Buying a house without a new build warranty

[oksleator]

Hello, I stumbled across this site when trying to find information, but we're not self builders, we're purchasers, so hope it's okay to post. 

 

The house we're trying to buy (which is a stables conversion which had building sign off in 2021) has no builders warranty or PCC, I presume due to covid/they were planning on living there themselves, etc. We need a mortgage and our mortgage lender (Natwest) has just withdrawn their offer as our conveyancer notified them there was no warranty. The house is 100 sq m single story bungalow, £480k sale price, cavity wall stone building with solar panels (in the garden not on the roof) and one of those modern septic tank systems (if that makes any difference). It was built by a local builder and had a passivhouse riba qualified architect involved. 

 

We're trying to get our ducks in a row with a solution before approaching our vendors. Clearly this is an oversight by them but equally we don't want to lose the sale as we love it and there's very little like it out there. They would likely get a cash buyer for it if they relisted, it had quite a lot of interest, and most of them seemed like downsizers (we're upsizing!). 

 

Does anyone know a ballpark figure for a retrospective builders warranty for this type of property? 

Are these acceptable by most lenders?

Are there any lenders who would lend without a PCC or builders warranty? 

 

We would be willing to contribute to the costs of a retrospective warranty especially if it was accepted by our current lender as we've secured a good rate with them, but that all depends on costs as our pockets aren't that deep right now and getting shallower with each solicitor's email! Thousands would be manageable, tens of thousands wouldn't. 

 

We've asked our broker and conveyancer for advice but they're a bit 'computer says no' with us as they don't seem to have come across this before. 

 

Thanks for the advice!

 

 

[joe90]

I had to sell my “forever house” due to divorce and the buyer got a retrospective warranty, not all lenders will lend using this but they are out there. I can’t remember the actual cost but not more than 2k if I remember correctly. Frankly has long as building control sign it off that would satisfy me.

Edited June 4 by joe90

[oksleator]

Hi Joe, sorry to hear about your divorce. Yes, we're not worried about the condition of the house, it looks to have been done to a high spec and if any issues arise further down the line, I guess we'll just fix them, like we've done on our current (Victorian) house. We just need to get it over the line with a lender. Thanks for the approx. price, that's useful. 

[Conor]

Ask your broker to search for lenders on a 3 year new build with now warranty. Ours searched to find lenders that didn't require a warranty. Weren't that many, but from memory Virgin didn't require one. We went with Bank of Ireland.

[Kelvin]

Speak directly to your lender and ask them if they’ll accept a retrospective warranty and of so do they have a list of companies that they accept that will rule them in or out. Then search for companies that offer new build warranties and get some quotes. Then speak with the vendor explaining the problem and your willingness to contribute towards the cost of it. 

[Alan Ambrose]

I’ve experience of a couple of these. First, 30 years ago, developer went bust after finishing - it was a property recession. Mortgage broker found me a mortgage supplier who didn’t require a warranty - it wasn’t easy.

 

Second was a barn conversion, 6 years ago - builder didn’t want to bother with the expense of getting one. After a bit of harumphing he got the SE to issue a cert. That worked. In the meantime I also found a broker who would have supplied a warranty (for a price) but didn’t need to use.

 

So you can make it work, you just need to push a bit.

[oksleator]

Thanks both. Have asked the conveyancer to ask the lender if they'll accept retrospective but no response yet. Have also asked the broker to explore other options, again not responding. Good to hear Virgin and BoI might be an option though, I will pass that on to him. 

[oksleator]

10 minutes ago, Alan Ambrose said:

I’ve experience of a couple of these. First, 30 years ago, developer went bust after finishing - it was a property recession. Mortgage broker found me a mortgage supplier who didn’t require a warranty - it wasn’t easy.

 

Second was a barn conversion, 6 years ago - builder didn’t want to bother with the expense of getting one. After a bit of harumphing he got the SE to issue a cert. That worked. In the meantime I also found a broker who would have supplied a warranty (for a price) but didn’t need to use.

 

So you can make it work, you just need to push a bit.

Hi Alan, thanks for the response. I'm a bit ignorant, what is an 'SE'? 

[garrymartin]

11 minutes ago, oksleator said:

Hi Alan, thanks for the response. I'm a bit ignorant, what is an 'SE'? 

 

Structural Engineer

[oksleator]

ha, right, that makes sense. Thanks! 

[oksleator]

Our broker has pretty much told us to buy another house. 

 

Our broker has been scouring the market but is coming up blank against any lenders who will accept a retrospective warranty. Maybe lenders have really tightened up in the last couple of years? 

 

We are low risk borrowers otherwise.

 

We've gone back to our vendors to see if they can get a PCC but as it was built during covid, I'm guessing their architect didn't visit. I'm holding out hope that he did. The ball is now in their court, I guess. 

[Mr Punter]

I think your broker has it right.  Although others will say that a warranty is not worth the paper it is written on, the value of a new house can be drastically reduced without one.

