You’ve found your dream home and even picked out the wallpaper for the feature wall, but the home survey has flagged subsidence as a potential risk.
Is it time to walk away, or should you buy a house with subsidence?
Buying a house with subsidence may mean that you are able to snap up a bargain, but it comes with some associated risks. The risks vary depending on whether the subsidence is ongoing or historic. A Structural Engineer’s Report will tell you the cause, treatment, and cost of repairs so you can make an informed decision.
In this article, we’ll cover the questions you should be asking and the problems you may face to help you decide if buying a house with subsidence is viable and right for you.
If you're actually selling a house with subsidence, check out the free quiz we've designed for you below:
So, should you proceed with the purchase? Read on to find out…
1. What is subsidence?
Subsidence is a type of ground movement and occurs when the ground beneath a building begins to sink downwards. Walls and floors can shift and crack as the foundations of the property are no longer supported by the ground beneath.
Subsidence puts your home at serious risk of structural problems if left untreated.
Some of the most common causes of subsidence include:
- Clay soil. Clay soil shrinks during hot, dry summers and expands during wet weather. This can make the ground unstable and can cause the foundations of a property to shift.
- Tree roots. Large, thirsty trees planted close to a property can pull water from the ground, especially during particularly dry spells. This causes the surrounding soil to dry up and contract.
- Water leaks, such as burst pipes. Damaged or leaking pipes and drains can soften and wash away soil from underneath a building's foundations.
If you want to learn more about the causes and signs of subsidence, read our article Subsidence: Absolutely everything you need to know here.
2. Ongoing vs historic subsidence
It’s important to know the difference between “ongoing” and “historic” subsidence if you are contemplating buying a house with subsidence. This is because you will be faced with a different set of challenges depending on whether the subsidence is ongoing or historic.
- “Ongoing” subsidence is active ground movement that is still causing problems now and will continue to do so until it is repaired.
- “Historic” subsidence is past ground movement that has since been repaired and not reoccurred. The house is structurally sound and has been signed off by a structural engineer.
You will face more challenges buying a house with ongoing subsidence.
2.1 How do you find out if the subsidence is ongoing or historic?
Regardless of how you’ve found out about the potential risk of subsidence, the first thing you need to do is identify whether it’s an ongoing or historic issue.
Firstly, speak with your estate agent and ask them to get the full picture from the seller. The seller will confirm either:
- It is a historic issue that has been fixed in the past.
- It is an ongoing issue that has been diagnosed but is yet to be fixed.
- They are unaware of the issue and are only just hearing about the risk of subsidence themselves.
Whichever category you’re in, your next step will be to obtain a structural engineer’s report.
- If the subsidence is historic, this will confirm that there has been no further ground movement.
- If the subsidence is ongoing, this will provide you with your own professional advice on the cause, treatment plan and potential costs.
- If the subsidence is suspected but not confirmed, this will provide you with the answers and suggested next steps.
Obtain a Structural Engineer’s Report
If you’re considering purchasing a property with subsidence, you should appoint a structural engineer to visit the property and carry out an inspection.
Following their visit, the structural engineer will produce a report setting out their findings. The Structural Engineer’s Report will identify if the defects are historic or if there’s evidence of more serious ongoing structural problems.
The Structural Engineer’s Report will also cover:
- Cause of subsidence. The report will usually contain the cause of the subsidence. However, the structural engineer may need to carry out further investigations to find out the cause. This may include a period of monitoring (which can be up to 12 months) to determine whether the building is moving.
- How to remedy the defects. The report will provide you with the structural engineer’s recommended actions to remedy the issues.
- Estimate of the costs of repairs. The recommendations will usually contain an estimate of the cost of any repairs necessary. However, you will also need to obtain separate detailed quotations from suitable contractors.
You can find a qualified structural engineer using The Institution of Structural Engineer’s “Find a structural engineer” tool.
3. Buying a house with ongoing subsidence
Buying a house with ongoing subsidence is not for the faint-hearted.
