Are we crazy? Trying to find a way of buying a house with potential subsidence

ossteith

We are first-time buyers who have been looking solidly for 1.5 years (after 9+ years of renting and saving).

After being outbid on several properties, we finally got accepted (against 4 others) on what we hoped would be the perfect first house: nice mid-terrace, needs a fair bit of work but within our budget and appetite. 

Through a structural survey, we identified potential, likely minor subsidence at the front of the property - evident in internal and external render cracks (hairline), likely caused by faulty drainage.

At first we didn't think much of it There's loads else that needs doing on the property and the surveyor, our builder and a structural engineer (who we asked to look at the structural integrity of an extension that was added without building regs, which we've now secured through a separate ordeal) all said it should be simple enough to fix and 'wasn't worth not buying the house over'.

However, as the movement issue hasn't been (a) formally diagnosed or (b) remedial action taken and complete, we're in a serious bind with insurance and mortgage. 

Our mortgage requires buildings insurance, with the 'usual protections' including subsidence.

But obviously, no mainstream insurance provider is going to take us on new while the issue is unresolved. Those that specialise will only take you on exempting subsidence cover. Which would invalidate the mortgage.

After thinking through every possible option, the only way we can see is if the seller somehow starts a claim on the subsidence issue and we inherit the policy. But before we jump to suggest that to the vendor or get third parties involved, I've been trying to find out...

(a) is it actually possible to take over a vendor's insurance policy? I know they have an obligation to continue insuring existing customers after a claim, but I assume that doesn't apply to the property itself? The seller has rented the property for the last decade, we would be buying to live.

(b) if we could take over their policy, how likely is it they will just whack up the premium to an eyewatering rate? We would be stuck with them for at least 1-2 years while the issue is addressed and monitored, before we could get structural sign-off and go to a different insurer.

(c) our mortgage provider has zero knowledge of this. Given the area we're buying in and price we secured, I'm guessing they just did a desk check and saw properties around going for 50k+ more and just clicked yes. Is it worth trying to raise this with them (e.g. to see if we could get a temporary exemption on insurance cover for subsidence while the issue is sorted), or best to leave as is?

I know folks might say 'this is all too risky', 'the right property will come up', 'think of the resale', etc etc. But we really do want to try to make this place work after spending the best part of 18 months basically living on Rightmove. We also want to make the house a home, to escape renting, and aren't too bothered at this stage about flipping and climbing the ladder.

Grateful for your thoughts on whether this one is solvable, or whether anyone has similar experience. 

TheJP

All this for 'potential subsidence'? The reason i dont deal with FTBs.

GDB2222

One problem is insurance. You would need to declare it, as otherwise you might have insurance that accepts premiums but doesn't pay out for subsidence. Will any insurance company take you on? If they do, will they load the premium or apply an extra policy excess? 

You need to get some quotes. 

leroyJ

GDB2222 said:

One problem is insurance. You would need to declare it, as otherwise you might have insurance that accepts premiums but doesn't pay out for subsidence. Will any insurance company take you on? If they do, will they load the premium or apply an extra policy excess? 

You need to get some quotes. 

Sounds like OP is very aware of this, it's more about that the mortgage is dependent on the insurance.

ossteith What would happen if you didn't declare that you knew of the potential subsidence issue?  You could obviously run into problems if you were ever to make a claim relating to subsidence, so you may have to be financially comfortable enough to cover this yourself.

But would it actually effect the mortgage?  How would either the mortgage or the insurance company know you identified this in a survey?  Neither would have access to this, and I don't think it's 100% necessary to get a survey when purchasing a house.

Btw I'm no expert, more just curious.

ThisIsWeird

That is utterly trivial settlement or movement, possibly 'subsidence', the only difference being that the latter will have a specific cause. Lawdie, most older houses will have some cracks like that.

What - exactly - did your survey say about this?