[oksleator]

Yeah it will definitely be reduced in value if it's unmortgageable. I'm sure they'll still sell it, as it's a lovely house in an amazing location. We will be heartbroken not to get it. But unfortunately, we need a mortgage. No rich family floating around in our backgrounds to bail us out. 

[Alan Ambrose]

Probably easiest way is push the sellers to sort out the warranty - their architect or SE is the easiest port of call. Point out that cash buyers will want a warranty also, if they’ve got any sense, so they can sell on. That was the position with the barn conversion above.

[oksleator]

Yeah I've laid it all out in an email to the estate agents to pass on to the buyers. Hopefully they can sort it out. I've emphasised we're still keen, we're happy to contribute to costs to resolve it, and this will likely bite them in the ass if decided to market it again to someone else. We've been poring over rightmove all afternoon and there's nothing else out there that we'd consider, so if there are any creative solutions we can come up between all of us, we'll be up for trying them. 

[Alan Ambrose]

Well hope it goes well. Let us know 😀

[oksleator]

Thanks, will do. The vendor is in discussion with their architect. 🤞 they pull something out of the bag. 

[Bonner]

Another potential route is an indemnity insurance. I guess it is more or less the same thing as a retrospective warranty but might be worth asking the question.

[oksleator]

Yeah we've asked about indemnities and received a hard no from the main lenders. 

 

If they get nowhere with an architect, I will see if we can find a specialist broker who takes on hopeless cases, but we'd have to weigh up the risks of that especially with mortgage rates as they are (and I personally don't feel they will go down). I have a sinking feeling we will not be moving anywhere, but trying to maintain some form of hope!

[Jilly]

Try another broker, it’s definitely doable.

Some thoughts:
Speak to a structural engineer? 
What are the risks? Would a high excess product work? 
Can you take on the house insurance that the owners have, as in the case where there is a previous structural issue?

Approach the insurance company who covered the build itself, they would have wanted the build details?
If you can prove it’s insurable, that will surely help? 
Speak to the owner. If they want to sell to you, they might have some suggestions.
 

 

 

[oksleator]

Thanks Jilly. Good suggestions. 

 

The owner is in discussions with the architect on the build so I'm hoping they come up with some solutions today. In the meantime, we will speak to some other brokers. 

[Jilly]

How about the self build lenders?

[garrymartin]

It's a specialist field so you will likely need to involve a broker or do your own homework, but any mortgage products available may attract a higher interest rate to offset the extra risk so be careful that you don't end up paying £1000s extra over time.

 

This link is likely to be of significant interest; it lists all the lenders that will proceed without a new home warranty scheme and the conditions for doing so.

 

https://lendershandbook.ukfinance.org.uk/lenders-handbook/englandandwales/question-list/1919/

 

As an example, for your NatWest mortgage, it states "Yes but the building work must be monitored or (if completed) have been monitored by a professional consultant and the professional consultant has provided the Professional Consultant's Certificate in the UK Finance Handbook form. In addition, you must confirm the Certificate was issued prior to exchange of contracts." which I guess is why you are having problems.

 

But as another example, Birmingham Midshires states "Yes, provided there are no more than 15 properties on any one development site and construction has been monitored by a professional consultant. We only require this where the new property is to be occupied for the first time." - did the vendors actually live in the conversion before putting it on the market?

 

Hope this helps. Sounds like you've found your ideal home.

 

 

[oksleator]

Thanks both. The vendors have been renting it out to a friend, so it has been occupied. Not sure they would be able to claim otherwise as it's mentioned on the conveyancer forms and it's obvious from the photos. 

 

I didn't realise self build mortgages were a separate thing. I am very green in this area, I thought I was just buying a regular house! We've always lived in old houses so a new build wasn't even on our radar, I always deselect those from our rightmove search criteria, but it is the perfect house which is why we are now in this mess. 

 

Our natwest mortgage offer was 4.12% (and we're borrowing 250k). Looking at self build mortgage rates that would be a huge difference in what we'd pay - they're coming in high sixes and sevens. I think if we get forced down that route we would need the vendors to meet us in the middle to at least get us over the 10 year from build term. 

 

You guys have been so much more help than our broker and conveyancer. Thank you!

Edited June 5 by oksleator

[garrymartin]

A self-build mortgage would not be appropriate as the property is already built. I think @Jilly intended to refer you to the companies that offer self-build mortgages rather than self-build mortgages themselves.

 

Also, Birmingham Midshires seem to no longer be trading so not a perfect example! 😉🤣 But there are plenty of others to choose from

 

Halifax for example, which has the same commentary of "Yes, provided there are no more than 15 properties on any one development site and construction has been monitored by a professional consultant. We only require this where the new property is to be occupied for the first time."

 

Halifax and Natwest both have mortgages at 4.45% fixed on an external comparison site so I'm sure with your specific details you could end up with a similar offer from Halifax without the warranty issues.

Edited June 5 by garrymartin