Many commercial property owners only discover unauthorised building work when they are trying to sell. For example, a buyer’s solicitor may ask for the completion certificate for a mezzanine installed years ago, but nobody can find it. A surveyor might also discover an extension that appears on the building plans but has no planning record.
Problems like these can delay a sale, make lenders more cautious and put pressure on the property’s value. Unauthorised work is fairly common in commercial properties. Industrial units may have mezzanines added, shops may have rear extensions or canopies, and offices are often divided or altered. Sometimes a property’s use has also changed without the correct permission, possibly under a previous owner.
Because commercial properties may not be sold very often, these issues can remain undiscovered for years. Fortunately, there are usually ways to deal with them. The main decision is whether to regularise the work, accept a lower sale price or sell the property in its current condition.
Planning Permission and Building Regulations Are Different
It is important to understand that planning permission and building regulations are two separate issues.
- Planning Permission: This deals with whether the development was allowed in the first place. It can include an extension, change of use, new access or signage. Planning matters are normally dealt with by the local planning authority.
- Building Regulations: These deal with how the work was carried out. They cover areas such as structural safety, fire safety, escape routes, insulation, ventilation and accessibility. These matters are handled by building control.
A property can therefore have planning permission but no building regulations approval. The opposite can also happen: work may have building control approval but no planning permission. Having approval for one does not automatically resolve problems with the other.
Why Unauthorised Work Can Cause Problems with Commercial Property
Missing permissions and approvals can create several problems for commercial property owners.
Lending
Commercial lenders may be unwilling to lend against a property with significant unauthorised work. Alternatively, they may reduce the property’s valuation, offer a lower loan-to-value or hold back part of the loan until the issue is resolved. The same problems can arise when refinancing.
Insurance
Buildings insurers may refuse certain claims where structural work was completed without the necessary approval, particularly if the damage is connected to that work.
Tenants and Leases
Tenants and their solicitors may also check that building work has the correct approvals. For example, an unauthorised mezzanine with inadequate fire escape arrangements could make the property more difficult to let. Problems can also arise when a tenant carried out alterations without properly documenting them. At the end of the lease, there may be disagreements over who is responsible for putting the property back into its previous condition.
Enforcement
The rules around enforcement have also changed. In England, the Levelling-up and Regeneration Act 2023 changed planning enforcement time limits. For many breaches taking place on or after 25 April 2024, local planning authorities generally have ten years to take enforcement action. Older work may be covered by previous rules.
The Building Safety Act 2022 has also increased building control enforcement powers. This means you should not simply assume that unauthorised work is safe from enforcement because it has been there for several years. Professional advice should be taken based on when the work was completed and where the property is located.
Scotland has a different system involving building warrants and completion certificates, while Wales and Northern Ireland also have their own rules.
Find Out Exactly What Work Has Been Done
Before trying to regularise unauthorised work, you need an accurate picture of the property as it currently stands. The council may need detailed drawings showing the existing building, including dimensions, floor areas, heights, openings, escape routes and the location of the work in relation to property boundaries. Basic estate agent floor plans are unlikely to provide enough information.
Commissioning measured building surveys can provide accurate as-built drawings of the property. These drawings can help you understand the extent of any unauthorised work, support a retrospective planning or regularisation application and provide buyers and their surveyors with reliable information. For complicated buildings, laser scanning can also help record features such as changing floor levels, unusual structures and service routes that may be difficult to measure by hand.
You should also collect as much paperwork as possible. This could include previous approvals, contractor invoices, dated photographs, structural calculations, electrical or other service certificates, fire risk assessments and evidence showing when the work was completed. The dates can be particularly important when deciding whether enforcement action is still possible.
Ways to Regularise Unauthorised Work
There are several possible routes, depending on the type and age of the work.
Retrospective Planning Application
You can apply for planning permission after the work has already been completed. The council will normally consider the application using the same planning policies that would have applied if permission had been requested before the work started. If permission is refused, there is a risk that the council could take enforcement action requiring the work to be changed or removed, although there may be a right of appeal.
Certificate of Lawfulness of Existing Use or Development
If enough time has passed and planning enforcement is no longer possible, you may be able to apply for a certificate confirming that the existing development or use is lawful. This is not the same as planning permission. Instead, it formally confirms that the council cannot take enforcement action against the development. You will normally need evidence showing when the work or use began. If successful, the certificate can be useful when selling because it gives the buyer and their solicitor clear evidence of the property’s legal position.
Regularisation Certificate
Under Regulation 18 of the Building Regulations 2010, you may be able to apply to the local authority for retrospective approval of unauthorised building work carried out on or after 11 November 1985. Building control may need parts of the property to be opened up so they can inspect foundations, structural elements, insulation or fire-stopping. You may also have to carry out additional work before a certificate can be issued. Regularisation certificates are issued by the local authority.
Indemnity insurance
In some situations, indemnity insurance can protect a buyer against the financial consequences of enforcement action. However, it does not make the building compliant and will not correct genuine safety problems. Another important point is that approaching the council about the unauthorised work can make indemnity insurance unavailable. You should therefore consider this option and take professional advice before contacting the council. Some commercial lenders may also refuse to rely on indemnity insurance where serious fire safety issues are involved.
When Regularising May Not Be Worthwhile
Regularising unauthorised work is not always the best financial decision. For example, it may not make sense if the work is unlikely to receive permission, inspections would seriously disrupt existing tenants, the cost of putting everything right is too high or you need to sell faster than the planning process allows. In these circumstances, selling the property in its current condition may be more practical.
This is likely to reduce the number of buyers because conventional lenders may not finance the purchase. However, cash buyers, developers and specialist purchasers may still be interested because they can include the cost and risk of resolving the problems in their offer.
For some owners, selling a property lenders won’t touch can therefore be an alternative to spending time and money regularising the property before putting it on the market. You should still be realistic about the price and provide buyers with full information about any known problems. Do not try to hide unauthorised work. Failing to disclose known problems could result in claims for misrepresentation even after the sale has completed.
Deal with Problems Early
Unauthorised building work does not necessarily make a commercial property impossible to sell. However, these problems become much harder to deal with when they are discovered halfway through a transaction. At that stage, the buyer may have more negotiating power, deadlines may be approaching and both sides may already have spent significant amounts of money on the sale.
Finding the problem early gives you more options. Start by establishing exactly what work has been carried out, when it was completed and which permissions or certificates are missing. Accurate surveys and professional advice can then help you decide whether to regularise the work or sell the property in its existing condition. The worst option is simply hoping that nobody notices. Problems with unauthorised work are much easier to manage when they are identified and dealt with before a buyer discovers them.