What does the seller say about 'subsidence'? If they are aware of any issue, they should be declaring it - as should the EA.

leroyJ

ossteith said:

Alternatively, we do make a fuss over a potentially very small issue and ask the vendor to put in a claim to get it looked at formally through their insurance (then try to take over their policy / claim). Which on paper 'protects' us in case its worse than it looks, and is more to the letter. But would hold everything up for months, is likely completely disproportionate to the issue and could create all sorts of issues later on (having a claim against the property which has to be declared, etc).

Personally I feel this is causing too much fuss.  Difficult to explain how this protects you, as it sounds quite technical and you'd think insurance would likely have some small print preventing this. 
As a seller, you would be worried about the sale falling through, and then having to declare this to a new buyer.

What is the exact wording of the question on the insurance?  As all you have is "potential" subsidence, and you've said that it's most likely caused by bad guttering.  So you could almost assume it's not subsidence, and therefore no need to declare it.

Tiglet2

ossteith said:

We are first-time buyers who have been looking solidly for 1.5 years (after 9+ years of renting and saving).

After being outbid on several properties, we finally got accepted (against 4 others) on what we hoped would be the perfect first house: nice mid-terrace, needs a fair bit of work but within our budget and appetite. 

Through a structural survey, we identified potential, likely minor subsidence at the front of the property - evident in internal and external render cracks (hairline), likely caused by faulty drainage.

At first we didn't think much of it There's loads else that needs doing on the property and the surveyor, our builder and a structural engineer (who we asked to look at the structural integrity of an extension that was added without building regs, which we've now secured through a separate ordeal) all said it should be simple enough to fix and 'wasn't worth not buying the house over'.

However, as the movement issue hasn't been (a) formally diagnosed or (b) remedial action taken and complete, we're in a serious bind with insurance and mortgage. 

Our mortgage requires buildings insurance, with the 'usual protections' including subsidence.

But obviously, no mainstream insurance provider is going to take us on new while the issue is unresolved. Those that specialise will only take you on exempting subsidence cover. Which would invalidate the mortgage.

After thinking through every possible option, the only way we can see is if the seller somehow starts a claim on the subsidence issue and we inherit the policy. But before we jump to suggest that to the vendor or get third parties involved, I've been trying to find out...

(a) is it actually possible to take over a vendor's insurance policy? I know they have an obligation to continue insuring existing customers after a claim, but I assume that doesn't apply to the property itself? The seller has rented the property for the last decade, we would be buying to live.

(b) if we could take over their policy, how likely is it they will just whack up the premium to an eyewatering rate? We would be stuck with them for at least 1-2 years while the issue is addressed and monitored, before we could get structural sign-off and go to a different insurer.

(c) our mortgage provider has zero knowledge of this. Given the area we're buying in and price we secured, I'm guessing they just did a desk check and saw properties around going for 50k+ more and just clicked yes. Is it worth trying to raise this with them (e.g. to see if we could get a temporary exemption on insurance cover for subsidence while the issue is sorted), or best to leave as is?

I know folks might say 'this is all too risky', 'the right property will come up', 'think of the resale', etc etc. But we really do want to try to make this place work after spending the best part of 18 months basically living on Rightmove. We also want to make the house a home, to escape renting, and aren't too bothered at this stage about flipping and climbing the ladder.

Grateful for your thoughts on whether this one is solvable, or whether anyone has similar experience. 

ossteith said:

With images, in case it puts things in context

Subsidence is certainly a worry but properties do move slightly over time and with the changing weather.  Generally if you can get a finger inside a crack, it would be something to investigate.  The hairline cracks above don't look wide enough to be worried about.  Plaster does crack as does outside rendering.  In fact those cracks look pretty insignificant to me, albeit I'm not a structural engineer.   I think you would be hard pushed to find a property that didn't have hairline cracks in plaster and render.

If the vendor has not been concerned about subsidence in the past, then presumably the house insurance is a normal policy, the TA6 has been completed by the vendor as though there were no problems getting insurance or underpinning in the past.