If the cost of buying the house and fixing the problem is significantly less than buying a similar problem-free property, it could be a good investment.
BUT, a subsidence issue can take over a year to resolve when you factor in the time waiting on structural reports, gathering building quotes and the completion of building works.
Even if you’re willing to take on the work and stress, buying a house with subsidence might not be financially viable for you.
Prospective buyers cannot insure a property with ongoing subsidence until any remedial works have been signed off, which in turn makes the property unmortgageable.
You therefore need to be a cash buyer to purchase a house with ongoing subsidence.
Bridging loans are an option but watch out for high interest rates and repayment deadlines, which are typically within 12 months. If the repair work still hasn’t been completed by the deadline, you won’t be able to re-mortgage the property and repay the loan.
You’ll also need to consider the costs for the subsidence repairs. Be sure to factor these costs into your offer and keep in mind that costs can (and often do) exceed initial building quotes.
3.1 Questions you should ask yourself before buying a house with ongoing subsidence
Before you commit to buying a house with ongoing subsidence, you should ask yourself the following questions…
- Will the cost of the house plus the cost of fixing the subsidence be substantially less than buying a similar house that is problem free?
- How serious is the subsidence and is it easily fixable?
- Are you willing to carry out the repair works and deal with accompanying stress?
- Do you have the cash to purchase the house outright?
- Do you have access to funds for the repairs in case it’s more expensive than the initial quotes?
- Will you be able get a mortgage (if needed) once the repairs have been completed?
- Will you be able to get home insurance once the subsidence is fixed?
- Will you be able to sell the house easily once the subsidence problem has been resolved?
The above list is by no means exhaustive. You should enlist the help of qualified professionals (your solicitor and structural engineer) so you have a clear understanding of the problem, the costs involved and the required solutions.
3.2 My tips for buying a house with ongoing subsidence
If you are seriously considering buying a house with ongoing subsidence, there’s a few things you should consider before deciding whether it’s a viable option for you.
As well as considering the questions above, I would recommend checking the following items off your list before you go ahead with the purchase:
- Get a structural engineer to carry out a full investigation. The Structural Engineers Report should contain advice on the cause of the problem, costings and their recommended next steps.
- Obtain multiple quotes for repair works. As well as costs, you should find out what work is required to rectify the problem and possible timeframes for completing the repair works. It can be useful to obtain multiple quotes to present to the seller to support any price negotiations.
- Renegotiate the asking price with the seller. Remember to factor in the costs for the repair works, compensation for the time and trouble involved and the fact that subsidence will devalue the property (even once the problem has been fixed). In my experience, an ongoing subsidence problem will devalue a property by around 20%.
- See if the seller’s insurance claim can be “transferred” to you. Speak with your conveyancer about whether this would be an option. Make sure to get this in writing. If not, you will need to try and obtain a lending on the property to pay for the work. One way to do this would be via a bridging loan but beware of high interest rates.
- Research the availability of insurance policies post-repairs. The property will be uninsurable until the subsidence problem has been resolved. If the property is still at risk of subsidence, you can expect to pay a higher premium than other homeowners. Your policy may also be subject to different terms and conditions to consider the additional risk. The Association of British Insurers recommend contacting an insurance broker through the British Insurance Brokers’ Association (BIBA) for specialist advice.
- Ensure you have the finances in place to purchase the property outright. Ensure you have the cash or finances in place (e.g. a bridging loan*) to purchase the property outright.
- Consider the purpose of the home. If you’re going to be selling up in the near future, consider the impact the S-word is going to have on the value of the property and number of potential buyers available to you. Are you prepared to take on the added stress and hassle?
* Watch out for high interest rates and repayment deadlines, which are typically within 12 months.
4. Buying a house with historic subsidence
You don’t need to walk away from your dream home if you discover it has a history of subsidence. After all, a house that’s been underpinned can sometimes be more structurally sound than one that hasn’t!
