Buying a House with Subsidence

Any type of property can have subsidence, whether it's an old or relatively new property. However, homes that are built on particular types of soil are at greater risk of being affected by subsidence. Properties on clay soil, frequently found in the South East of England, are especially vulnerable.

Clay soil can expand in wet weather and then contract when it's dry, causing the ground to subside. Also, properties that are built on silt, gravel or sand, such as those near rivers or the coast, can be susceptible to subsidence and erosion. Properties that were built in ex-mining areas in the UK, such as the North West of England, Yorkshire and the Midlands, are also more vulnerable to subsidence problems.

In some instances, your home may also be subject to non-standard construction, so you may need to discuss Non-Standard Construction mortgages with your broker.

It's important to keep in mind that not all cracks mean there's subsidence. Small hairline cracks in the wall are normal and happen due to materials expanding and contracting, caused by changing temperatures.

It’s unlikely you’ll get a mortgage on a house that currently has subsidence as it can cause serious structural damage that could potentially:

• Make the property uninhabitable
• Require extensive and expensive repairs
• Cause the property to collapse

Part of a standard lender's mortgage conditions is that a property must qualify for building insurance. However, most insurers will refuse to insure a property known to have subsidence.

If subsidence has previously been picked up and dealt with, then you should be able to get a mortgage on the property. The lender will instruct a surveyor to check that the problem has been resolved as part of your mortgage application.

If the property you want to buy currently has a severe subsidence problem, you would need to get a bridging loan to purchase the property and rectify subsidence before getting a mortgage on it. A bridging loan would enable you to get some specialist buildings insurance on the property until the remedial work is done and you remortgage and switch insurance providers.

Alternatively, some lenders may agree to approve a mortgage on the property but will only release the full funds once you've completed the remedial works. For example, the lender gives you 6 months to carry out the work and then the valuer will revisit the property to verify the work has been completed.

If you want to buy a property with subsidence, you should speak to an independent mortgage adviser at John Charcol to see what mortgage options are available.

Most traditional buildings or home insurance policies don't cover existing subsidence issues. If you purchase a house which later develops subsidence, your home insurance should cover at least some of the cost of repairing the damage. It won't cover the actual cost of fixing the subsidence problem itself.

Underpinning is an effective technique to strengthen a property's foundations severely affected by subsidence. It can offer reassurances that any previous problems with subsidence have been dealt with. The cost of underpinning a house will depend on how severe the subsidence problem is and the type of underpinning process used.

• Jet grouting: this strengthens weak soil under a property's foundations by creating a strong base using high-pressure jets to mix the existing soil with a self-hardening grout
• Mass concrete underpinning: this process uses concrete to deepen or extend the existing foundations and is the most common type of underpinning
• Piling: by driving piles into the ground to sit on more stable soil, this method is considered the most versatile way to strengthen the foundations of a property

Minor subsidence caused by leaking water pipes or tree roots are reasonably easy to fix and, as a result, shouldn't cause too many problems when looking to get a mortgage, as long as all the repairs are completed. Major subsidence issues, like shifting soil, may require more extensive remedial works such as underpinning. In this case, it could mean your lender rejects your application. Whatever the degree of subsidence, it's always a good idea to get advice from a structural engineer following the surveyor's completed valuation.

How much subsidence affects the value of the property will depend on the severity of the problem and how recent it is. Even a property that has been underpinned to deal with subsidence can be worth less, dropping by as much as 20% in market value compared to similar properties without a history of subsidence.

If you own a property that you want to remortgage with a new provider, but the house has subsidence, you will be treated the same as someone considering buying a new property with subsidence. Most lenders will not want to take on your property until the issue is dealt with. This means that, in most cases, you'll have to rectify the subsidence problem before approaching lenders. Alternatively, you could stay with your existing lender, but most will still want you to carry out the work before letting you do so.

Contact our independent mortgage experts if you want to purchase a property with subsidence or have questions about getting a mortgage on a property with known or historic subsidence.

At John Charcol, we have access to a broad range of mortgages, including exclusive deals and specialist lenders. We can help you find the right product for your circumstances. Get in touch with us today on 0330 433 2927 or submit an online enquiry to find out more.