PROPERTYCLINIC

The Daily Telegraph - Saturday - - Property -

POINTS OF LAW

My niece moved house and within a month she no­ticed ir­reg­u­lar wall mark­ings which turned out to be wa­ter, caus­ing rot in the floor. A ma­jor re­pair is re­quired. She had a home­buyer’s sur­vey to sup­port the pur­chase which did not iden­tify this as a prob­lem and the sell­ers did not men­tion there was a high wa­ter ta­ble. This has been con­firmed by neigh­bours, who, for some years, have used a ground pump to limit wa­ter col­lec­tion be­neath their house. My niece’s in­sur­ance com­pany will not pay for a re­pair and the sur­veyor de­nies li­a­bil­ity. The mort­gage lender com­mis­sioned the sur­vey and my niece paid £550 for a re­port. What should she do? David Flem­ing writes: With re­gard to de­fects such as this, the gen­eral rule is still “buyer beware”. The stan­dard prop­erty in­for­ma­tion form does not re­quire the seller to give any in­for­ma­tion about de­fects with the prop­erty. I am not cer­tain whether two sur­veys were car­ried out or only one since you men­tion that your niece had a home­buyer’s sur­vey but also paid for a mort­gagee’s sur­vey. She should have been given a copy of the mort­gagee’s sur­vey. The courts have de­cided that a sur­veyor com­mis­sioned by the mort­gagee can, if neg­li­gent, be li­able to the buyer since he is aware that the buyer will rely on his re­port.

Un­for­tu­nately, pro­fes­sional neg­li­gence cases of this na­ture are in­vari­ably com­plex and ex­pen­sive. You would have to find an­other sur­veyor will­ing to say that your niece’s sur­veyor and/or her mort­gagees’ sur­veyor ought to have spot­ted this prob­lem. Un­for­tu­nately, sur­vey­ors’ re­ports tend to con­tain large num­bers of dis­claimers mak­ing it clear what they have and have not in­spected. More­over, even if you suc­ceeded in prov­ing the sur­veyor(s) li­able, you would not nec­es­sar­ily get back the cost of the re­pair. In prin­ci­ple, com­pen­sa­tion in th­ese cases is the dif­fer­ence be­tween what the buyer paid for the prop­erty and what it was ac­tu­ally worth in its “de­fec­tive” con­di­tion.

David Flem­ing is head of prop­erty lit­i­ga­tion at William Heath & Co.

MORT­GAGES

I am 65 and own out­right a small, semi-de­tached house in the outer sub­urbs of Lon­don. The other half of the build­ing has been of­fered to me at a rea­son­able price. I hoped to buy it by re­leas­ing eq­uity on the joint prop­erty which I plan to make into a sin­gle house. How­ever, my fi­nan­cial ad­viser said that I am too young for the best deal on eq­uity re­lease. He sug­gested it would be bet­ter to scrape all my sav­ings to­gether to make the pur­chase and leave the eq­uity re­lease un­til I am older. What do you think? James Cot­ton writes: Tak­ing out an eq­uity re­lease scheme on your cur­rent home (which is cur­rently mort­gage-free) is per­fectly fea­si­ble. It is also pos­si­ble to take out an eq­uity-re­lease scheme when pur­chas­ing a new prop­erty – it does not have to be on a home you al­ready own.

The dif­fi­culty with your plan is that you are hop­ing to se­cure bor­row­ing on a prop­erty that does not yet ex­ist — that is, the new sin­gle house. Lenders are un­der­stand­ably cau­tious about lend­ing on this sort of thing, as they won’t know the value of the new prop­erty un­til it is com­pleted.

How­ever, I spoke to Home & Cap­i­tal, a spe­cial­ist eq­ui­tyre­lease provider and ad­viser and it said that this sort of trans­ac­tion would be pos­si­ble. Once a scheme was ap­plied for, a val­uer would come and look at the prop­er­ties and as­sess the likely value of the two com­bined – they would want to be con­fi­dent that one plus one equalled at least two.

It is likely that any provider would re­lease a cer­tain sum of money up front to help fund the pur­chase and then re­lease the re­main­ing funds once plan­ning per­mis­sion was in place and the con­ver­sion ready to start.

As for whether you would get a good deal on eq­uity re­lease, it is cer­tainly true that the younger you are, the less money th­ese schemes pro­vide – the min­i­mum age on many eq­uity re­lease schemes is 60 or 65.

How­ever, it re­ally de­pends on how much you want to buy the prop­erty next door and whether you have al­ter­na­tive funds to do so. If it is some­thing you re­ally want to do, but don’t have suf­fi­cient sav­ings, eq­uity re­lease can help fund the short­fall.

It is im­por­tant that you keep some of your sav­ings for emer­gen­cies and make sure you bud­get for all the con­ver­sion work.

Fi­nally, don’t rule out a stan­dard mort­gage if you have a de­cent pen­sion in­come – many lenders will lend to peo­ple in re­tire­ment.

James Cot­ton is a mort­gage spe­cial­ist at L & C (0800 953 0304; wwww.lcplc.co.uk)

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