Buying a converted house with NO warranty – other half of building HAS one. Would you proceed?

[CG100]

Hi everyone,

 

I’d really appreciate some advice from anyone with experience of buying a converted property where the new-build/structural warranty is missing.

I’m in the process of buying a house that forms one half of a converted mill building (the whole building was converted about 3 years ago). Before I offered, I asked whether there was a new home warranty and was told yes.

I’ve now found out that:

• the house I’m buying has NO warranty at all

• the house next door (same building, same conversion, same developer) DOES have a warranty

• Checkmate (the warranty provider) say they will NOT issue a certificate for mine and won’t explain why

• the developer cannot be contacted and appears to have stopped operating

• the seller’s solicitor says there is an “indemnity policy” instead

I know indemnity does not cover structural issues – it only covers legal risk for the lender.

My mortgage broker (Nationwide) says it may still be acceptable from a lending perspective because the property has been lived in before and has building regs sign-off, but that the final decision will depend on:

1. my solicitor’s report, and

2. the valuation/survey.

I will be getting a Level 3 survey if I proceed.

My concerns are:

• why the next-door property got the warranty but mine didn’t

• why Checkmate won’t issue the certificate and won’t give a reason

• whether indemnity-only is actually safe

• whether this will affect resale in the future

• whether I should proceed if the survey is good

• what size of price reduction is reasonable in this situation (they may well not offer one)

I’ve told the agent I can only move forward if the price is reduced to reflect the increased risk.

Has anyone bought a house in a similar situation?
Would you proceed with indemnity only if the survey was clean?
And how much of a reduction would you expect for a missing warranty on a 3-year-old conversion?

Any advice or shared experiences would be hugely appreciated.

Thanks!
Corinne

[Thorfun]

what does your solicitor advise?

 

1 hour ago, CG100 said:

And how much of a reduction would you expect for a missing warranty on a 3-year-old conversion?

not trying to be funny but if the building had structural issues and needed to be rebuilt then i would suggest the rebuild costs be knocked off the asking price. obviously the seller will reject this but if you think of worst case scenario that a structural warranty will give you then that's the cost you'd incur without one.

 

if it's a semi detached though if one side has a warranty then i can't understand why the other side wouldn't? if structural issues happen on one side then won't that also affect the other side?

 

tbh, i don't have a clue what to advise here apart from speak to your solicitor! maybe others will be along to offer something else.

[torre]

Half a conversion with a warranty and half without would be a red flag for me, and I'm sure other buyers, and so of course that negatively affects saleability and future value - the impact diminishes over time as the current owner is likely to have already bumped into serious issues.

 

I wouldn't rely on the indemnity at all but you could ask that the vendor purchase a retrospective warranty, preferably from the provider of the other half's warranty.

 

That will cost the vendor a few thousand, but if they won't agree then I'd personally want to knock a lot more than the warranty cost off my offer regardless what my own surveyor says, because of the extra risk you're taking on.

[Mr Punter]

Bear in mind that in another 7 years the warranty will be moot.

[CG100]

3 hours ago, Thorfun said:

what does your solicitor advise?

 

not trying to be funny but if the building had structural issues and needed to be rebuilt then i would suggest the rebuild costs be knocked off the asking price. obviously the seller will reject this but if you think of worst case scenario that a structural warranty will give you then that's the cost you'd incur without one.

 

if it's a semi detached though if one side has a warranty then i can't understand why the other side wouldn't? if structural issues happen on one side then won't that also affect the other side?

 

tbh, i don't have a clue what to advise here apart from speak to your solicitor! maybe others will be along to offer something else.

Waiting to hear from the solicitor. Originally they said ask the mortgage broker who didn't seem to concerned and said it would be down to the solicitor. There is another property next door (detached) that also doesn't have the warranty - really odd as some do and some don't. I have tried to get hold of the neighbouring property owner to see if they have any insights. As far as I know there have not been any problems with it in the last 3 years - which is course is a good sign!! Yet there is risk. I will keep digging and make a decision once I have gathered my info - all of this input is helpful, thanks

[ProDave]

The annoying thing is why was the warranty issued.

 

The worst case suspicion is there was some detail done wrong on your half that the warranty provider was not happy with, but it was done correctly on the other half.

 

Warranty providers inspections are often more stringent than building control.

[CG100]

1 hour ago, torre said:

Half a conversion with a warranty and half without would be a red flag for me, and I'm sure other buyers, and so of course that negatively affects saleability and future value - the impact diminishes over time as the current owner is likely to have already bumped into serious issues.

 

I wouldn't rely on the indemnity at all but you could ask that the vendor purchase a retrospective warranty, preferably from the provider of the other half's warranty.

 

That will cost the vendor a few thousand, but if they won't agree then I'd personally want to knock a lot more than the warranty cost off my offer regardless what my own surveyor says, because of the extra risk you're taking on.

Yes - I have reduced my offer by nearly £20k so I will see where that gets me and also ask about this retrospective warranty. thanks

[CG100]

1 minute ago, ProDave said:

The annoying thing is why was the warranty issued.

 

The worst case suspicion is there was some detail done wrong on your half that the warranty provider was not happy with, but it was done correctly on the other half.

 

Warranty providers inspections are often more stringent than building control.

yes this is my concern - and the next door detached property is also without a warranty - it just sold to a couple though who seemed happy to go ahead. 

[CG100]

3 hours ago, Thorfun said:

what does your solicitor advise?

 

not trying to be funny but if the building had structural issues and needed to be rebuilt then i would suggest the rebuild costs be knocked off the asking price. obviously the seller will reject this but if you think of worst case scenario that a structural warranty will give you then that's the cost you'd incur without one.

 

if it's a semi detached though if one side has a warranty then i can't understand why the other side wouldn't? if structural issues happen on one side then won't that also affect the other side?

 

tbh, i don't have a clue what to advise here apart from speak to your solicitor! maybe others will be along to offer something else.

 

[CG100]

My solicitor has said it is up to me. They also said it is not a legal requirement as it's a conversion and the lender will likely be ok to go ahead -subject to the survey...

[Thorfun]

22 minutes ago, CG100 said:

My solicitor has said it is up to me. They also said it is not a legal requirement as it's a conversion and the lender will likely be ok to go ahead -subject to the survey...

wow! they didn't offer any potential solutions? you could request an indemnity that WOULD cover structural defects. anything is possible and i'm surprised your solicitor didn't suggest anything at all.

[CG100]

2 minutes ago, Thorfun said:

wow! they didn't offer any potential solutions? you could request an indemnity that WOULD cover structural defects. anything is possible and i'm surprised your solicitor didn't suggest anything at all.

they are just saying as long as I get it inspected they don't think it will be a problem for the mortgage. But it is up to me to decide!! Good idea - I will look into that.

[Thorfun]

Just now, CG100 said:

they are just saying as long as I get it inspected they don't think it will be a problem for the mortgage. But it is up to me to decide!! Good idea - I will look into that.

ultimately it is up to you and if your lender is happy to proceed without the warranty and your survey comes back clean then i'd say you're in an ok spot. as was said above after 7 more years the warranty doesn't matter anyway.

 

tbh, i'd have been a lot cheekier with the reduction than 20k. but it's a hard game to play if you really love the place and are worried they'll just pull out and not entertain further offers.