Considring buying a house which may have subsidence (house insurance claim in progress)

2cojones

Hi. I am thinking of putting an offer on a house which has recently come back on the market after the buyer pulled out following a Homebuyers Survey. The estate agent gave me a copy of both the Homebuyers Survey and the Subsidence Engineer's Report which the seller's home insurance company commissioned following a claim.


The house has some cracking to the internal walls, and a few to the outside too. Nothing too major, most are 0.5mm or 1mm in width, the worst being 2mm in width. It's an end-of-terrace house and all the cracking is on the unattached side wall.


The Subsidence Engineer's Report outlines at worst 'cracks indicative of minor subsistence damage' and the fact that the side wall needs repointing due to mortar erosion (house built in 1960). They undertook an underground drainage survey near the affected wall and found a number of displaced joints to the drainage pipework and surrounding soil was soft suggesting water leaking.


The insurance company are going to monitor the cracks to see if they get any worse, repair the leaking drainage pipework and the internal/external cracks on the house. My question is, with the insurance claim in progress where would I stand if the investigation/repair work isn't completed by the time we get to Exchange/Completion - obviously it's the current owners insurance policy so I'm concerned that I could be left with the issue only partly resolved.


So why would I be considering a house in this condition ? Well it's up for £300k and thinking about an offer of £285k. It's a 70's nightmare inside - artex ceilings, horrible colourful swirly carpets, needs a new kitchen, new boiler, generally modernising but the rooms are huge and the garden massive. If the house had contemporary d!cor and was ready to live in it would be around £325k.


Any advise would be really appreciated.


Chris

LandyAndy

I wouldn't consider it for such a small potential price uplift.

davidmcn

2cojones wrote: »

So why would I be considering a house in this condition ? Well it's up for £300k and thinking about an offer of £285k. It's a 70's nightmare inside - artex ceilings, horrible colourful swirly carpets, needs a new kitchen, new boiler, generally modernising but the rooms are huge and the garden massive. If the house had contemporary d!cor and was ready to live in it would be around £325k.

That really doesn't explain why you're wanting to buy it, given the complications of an ongoing insurance claim. Do you need a mortgage?

AdrianC

Do you need a mortgage, or will it be a cash purchase?

Can't see any lender being keen to take it on, certainly without a massive retention.

That apart, £40k off "finished" price for a house which needs a complete refurb on top of major structural intervention? Nowhere NEAR cheap enough.

2cojones

Thanks for the early posts. Yes I need a mortgage and I have an AIP (I did have an offer on a different property but was gazumped two weeks ago!). Admittedly it would be a complicated purchase. My problem is that I need to buy a house very soon or commit to a further year of renting a different house (need to move out of current rental in April), there as so few suitable houses on the market in the town I'm looking to buy. Not an ideal situation by far. I definitely do take your point that there is huge risk here, and the cost benefit is not huge ...

davidmcn

If you need to buy something very soon, I suggest you find a less problematic property, rather than proceed with a purchase which is likely to require lots of toing and froing with insurers, surveyors and lenders.

AdrianC

2cojones wrote: »

Yes I need a mortgage and I have an AIP

An AIP means they don't object to you.
They now need to agree to the property being suitable security...

My problem is that I need to buy a house very soon or commit to a further year of renting a different house (need to move out of current rental in April)

Can your landlord give you no leeway?

Buying the wrong house in haste is likely to be a very expensive mistake - fortunately, a lender will protect you from the worst, because they don't want to get saddled if they need to repossess...

Moving to another rental is vastly preferable than buying something, anything just because it's available (and there's no guarantee you can complete by April anyway).

there as so few suitable houses on the market in the town I'm looking to buy.

Another reason to pause and wait for the right place to come along.

G_M

Although the reports suggest only minor cracking, it is unclear
a) if it is ongoing (they will monitor, but what if it IS ongoing and gets worse?)
b) what the cause is (drain is suggested, but what if it's not the cause. Fix the drain and the movement cotinues....)


Unless there is a massive discount on price I'd not progress. Assuming even that your mortgage lender were to agree to lend which seems unlikely.

foxy-stoat

Too expensive at 285k with an on going subsidence claim....solicitors will have a field day with worthless indemnity policies and asking dumb question's if the lender accepts the property.I wager the valuation comes back at £0 until the work has been completed and proved....so if you must buy it then diary the date for exchange for 2025 at least.

Davesnave

AdrianC wrote: »

That apart, £40k off "finished" price for a house which needs a complete refurb on top of major structural intervention? Nowhere NEAR cheap enough.

We bought a large, structurally sound property from the same era, also needing refurbishment. Allowing for the fact that we moved walls around, the rest of the work still cost in excess of £50k and that was with mates rates on the building & carpentry, with two of us also labouring and painting to reduce costs.



Once into a proper refurb, there are always things which add to the initial estimates. Be very wary, particularly if you have little or no experience of major works.

2cojones

Thank you all so much for your wise words and sensible advice. I have seen the light ! Each of you have convinced me that this property is way too risky, hassle and complication that I just don't need. Aside from the hassle and massive work to take on there is the real risk that you point out of the lender not likely to take it on.


The specific cause of the minor subsidence has not been identified (as you point out G_M) and it could very easily turn out to be a very expensive mistake.


I shall pass on this one and continue to stalk Rightmove each morning! Agreed, having to rent again would be preferable to buying the wrong place. Thanks all once again for helping me see sense !