Please quote the exact wording the surveyor wrote in relation to this 'possible' subsidence, for more knowledgeable advice.  If it turns out to be minor rather than a major issue, then you could be opening a can of worms with your lender and insurance company.

ossteith

Tiglet2 said:

Please quote the exact wording the surveyor wrote in relation to this 'possible' subsidence, for more knowledgeable advice.  If it turns out to be minor, then you could be opening a can of worms with your lender and insurance company.

Thanks for looking at this, appreciate the advice! I've posted it above on page 1

Tiglet2

ossteith said:

ThisIsWeird said:

What - exactly - did your survey say about this?

Specifically...

"The downpipe to the front of the property is not connected to the gulley and there is a build up of vegetation around the gulley. Rainwater penetrating into the ground can erode away the substrata underneath the foundations of a building, resulting in structural movement, which we assume is the case here. Ideally, the downpipe should be connected to the gulley and the gullies kept clear and free of debris to prevent the gulley from becoming blocked. All gulleys should be included in any further investigation carried out to the drainage system.

There were cracks in the wall on the front elevation, that we assume are related to the render coat. The cracks should be raked out and repointed. If the cracks re-open, a specification for any necessary remedial work should be sought from a structural engineer. 

As previously mentioned, there is cracking to the front wall that is likely to be caused by faulty drainage. A specialist drainage contractor report will, therefore, be required, which should involve a water retention test, possibly followed by a CCTV inspection. The local water company may be responsible for drainage repairs, and this should be confirmed by your legal advisors. If a defect is found, it is likely that the drains will be able to be sleeved. All cracks should be raked out to a depth of around 2cm to ensure a good key for the new mortar. Lime mortar (not cement) should be used to allow the brickwork to breathe. If the cracking opens up again after any drainage repairs, further advice should be obtained from a structural engineer, as further work to support the property could be required."

Which is all standard boilerplate stuff - but once it's been said it puts us in a hard position, even if the remedial action is pretty simple.

Or am I making a fuss over nothing?

I do think you are reading too much into this, though, bear in mind, the surveyor/SE has to cover their backs by telling you of any 'potential' problems. 

You will have to decide if you want to proceed with this purchase and deal with the remedial problems once you are the new owner, with the 'potential' of having to deal with any subsidence issues that show up in the future if the remedial works don't solve the issues.  If you expect the vendor to deal with this now, then you will have to walk away from this purchase because monitoring 'potential' movement can take several years before the results are known.

How old is the property?  Is it built on clay soil?  

Remedial Works:

First of all, repair the guttering/gulley so that rainwater is not penetrating into the ground and causing 'potential' erosion.

Repairs to the render coat and monitor to see if the cracks re-open in a year or two.

Faulty drainage - probably won't know if the drainage is faulty until a year or two after the above remedial works have been completed and you can see whether the works have solved any issues or whether the cracks re-open due to faulty drainage.   Note, the survey states IF a defect is found.......Even if that is so, the report advises remedial works, i.e. drains to be sleeved.  

If cracking appears to open up again after drainage repairs, then further work to support the property could be required, i.e. underpinning - but this is the worst case scenario in a few years time

ossteith

It's circa 1900. On soil, survey says "The property is situated in an area that is at moderate risk of Shrink-swell clay."

You've summarised it neatly above. Just feels very awkward that everyone gets to cover their backs (surveyor/SR, insurers) while we're left carrying all the risk in either scenario. That's life I guess...

EssexHebridean

There is a possibility here that the question could be p taken out of your hands anyway, because your solicitor could feel that they have to report this to the lender, and the lender *could* decline to lend, or indeed reduce the amount they are prepared to offer you.  That said though, I really feel for you on this one - I would have been gutted to have had something come up on the place we bought, and even had we had the money to effectively underwrite any issues ourselves, I don’t think I would have been brave enough to take the chance on it “probably” all being well.