are absolutely in love with this property and are keen to find a way to buy it. The mortgage broker has suggested a secured loan (with a higher interest rate) instead of a mortgage. However, we’re very wary of buying a property that has proved to be unmortgageable. (Plus, everything we can find online suggests that buying an unmortgageable property ought to come with a hefty discount but the seller is unwilling to budge on the price as he’s in no rush to sell.)
What we want to know is this: is the retrospective warranty a problem that will endure, so that if we somehow bought the property, it would be difficulty for the next person who hypothetically buys the property from us (after we’ve lived in it for, say, 10-15 years) to find a mortgage – or is it only a problem at this stage, immediately after the conversion has taken place?
And if this is only a problem at this stage, and reselling should be relatively straightforward (at least in terms of the buyer finding a mortgage), would it be foolish of us to take out a secured loan? Our family and friends are warning us against this but as this is our dream home, it is tempting just to find a way to buy it (especially as it’s an amount we could pay off in a few years).
Anonymous
A I think it would be foolish to pursue your dream of owning this home, full stop. Any work – internal or external – that will affect the special character of a listed building (whether that’s grade I, grade II* or grade II) requires listed building consent. If you buy a listed property where work was carried out without consent, when ownership transfers to you, you will become liable for correcting any mistakes. According to the property experts, Planning Portal, while it is possible to get retrospective consent after work has taken place, work is only authorised from the actual date the consent is given. So anyone who carried out work before this date can still be prosecuted as doing work on a listed building without the necessary consent is a criminal offence. According to the Listed Property Owners’ Club, there is no time limit on enforcement action, so if you inherit unauthorised work undertaken by a previous owner, you can still be required to reverse any alteration. Even if the property wasn’t listed, I would still steer clear as the seller seems to have converted the building without planning permission, and I do not believe that he didn’t know that planning permission would have been required. This also raises questions about whether building regulations were followed to the letter, but maybe I’m being unduly suspicious. As far as selling it on in the future goes, the absence of listed building consent means that no one would be able to get a mortgage on the property. (The above advice relates to the rules in England.)
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This article was amended on 6 June 2023 to remove some personal information.
