We are currently involved in helping to fund a deal for a purchase of a property. The property will be bought as a residential home, however, the potential exists to convert the property into two separate plots and build another dwelling next to the existing one.
This opportunity arises time to time; some see the potential, for others it does not register. Many years ago we came across a site in Ealing, where the developer had done an office to residential conversion. The development was nearing completion and the properties were to be sold using the government Help to Buy Scheme. The symptom of this label is typically they are overpriced with jacked up ground rents and service charges and sold to desperate first-time buyers who cannot cobble together a deposit. That’s my perception anyway.
On this site, the flats were being sold with the benefit of a car parking space. We had consulted our planner and he assured us there was A no requirement to provide parking, and B it was possible to hive off the car park completely, and build a whole new development on the site.
This was missed by the developer, it happens.
On the purchase we are consulting on currently, some issues came up during the conveyancing. It seems an extension had been built by the previous owner illegally. This should have been picked up by the previous conveyancer but was not.
Therefore, for the current seller to sell this it would now need to be disclosed, otherwise he could find himself in a lot of hot water, if it was to come out some time later.
Our current client is still looking to purchase the site, with perhaps a little more gusto, as now he has seen the issues; this means the pool of buyers will shrink, and the price will need to decrease to take into account the remedial costs.
Originally, the plan was to purchase this site with a residential mortgage, however this would not be possible now with the issue that has surfaced. It will need to be a bridge, until this has been sorted in one of two ways, either a demolition, or a regularisation.
The cost of the bridge, the uncertainty, hassle factor, will all need to be quantified and need to come off the purchase price. The current seller is planning to bring a case to his previous lawyer; the discount sought will no doubt be added to his claim.
The above example shows the dangers of using tick box conveyor belt conveyancing firms. Generally speaking, most transactions will not have issues to pick up, therefore one may get lucky. However, it is simply not worth the risk, and the amount spent in doing this process properly is akin to paying an insurance premium; you want the comfort of having it in place, so you never have any issues.