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Non Compliance - Financial Institutions normally require planning permission before loans can be dra

  • 15-09-2021 7:40pm
    Registered Users Posts: 136 ✭✭

    TOPIC: Financial Institutions normally require planning permission before loans can be drawn down to finance a building project / mortgage


    Looking for guidance as getting conflicting information and wanted to get the input of others from their experiences of this, the scenario is as follows:

    Rural detached bungalow built in late 1970s - engineer has verbally confirmed after looking at the planning originally granted that the house is not in compliance, on a technicality as it is built in reverse to what the planning granted at the time, the engineer advised that retention would need to be applied for through the local council and the likelihood is that it would be granted however the septic tank could be brought into question (even though it works) it would not meet todays requirements.

    The second issue pertains to farm sheds built without planning a few years after the house, the engineer pointed out that as the sheds are not 100 meters or more from other neighbouring dwellings, etc. - they would not be compliant either and retention would again need to be sought for compliance.

    The engineer then went on to inform us that as the property is not in compliance, a mortgage would not be granted by a financial institution.

    After endless research and speaking to our solicitor - we're left questioning how this will pan out - I understand with a more recent building and compliance is built into the process with good management, it will lapse after 5 years and you can't expect the sellers to be updating it, however this scenario dates back over 40 years and is far less black and white.

    Can anyone enlighten me as to how this may play out and also the chances of a bank approving a mortgage in this scenario? - according to my solicitor its not always the case the financial institution will say no?!

    Confused to say the least - all enlightenment welcome 🤷‍♀️

    Thanks in advance 🙏


  • Subscribers Posts: 40,507 ✭✭✭✭sydthebeat

    its quite simple

    its the responsibility of the seller to ensure the product for sale is "saleable" ie up to standard.

    once the sellers realise that the unauthorised aspect of the development is restricting the chance of a sale, it should focus their minds. of course, they are free to find a cash buyer who is wiling to take a chance with their own money.

    its fully understandable how and why a mortgage company would refuse to grant a mortgage on a property that is knowingly unauthorised.

    i see you as having two options.

    1. request the seller to regularise the development. if they refuse, then walk away.
    2. If they are unwilling, and you still really want to go ahead and speculate your won money, you could come to a legal agreement where you yourself apply for retention permission, and the cost of this and any remedial works required, to be taken from the agreed purchase price. This process however could take 6 months+ and the sellers may not wish to wait that long, if they can get a cash buyer in the meantime.

  • Registered Users Posts: 136 ✭✭GreenGrass2019

    Thank you - that ties in with my own understanding to date both by all the research I've done online and from what I have learnt from auctioneers, engineers and solicitors.

    In your experience is it likely for a financial institute to overlook or have a work around to such situations where non compliance is in the equation? (I ask this as my solicitor was of the opinion, its not always a barrier for the mortgage provider 🤯)

    If a cash buyer is to come forward, I take it they will be in a good position to negotiate a more favourable price taking the above into account?