Help!...underpinned house advice

mrhappyman

blackshirtuk thanks for replying. I'm going to have a think overnight on this one and make a decision

dacouch

mrhappyman wrote: »

Dacouch you make some very interesting points. Re this house, it was likely the drainage to one side of the house that was leaking or possibly water table issues hence that side was underpinned. I'm guessing they wouldn't underpin the whole house as a result but that might be an issue of further problems you say? I have read that elsewhere also. And were there mainstream insurers prior to L & G and AXA before
Thanks for all your replies

Who has told you it was likely to be a drainage issue to one side of the house.

Drainage issues are typically cased by root ingress to the drains, are there any trees in the area of the house that was underpinned?

It's good that the current owners have a good deal with Barclays, I strongly recommend you keep renewing this although be prepared that it's not unknown for the Insurers who paid the subsidence claim which I assume was the underwriter for Barclays to increase premiums to circa £700+ a year so budget for a bigger premium in future and then if it doesn't increase you won't have a problem.

Mainstream Insurers entered the market ten odd years being Saga and Fortis (Now Ageas) through a combination of intending to enter that part of the market and having a badly worded question about Subsidence / Underpinning.

What happens in Insurance if you suddenly start accept business that's deemed high risk by the rest of the market eg high premiums. Is that you attract a large percentage of those customers who are naturally attracted to lower premiums (People with previously underpinned properties generally pay around £700 a year). So you attract a lot of higher risk clients but are charging very low premiums. The result for these Insurers is their book of business becomes unbalanced by the higher risk clients (They have too many high risk clients to be balanced out by the lower risk clients). The claims subsidence claims start to roll in (They're normally upwards of £20k) and the Insurers either increase the premiums dramatically for those with underpinned properties or withdraw from the market.

Traditionally people with properties with subsidence renew their policy forever and transfer it to any future purchasers of their property.

I lost a significant number of my customers with subsidence to Saga & Fortis despite me warning them of the potential consequences.

Two years later I started receiving calls from some of the customers in a mad panic. They were in the process of selling their homes and on the verge of exchanging (Literally the next day) The buyers solicitors assumed their customers could just take over the existing policy (As would normally happen). The Insurers had started receiving claims and rather then stop offering cover they simply refused to allow the new buyers to take over cover.

The result was they would be begging for their previous Insurer to offer cover again. The previous Insurers (Insurer at time of subsidence claim) would specifically state they would not offer cover as in their eyes they had been loyal to the client by keep offering cover forever but the client had not returned the loyalty so they were not prepared to offer cover as the bond was broken.

The only other option is to go to the specialist market such as Bureau Insurance who offer cover but you need to pay for a specialist survey which takes a while to arrange and then obtain a quotation.

Virtually all of the sales fell through as the buyers were either not prepared to wait or were put off by the hassle. So the houses were remarketed and at a lower priced.

So personally I would recommend anyone considering L&G or Axa (Who currently accept properties that were underpinned if it was over ten years ago) go in with their eyes open.

If your seller has continual cover offered by the Insurer who paid out the claim and / or their mortgage provider this will probably not affect you. But as other posters have mentioned, properties with previous subsidence are not straight forward and do tend to have a limited market when you go to sell.

mrhappyman

dacouch wrote: »

Who has told you it was likely to be a drainage issue to one side of the house.

Drainage issues are typically cased by root ingress to the drains, are there any trees in the area of the house that was underpinned?

It's good that the current owners have a good deal with Barclays, I strongly recommend you keep renewing this although be prepared that it's not unknown for the Insurers who paid the subsidence claim which I assume was the underwriter for Barclays to increase premiums to circa £700+ a year so budget for a bigger premium in future and then if it doesn't increase you won't have a problem.

Mainstream Insurers entered the market ten odd years being Saga and Fortis (Now Ageas) through a combination of intending to enter that part of the market and having a badly worded question about Subsidence / Underpinning.

What happens in Insurance if you suddenly start accept business that's deemed high risk by the rest of the market eg high premiums. Is that you attract a large percentage of those customers who are naturally attracted to lower premiums (People with previously underpinned properties generally pay around £700 a year). So you attract a lot of higher risk clients but are charging very low premiums. The result for these Insurers is their book of business becomes unbalanced by the higher risk clients (They have too many high risk clients to be balanced out by the lower risk clients). The claims subsidence claims start to roll in (They're normally upwards of £20k) and the Insurers either increase the premiums dramatically for those with underpinned properties or withdraw from the market.

Traditionally people with properties with subsidence renew their policy forever and transfer it to any future purchasers of their property.

I lost a significant number of my customers with subsidence to Saga & Fortis despite me warning them of the potential consequences.

Two years later I started receiving calls from some of the customers in a mad panic. They were in the process of selling their homes and on the verge of exchanging (Literally the next day) The buyers solicitors assumed their customers could just take over the existing policy (As would normally happen). The Insurers had started receiving claims and rather then stop offering cover they simply refused to allow the new buyers to take over cover.