However, subsidence is a major structural issue and shouldn’t be overlooked.
It is important to understand the severity of the original subsidence, the cause and the extent of the repairs undertaken. This will help you can calculate if there’s any potential risk that it may recur in the future, as well as the potential impact on your insurance premiums and terms.
You should also consider how easy it will be to sell a house with historic subsidence when the time comes. It can be much harder and take a lot longer than selling a problem-free property.
It’s always surprised me that I receive as many calls from home sellers struggling to sell a property with a historic subsidence issue as I get from those with a current and ongoing issue.
4.1 Questions you should ask before buying a house with historic subsidence
Here are some of the questions you should ask yourself before buying a house with historic subsidence…
- How serious was the subsidence and what was the extent of the repairs?
- Has the Seller provided all the documents proving the property is now structurally sound? For example, the Certificate of Structural Adequacy (if the repairs were carried out for an insurance claim) and the Completion Certificate (if the property was underpinned).
- Has the Structural Engineer Report revealed any new signs of subsidence?
- Will you be able to get home insurance on standard terms, or will future subsidence claims be excluded? Will you have to pay increased premiums?
- Have the previous seller or recent unsuccessful buyers struggled to get a mortgage on the property?
- Is there a risk of future subsidence issues or has the root cause been fixed?
- Will you be able to sell the house easily in the future?
The above list is by no means exhaustive. You should enlist the help of your conveyancer and structural engineer, so you have a clear understanding of the repairs carried out and the level of risk of any future subsidence problems.
4.2 My tips for buying a house with historic subsidence
Buying a house with historic subsidence can mean you snap up a bargain in an area that you might otherwise not be able to afford. But it’s vital that you consider all the pros and cons of buying a house with historic subsidence before signing on the dotted line.
I have set out my tips below to help you gather all the information you need to make an informed decision:
- Get a structural engineer to carry out a full structural survey. This will (hopefully) confirm the subsidence is historic and any treatments already completed. It will also flag if there are signs of any recent ground movement.
- Look in detail at home insurance policies. Your best place to start would be to contact the seller about their home insurance. Some insurance providers are happy to offer insurance to a new buyer should an existing customer wish to sell their home (you’ll need to have this in place from the date you exchange contracts). Make sure subsidence isn’t excluded from the policy and be prepared for higher premiums.
- Obtain supporting documents from seller. Ask your conveyancer to obtain clear written evidence from the seller that all historic subsidence issues have been resolved, along with any guarantees, the Certificate of Structural Adequacy and Completion Certificate (if the house was underpinned). Read more about the documents sellers should provide to prospective buyers here.
- Consult with your mortgage lender. Make sure that your mortgage lender is aware the property suffered from historic subsidence and provide in-depth information about the repairs, timelines and any supporting documents provided by the seller.
- Possibly negotiate a lower asking price. If you discover anything that worries you during your due diligence, you may want to negotiate a lower asking price with the seller. This can absorb some of the extra costs associated with buying a home with subsidence.
5. Is it worth buying a house with subsidence?
Buying a property with subsidence that was rectified many years ago with no instances of recurrence can be a good option. The reduced price will open doors to more desirable locations that you might otherwise not be able to afford.
You can bag yourself a bargain if you are an experienced developer who has cash available, trusted contacts in the trade, can weigh up the costs and make a sensible offer that will ensure you make a profit when you come to sell.
On the other hand, purchasing a house with ongoing subsidence for an inexperienced buyer can be an extremely daunting, expensive, and stressful ordeal.
The important thing is that you gather all the information you need to make an informed decision about whether buying a house with subsidence is right for you.
And remember that when it comes to selling a house with subsidence, it can be much harder and take a lot longer than selling a problem-free property.
If you're here because you do own a property with subsidence and are researching how to sell, the short quiz I've designed for you below could be a big help.
By Matthew Cooper, Co-Founder of Home Selling Expert