Should we buy an house which has had subsidence?

HelpUsPlease

We are thinking about purchasing a Victorian property whichhas recently had 2 insurance claims, the first of which was for water damage(drain alignment in May 2011) and then a subsidence claim in Aug 2011. Both claims were reasonably small amounts, £600for the water damage and £5001 for the subsidence claim. The work has recently been signed off and wehave a copy of the Certificate of Structural Adequacy in our possession. The property dates back to 1878 and this wasthe first case of subsidence on the property.

No underpinning was required but trees were felled andexpansion joints were put in place where the old part of the building met new(previous extension) plus the garage had numerous blocks replaced and it wasalso reinforced. It should be noted thatthe attached garage was the closest part of the building next to theneighbouring trees which caused the subsidence in the first place.

The only other treatment was making good numerous smallcracks pretty much throughout the property and redecoration.

Now here’s our dilemma. Having been to the property on three occasions all seems well and goodas there is no evidence that any major movement has recently taken place exceptthat there are a couple of hairline cracks in a ceiling in two rooms.

The current owners are insured with Tesco Bank and afterwaiting almost two weeks we have heard back from Tesco Bank to say that theywould insure us. The current owners arepaying £1550 for their insurance and we have been quote around £500? However, we are worried that Tesco Bank mightdecide to up the payments to whatever they feel like as the years go on? Are we protected against them doing this orcan they just make a decision to whack a hefty amount on as and when theyplease?

We are also concerned about resale of the property in futureyears to come. What would happen if theunderwriters changed their terms and conditions, could this mean that TescoBank will not be obliged to insure the next owners?

The next thing we are worried about is what would happen ifsomething were to reoccur, would we stand to lose money if the property took aturn for the worse? Would the insurerspay out for such a claim, would they rebuild if it was that bad or even knockdown, most importantly where would this leave us?

My goodness we haven’t even purchased yet but we sound sonegative? The truth is we do love the propertyand nothing might ever happen but we wouldn’t want to be in a position wherehaving tied up all our savings into this property that somewhere down the line weend up with nothing or a building which is worth tens of thousands less?

The thing is at this moment in time the building does appearto be sound but who knows this could all change? We really wish that the undertaken work hadbeen carried out at least ten years ago as this would be more reassuring. We are caught up in an awkward situation asthe owners are prepared to let the property go for what they purchased it forjust under 4 years ago. We are going tohave a full structural survey done and expect under the circumstances for thisto come back clean. This is based onthe fact that a Certificate of Structural Adequacy has just been issued?

However, realistically should we be putting in a loweroffer/percentage due to the fact that the property won’t be as saleable in thefuture and the element of risk involved plus to cover insurance premiumgaps? Please, please can someone advise?

Many thanks

HappyMJ

You know all the reasons behind the subsidence so it isn't a problem.

It's still saleable. Offer what it's worth to you.

Subsidence is a major problem if you live in a mining area and the ground is falling away and there is no way to stop it. The house would then be worthless....but this is due to a tree which is gone now and the problem resolved. It's an old building maintenance work like what you have described would be expected I don't think it will affect the value.

Yorkie1

There's nothing to stop Tesco hiking the rates if they want to in future years.

Check what the subsidence excess will be - I believe (might not be right - double check) that some lenders will not lend if the insurance excess is > £1K.

When you found out that Tesco would insure you, how was that done? Did the sellers ask if they would continue cover, or did you get a separate quote? I'm rather puzzled by the drop in price of 2/3rds.

HelpUsPlease

Yorkie1 wrote: »

There's nothing to stop Tesco hiking the rates if they want to in future years.

Check what the subsidence excess will be - I believe (might not be right - double check) that some lenders will not lend if the insurance excess is > £1K.

When you found out that Tesco would insure you, how was that done? Did the sellers ask if they would continue cover, or did you get a separate quote? I'm rather puzzled by the drop in price of 2/3rds.

We did this ourselves. The current owners gave us their current details so that we were able to call Tesco Bank. Tesco Bank said that excess would remain at £1000. Not sure what you mean by drop in price?

HelpUsPlease

HappyMJ wrote: »

You know all the reasons behind the subsidence so it isn't a problem.

It's still saleable. Offer what it's worth to you.

Subsidence is a major problem if you live in a mining area and the ground is falling away and there is no way to stop it. The house would then be worthless....but this is due to a tree which is gone now and the problem resolved. It's an old building maintenance work like what you have described would be expected I don't think it will affect the value.

I think in all there were 7 seven trees which were all felled. Should we be thinking of offering a lower price? Do you think we would have a problem selling in later years? What about underwriters could they possibly change terms and conditions to stop someone else from being able to take over insurance?

Yorkie1

HelpUsPlease wrote: »

We did this ourselves. The current owners gave us their current details so that we were able to call Tesco Bank. Tesco Bank said that excess would remain at £1000. Not sure what you mean by drop in price?

If they were looking at the present policy and agreed to continue cover on the same basis, that seems to cover off the insurance angle for the short term.

You said that the present owners pay £1550 p.a. for the insurance, but that your quote was £500. That was what I meant - seems a lot less for what appears to be a very similar risk, unless the present owners have made lots of 'personal' claims and you have no claims history.

The main thing now to weigh up is whether you are prepared to have difficulties whenever you come to sell this property. You will always have to declare the subsidence in future, which will make many potential buyers run away and others to offer less.