Purchasing a house with history of subsidence - FTB

rrr84

We (FTB) are in the process of buying a 1997 built detached house in South East England. We viewed the house in March 2022. The asking price was £450,00. We tried to negotiate the price, but the vendor was firm on the asking price. 
After much deliberation, we agreed to put in an offer at the asking price since we really liked the property. This was quite a secluded location, at the end of a small culdesac and on the canal side.

It took some time to get the valuation arranged, and we received a mortgage offer from nationwide (90% LTV-Heling hand mortgage) in July. We were due to exchange/complete on the 30th of August(property is vacant now, vendor has relocated). We have asked for some clarification from the vendor's solicitor on a few questions regarding boundary walls etc. and among many final enquirers raised, we have received a beyond concerning response for one of question raised:

Has the property, so far as the seller is aware, at any time suffered from subsidence, or
flooding? Response: ''e did have a subsidence problem, which was due to some tree roots. The trees were cut down and the cracks were repaired. "

The vendor has now provided the Certificate of Structural Adequacy and final document in the claim, claiming that even the estate agent was unaware of the historical subsidence situation.

This is to certify that, as required by our terms of appointment, we have appraised the property as regards the above damage, which in our professional opinion was caused by clay shrinkage subsidence.

Mitigation Strategies 
Mitigation actions included the removal of an ash tree, a sycamore tree, and two plum trees owned by a public house.

This was undertaken on professional advice of the arborist to remove or minimise the cause of damage identified under Section 2 above.

The property was monitored from December 2018 to May 2020 and found to have re-stabilised.

4: Superstructure repairs and redecoration 
Repair work has been undertaken on the property. The works consisted generally of superstructure crack
repairs and decoration, all as detailed in the schedule prepared by Xxx.

Should we be re-negotiating the house price downwards to reflect this "problem" and by how much (we are paying £450,000)?

Because of our ignorance, we didn't commission a home buyer survey before proceeding with the mortgage application.

We have been asked by the solictor to conduct a structural building survey (level 3)—awaiting the result now.

We have a bit of concern about the potential resellability and difficulty with potential insurance premiums. At the same time, if we walk away, I will probably not get the same house for the same price, given the inflated price in SE and the recent interest rate hike. Assuming the structural survey is satisfactory and the mortgage lender is satisfied with a history of subsidence, should we re-negotiate the house price to reflect this "problem," and by how much (we are paying £450,000)?

We checked online for insurance quotes by declaring historical subsidence. We got a quote from Admiral for £500 and none of the high street providers was willing to insure us since we added subsidence details ( we didn't mention the claim the vendor had made in 2018). As I never owned a house, I didn't declare any past claims.

My head is saying I should walk away, but my mind is saying I should proceed. Stuck in a rut? I have a current mortgage offer of 1490/month for a 5 year fix (45k deposit) and if I were to apply for a new mortgage, I would be paying circa 1800, which is really beyond my budget. Any thoughts or feedback, please.

rrr84

I must add- the vendor's current insurance provider (churchill) has provided a quote for £480/ year - we didn't mention the claim the vendor had made in 2018). As I never owned a house, I didn't declare any past claims. Historical subsidence issue was noted by customer service personnel who has help to generate the quote - I believe by entering the house details, they should have past claims already in their syste, I am still not convinced whether this will be amount i would have to pay if were to use the same insurance provide as the vendor- 

propertyhunter

See what the surveyor's report says. Make sure you give them all of the details you've been given from the vendor so they can look out for this specifically, and check whether the vendor's story adds up. They can also indicate costs of any remedial work (if needed) and implications for future sales. Get the surveyor to do a valuation for you too; they will consider the subsidence history and come up with a figure that reflects the market. 

You got a mortgage offer from Nationwide - do you know if they sent a surveyor over to the property? For a 10% deposit it's likely they will have done, so the bank doesn't seem worried. 

I personally wouldn't go for it, but I haven't seen it and have no emotional attachment to it. But I've lost houses I've loved and come out of the buying process with an even better house. Only looking back was I grateful for not getting earlier houses I offered on. 

tooldle

By all means get a survey but keep in mind the problem is fixed. The situation you describe can happen to any property. The key facts being the cause has been identified and removed, and the property has been repaired. Having owned an underpinned house myself, we continued to insure with the vendors insurance company until 5 yrs from claim date had passed. We then insured on the open market with no issue. 

rrr84

propertyhunter said:

See what the surveyor's report says. Make sure you give them all of the details you've been given from the vendor so they can look out for this specifically, and check whether the vendor's story adds up. They can also indicate costs of any remedial work (if needed) and implications for future sales. Get the surveyor to do a valuation for you too; they will consider the subsidence history and come up with a figure that reflects the market. 

You got a mortgage offer from Nationwide - do you know if they sent a surveyor over to the property? For a 10% deposit it's likely they will have done, so the bank doesn't seem worried. 

I personally wouldn't go for it, but I haven't seen it and have no emotional attachment to it. But I've lost houses I've loved and come out of the buying process with an even better house. Only looking back was I grateful for not getting earlier houses I offered on. 

Nationwide did send a surveyor over to the property - not certain if they really have done any visual inspection on the property- presumably the valuation done was a standard bank valuation to verify if price reflects the market.

rrr84

tooldle said:

By all means get a survey but keep in mind the problem is fixed. The situation you describe can happen to any property. The key facts being the cause has been identified and removed, and the property has been repaired. Having owned an underpinned house myself, we continued to insure with the vendors insurance company until 5 yrs from claim date had passed. We then insured on the open market with no issue. 

Thank you - Please could you clarify on the 5 from claim date had passed- have you had to declare that property had a history of subsidence and still managed to get insured on the open market ? 

tooldle

rrr84 said:

tooldle said:

By all means get a survey but keep in mind the problem is fixed. The situation you describe can happen to any property. The key facts being the cause has been identified and removed, and the property has been repaired. Having owned an underpinned house myself, we continued to insure with the vendors insurance company until 5 yrs from claim date had passed. We then insured on the open market with no issue. 

Thank you - Please could you clarify on the 5 from claim date had passed- have you had to declare that property had a history of subsidence and still managed to get insured on the open market ? 

Yes, we insured on the open market. The previous owner had claimed, so it was two years with the existing insurance company. Whenever we changed insurance we declared the previous owner’s subsidence claim and never had an issue. The issue for that house was a collapsed culvert in the street. These things happen. The word subsidence seems to scare people, yet most houses will move to a degree simply due to the soil on which they are built and the changing seasons. Clay expands and contracts yet people still happily buy houses built on clay. The thing to be clear about being the house has been repaired and movement is not ongoing i.e. historic subsidence and not currently affected by subsidence.