FTB Structural Engineer report indicates historic movement - should I continue?

Sussexsuperseagull

Hi all - my first post here, I've read tonnes of MSE forums over the last few weeks/months and its finally time to post!
Me and the partner are FTB in the process of buying a 1920's (ex council) end of terrace property. We property is in fairly run down state, unlikely to have been refurbished for perhaps 30-40 years and was being sold through probate. We found the property appealing because it was marketed at roughly 70k below the normal asking rate in area (4 bed normally go for £400k this was on sale for 330k) and we estimated it needed in the region of 40k worth of work to get up to a good standard. We managed to knock off 5k off the asking price and had our offer of £325k accepted. 

The next step was sorting out the finances, and whilst our personal information sailed through like a breeze, when it came to valuation time - the valuer came back with a nil valuation as there 1. Evidence of damp and timber decay and a inspection and remedial report should be carried out and 2. Evidence of structural movement, an inspection should be carried out be a qualified engineer to identify the cause of the movement and costs for all works necessary to ensure future stability.

Whilst we were shocked with this, we managed to speak with the vendor who agreed it was in her best interests to pay for a structural engineers report. This was carried out and the findings were... interesting! (we got a free damp report and the remedial work was minimal)

The engineer identified some cracking on the front elevation which he says suggests slight movement of the foundation, however the movement is likely to have occurred many years ago as there was no signs of recent movement, he says there are drains in that area and if there had been subsidence in the past defects to the drains would be the most likely cause and it recommends the drains are tested and reported upon. He also discovered some horizontal cracking which suggests possible wall tie corrosion but nothing to do with subsidence. 

He says 'it is not thought that there are any fundamental problems with the property but there are a number of issues to be considered and action to be taken to prevent an escalation of problems.' 

I have asked my broker to forward the report on to the valuer but I wanted to know peoples thoughts on here... should I be running a mile? This property has huge potential if renovated right and (without the aforementioned structural issues) it would likely sell for £415k plus in the current market once renovated. Our plan is to renovate, remortgage, live for a few years and then sell when we upsize. However, even if I rectify the small cracks through pointing etc and other issues mentioned will these issues come back to haunt me in any future sale or impact on sale value?

Falafels

The property we're buying has historic movement; we were aware of this before we even put in an offer. It's not a big deal - though it would be a different matter if the movement were ongoing.

The advice to check the drains is sound, and it would be a good idea to get these investigated if they have been part of the problem.

If the property's been underpinned in the past - which it doesn't sound as though it has been - this can cause some problems with mortgages and insurance.

If your lender is happy to proceed, then carry on. If you've got enough money to carry out the works without breaking the bank, it looks as though you stand to make a tidy profit!

P.S. The property I sold recently had historic problems with roof spread. I'd done all the remedial stuff, had structural engineer's report signing off the works - and it was a non-issue for my purchaser.

Sussexsuperseagull

Falafels said:

The property we're buying has historic movement; we were aware of this before we even put in an offer. It's not a big deal - though it would be a different matter if the movement were ongoing.

The advice to check the drains is sound, and it would be a good idea to get these investigated if they have been part of the problem.

If the property's been underpinned in the past - which it doesn't sound as though it has been - this can cause some problems with mortgages and insurance.

If your lender is happy to proceed, then carry on. If you've got enough money to carry out the works without breaking the bank, it looks as though you stand to make a tidy profit!

P.S. The property I sold recently had historic problems with roof spread. I'd done all the remedial stuff, had structural engineer's report signing off the works - and it was a non-issue for my purchaser.

Thank you Falafels that is very reassuring 

greatcrested

Surely the real issue is " the valuer came back with a nil valuation".

So the mortgage lender will not lend on this property.

Have you applied for/ been accepted for another mortgage?

Sussexsuperseagull

greatcrested said:

Surely the real issue is " the valuer came back with a nil valuation".

So the mortgage lender will not lend on this property.

Have you applied for/ been accepted for another mortgage?

The valuer valued the property nil but stated he would value at the purchase price pending the outcome of damp report/structural engineer report. It’s not back with the valuer to reconsider.

sarachristie

What are your 40k worth of works if you don’t mind me asking?

FreeBear

Sussexsuperseagull said: (we got a free damp report and the remedial work was minimal)

You do realise that a report is only worth what you paid for it ?

A "free" survey is more often than not, just a sales pitch. I have had a couple of "free" energy surveys in recent years. One turned out to be a hard sell for overpriced double glazing, the second for spray foam loft insulation - Both got a swift kick up the proverbial for wasting my time.

Sussexsuperseagull

sarachristie said:

What are your 40k worth of works if you don’t mind me asking?

A full rewire, re plastering, windows, new kitchen, bathroom, carpets and flooring. Total reno basically on a 4 bed end of terrace 

Sussexsuperseagull

Hi all,
Thought I would provide an update to those interested. When we passed on the engineers report the valuer asked for some more reports to be carried out. He wanted a drainage survey, cavity wall tie report and a roofer to estimate his fees to fixing the possible roof spread. We had all the checks done and the works came to c.£4,000. We forwarded on to the valuer thinking they are certainly going to include a retention here and to our amazement they offered the mortgage for the full 90%. We then spoke with the vendor to renegotiate the price and managed to knock off a further £15k off the already agreed £5k reduction. Lender sent out a fresh offer the following day! Perfect result for us, hoping the conveyancing isnt too long.