No NHBC certificate – no sale?

THE QUESTION

Has anyone had an experience of lenders not accepting property because of lack of acceptable NHBC certifications?  The house was originally a bungalow and has now been extended extensively.

Four lenders have confirmed they will not touch it.  As the property is classed as an initial occupancy, it has been altered, extended and refurbished and is being sold for the first time since this work was completed.  

Though there is certification from Building Control for the work, the property does not have the benefit of a Building Standards Indemnity Scheme nor has it had consultant supervision or certification.  None of the lenders are willing to consider a retrospective warranty. Unfortunately, the vendors were advised incorrectly and only have building regs certificate as the job was considered minor given 95% of the existing foundation was used.

THE ANSWER

The vendors have shot themselves in the foot here.  For any significant alteration/conversion of a property mortgage lenders can insist their security is protected by having a warranty, as would be the case if it was a new build.  NHBC is one such warranty provider, but there are several others. To be acceptable to lenders it doesn’t have to be NHBC specifically.

There could be a silver lining in this for you.  The vendors situation is that they can only now sell to cash buyers and we all know what cash buyers do when they sense an opportunity – hammer down the price!

Whether there is a deal here for you or not hinges on whether you can buy it, pay for your own warranty and thus make it mortgageable.  So the first task is to find a warranty provider that will grant you the warranty and establish what their cost will be for doing so.

Once you have that in the bag, it is safe for you to buy the property, clearly at a significantly reduced price though.  You can use bridging finance to finance the purchase, get your warranty in place, then refinance onto a mortgage at the true market value - thus recycling most/all of your cash out of the deal.

You can learn more here:

• Contact Kevin Wright over on his Facebook page.
• Browse the Recycle Your Cash online training library by clicking here.
• Attend an upcoming 1-Day Property Finance Masterclass event - Book in here.