The result was they would be begging for their previous Insurer to offer cover again. The previous Insurers (Insurer at time of subsidence claim) would specifically state they would not offer cover as in their eyes they had been loyal to the client by keep offering cover forever but the client had not returned the loyalty so they were not prepared to offer cover as the bond was broken.

The only other option is to go to the specialist market such as Bureau Insurance who offer cover but you need to pay for a specialist survey which takes a while to arrange and then obtain a quotation.

Virtually all of the sales fell through as the buyers were either not prepared to wait or were put off by the hassle. So the houses were remarketed and at a lower priced.

So personally I would recommend anyone considering L&G or Axa (Who currently accept properties that were underpinned if it was over ten years ago) go in with their eyes open.

If your seller has continual cover offered by the Insurer who paid out the claim and / or their mortgage provider this will probably not affect you. But as other posters have mentioned, properties with previous subsidence are not straight forward and do tend to have a limited market when you go to sell.

dacouch, thank you for your really detailed reply. You've given a fascinating insight to the whole thing, especially the perspective of insurers.

I read the report by the structural engineer (from 1985) at the estate agents. The report seemed to suggest that in their view, it was the either the drainage system to that side of the house or a “constantly changing water table.” He recommended that the drainage system and drain pipes to that side of the house all should be changed, that side underpinned (at least 6 metres) and shrubbery near that wall be removed. Think the referred to sand soil underneath the house so maybe that didn’t help?

There are a couple of trees in the back garden but at least 10 metres further back and probably 15 metres or more from the underpinned wall so I imagine it probably wasn’t that. From the report, there’s no mention of trees except shrubs on the side. I’m not sure if Barclays were the same insurers at the time, the owener who underpinned the house sold it soon after and the current owner bought it from that person, so two owners after the underpinning so maybe different insurers. Barclays have told me they are aware of it and as it’s long ago, they are okay with it.

However, taking everything into account including some of the points you made some of which I have thought of but thoughts more crystallised now, I am more of a mind to walk away. It's a real shame, as the house was lovely and ideal in many ways. But it will probably be my biggest asset, it's where I'll live and not somewhere I can look at as a business investment and take a view.

I don't want to risk insurers pulling out of the market at some point (I've witnessed that as a solicitor with professional indemnity insurers and it's not pretty lol) or charging stupid prices, possible (if unlikely) further subsidence due to only one side being underpinned, the lack of the complete paper trail with no building regs approval, and basically the risk of not being able to sell it in a few years or being worried about the fact beforehand!

Really appreciate everyone's views and comments, this is a great forum and has been very helpful to me.

mrhappyman :j

dacouch

It's likely Barclays are the original Insurer and it's just been transferred from owner to owner which is what happens with 95% of properties with subsidence.

This has been the traditional way of insuring such properties and there's an unwritten rule amongst most Insurers that they will continue offering cover for a property as long as the owner keeps renewing or transfers it to new owner.

The people in my example slipped up as they broke the bond with the original Insurer who when they went back asking for Insurance again basically said sorry loyalty works both ways.

My post was an explanation so you know the worst case scenario, it's not designed to out you off but to give you the facts.

Why don't you make an offer for the property which is what most people will do when they discover the subsidence. The worst they can say is no

blackshirtuk

Just to let you know the insurance on ours is £425 a year, i have done quotes for under £300 with no subsidence issue.

Have to admit was considering changing to AXA until i saw Dacouch's post!!

dacouch

blackshirtuk wrote: »

Just to let you know the insurance on ours is £425 a year, i have done quotes for under £300 with no subsidence issue.

Have to admit was considering changing to AXA until i saw Dacouch's post!!

Just to be clear, Axa may stay in the market and everything be hunky dorey.

They've only been accepting this type of business for about a year so claims won't have filtered through yet.

Axa have just withdrawn from pet Insurance leaving a lot of pet owners high and dry when they realised they could not make any money on it.

mrhappyman

dacouch, thanks for your further response. Trouble getting sleep in this heat so thought I'd log in...

I think insurers are of course profit driven naturally, and subsidence claims being typically expensive, it's entirely logical to me that an insurer at any time is likely to leave the market if it starts getting claims to the extent it no longer looks good business for them. That's another risk and another thing to worry about for the future if you happen to own a house with subsidence...

Ok so dacouch, would the lack of building control sign of bother you? Another poster made the valid point that building control sign off is not a guarantee, which I know, however to me it shows that such a fastidious organisation as the local council were happy with the work and it's another part of the "paper trail". I know it's 30 years since the underpinning, and I am told, problem free, but I'm just very concerned that a buyer in a few years time will want to see the complete paper trail and will wonder why on earth building control never received an application and weren't asked to look at and sign off the underpinning, which is usually quite major structural work?