Buying a House with Subsidence

What Is Subsidence?

Subsidence is the sudden sinking of the ground that a property is sitting on. It can occur naturally or be caused by human activities. All properties experience a little movement, which often goes unnoticed. Sometimes it can be a downward movement and cause the building to become unstable. Subsidence can affect both a property's structural safety and market value.

Subsidence is different from settlement, which typically happens with new build properties when the ground compacts beneath the weight of the new building. However, subsidence is not caused by the building's weight, but by the ground underneath it becoming increasingly unstable.

Which Properties Are More Likely to Be Affected by 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.

What Are the First Signs of Subsidence?

The first tell-tale signs of subsidence are torn areas of wallpaper and doors and windows that have started to stick. You may also see cracks in the walls that appear in the same area both outside and inside the house. These cracks usually appear diagonally near windows and tend to be wider at the bottom than the top and thicker than 3mm. As the ground beneath your home becomes increasingly unstable and moves downwards, it will also take some of your home's foundations down. With one part of the building starting to move, it puts pressure on the property's structure, causing cracks to appear at the points of tension.

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.

Can I Get a Mortgage on a House with Subsidence?

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.

Does My Home Insurance Cover Subsidence?

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.

How Can Subsidence Be Rectified?

Whether you’re buying your first home or an experienced homeowner moving to a new property, subsidence can be a huge worry. But it is possible to fix subsidence and stop it from returning. Underpinning is one of the most common ways to deal with subsidence, strengthen a property's foundations and minimise the impact of subsidence on your home. Once this work is finished, you'll be issued a Certificate of Structural Adequacy (CSA), confirming the work to rectify subsidence is completed. This will then be followed by a monitoring period. Many lenders will require you to provide a CSA when considering your mortgage application. You will also probably want to instruct a full structural survey on the property to check for any other potential structural defects.

What Is Underpinning?

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

What About Minor Subsidence?

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.

Does Subsidence Affect the Value of a Property?

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.

Can I Remortgage with 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.

Can I Sell a House with a History of Subsidence?

If your home has had subsidence that has been successfully dealt with, you must keep all relevant paperwork and make it available to prospective buyers. A history of subsidence could potentially make getting insurance and a mortgage more challenging, which will put some buyers off. You'll need to explain to prospective property buyers that the situation has been dealt with and that it's no longer an issue while answering all their questions honestly.

If the subsidence occurred while you owned the property, be sure to be as forthcoming as possible about the causes of the problem and how it was dealt with. Unfortunately, just hearing the word "subsidence" is enough to put off some prospective buyers, even if the problem has been successfully rectified. It is best to be upfront about any historic subsidence and how and when it was resolved, as it will show up in a property survey.

Speak to a Mortgage Expert

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.