Historical subsidence - should I request lower price

[Finallygrowingup]

Hello all,

Very close to exchange (hoping to before the end of June). Didnt think of getting additional survey (FTB with no clue). Found out today the property has historical subsidence, cracks appearing from shrinkage of clay. The work has been remedied (no underpinning just crack repair and additional cosmetic work). Will we have time for a survey and complete by end of june? Should/would it be appropriate to ask for a reduction in price based on higher insurance premiums over the 30 year mortgage period? Would that annoy the vendor resulting in sale collapse?

Any advice please

Just to add the clay shrinkage subsidence was in 2019. It has since been remedied and certificate provided dated 2020.

Well, that depends.

The historical subsidence should be reflected in the price. It is a major issue, even when it is ‘historical’.

Is it reflected in the price? If yes, then I wouldn’t push for a further reduction. If no, then, by all means, use it as a negotiating point.

I’m sorry, I didn’t address your questions properly.

Hell, yes, I would require a structural survey! Clay will continue to shrink and expand. If underpinning hasn’t been carried out, you can expect further issues.

You do have time for a survey, provided you book it quickly.

Yes, it might annoy the vendor enough for the sale to collapse. It depends on whether they are expecting this and how far along you are in the process.

Is the certificate going to be transfered to you?

I'd have a survey, but also ask the vendor how much their insurance currently is. If it's all been signed off your main risk is the higher premium insurers might charge.

Also - how did you find out about the subsidence? We're the buyers upfront about it (e.g. in the property information form) or was the info from a 3rd party like an insurance company?

If they are upfront about it I would guess they factored it in to their asking price. If they hid it there may be other stuff they are hiding (another reason for a survey).

2019 isn't historical subsidence imo. I'd be worried about ongoing issues

If the cause was clay shrinkage, does the report say anything about avoiding this in the future? For example, keeping vegetation down, or not allowing roots? Did the seller tell you about the subsidence while you were making the offer? Did you agree the final price after knowing? If not, and it’s a big surprise, then I think you need to check whether the price is right.
Subsidence is so common, and it can be remedied, Plenty of insurers cover it. I don’t really think it needs to be a deal breaker.

Honestly I'd run mile away. You don't know whats actually happened. Insurance issues? Could be all sorts of problems. Resale issues for you as well. I know you are desperate to get your first house but you may end up regretting it and even losing money.

Also if you do get it then get the best most in depth survey you can. Don't worry about the vendors, if they are pushy it's because they are hiding something. You should have been told this at the start. Sorting cracks etc doesn't sound like a very thorough job has been done

How did you find out about this at this stage?

You do need to get a structural survey done.

This can be very quick and it may be that the result is reassuring, or any subsequent actions quick.

But it would be very risky to go ahead without a survey.

Get a structural engineer to do a structural survey looking into this issue, unless you want a full survey looking at wiring, roof tiles etc.

Structural engineer.

Get a survey it is very likely to get worse

www.theguardian.com/environment/2021/may/19/climate-crisis-to-put-millions-of-british-homes-at-risk-of-subsiding?CMP=Share_iOSApp_Other

I wouldn’t consider subsidence within the past two years to be historical! Most properties I’ve purchased have had historical subsidence and cracks, but the movement occurred about 40 or more years earlier.

@YellowScallion

2019 isn't historical subsidence imo. I'd be worried about ongoing issues

Precisely, and all the present owners have performed is cosmetic repair, so there appears to be no reason this issue won't persist. It's not encouraging that the issue also seems to have been concealed to such a late stage. Even if you feel willing to proceed, would any future buyers, when you want or need to re-sell? Is this property worth anything close to what you are paying? Is it resaleable? Is it insurable? Is it mortgagable?

I wouldn't negotiate price I would withdraw with a skip in my step (and consider the survey money well spent).

What is the property... is it a Victorian terrace in London/SE?

2019 sent houses across the SE cracking because of temperature changes, so it may not be anything major, but it is worth looking into

I would always get a survey before buying a property, and yes, subsidence should be reflected in the price: due to cost of insurance and/or remedial work

PS - Victorian/Edwardian houses are subject to this because they have very shallow foundations. On the other hand, the building materials of the time allowed the houses to 'sway' a bit without cracking (lathe & plaster i..e. wood & old lime plaster walls). And this is an issue in the SE as houses built on clay.

Did the previous owners make an insurance claim? If so, the insurance premiums will be higher than other houses, & you will have to declare when you sell (impacting your price). Def try to negotiate - the price reduction could be up to 10%

Historical means no work or improvement is needed.

But you need to verify it is historic and not ongoing.

Houses on certain soils like clay are effected by dry and wet season.

Oh wow! Didnt realise how big of a deal it is.

It is a 1930's semi in London built on clay. Subsidence was cracking to the walls of the extension built at the back of the property. Remedial action was fixing the cracks with iron rods, taking everything out, replastering etc and removing 'vegetation' the tree that caused subsidence.

Am I being stupid: the cost of a survey plus paying stamp duty (if property bought after June and min 10k) would be more expensive than any potential future problem? On the basis that the tree has been removed and cracks fixed and signed off a year after the work completed I'm swaying towards asking for a lower price and if accepted continuing? Am i being too stupid? Im going to wait for my lender to respond as it wasnt flagged ln valuation and not disclosed to us previously and make a reduced offer - is 20k lower too cheeky - factored in difference of insurance premium over 30 years plus potential impact on resale price

Also thank you all for your responses - been so helpful

Any future problem would be covered by insurance, so depends on the excess. As the seller how much this is. That will likely be £1k. You could also ask how much their insurance premium is and compare to a similar house without subsidence.

As you've now added that trees have been removed that's even more reassuring as it would've been the trees contributing to the clay shrinkage.

£20k seems like far too much. Remedial action has been taken, your house is in a much better situation than one two streets over, also on clay with big trees close by.

I'd investigate what the insurance situation is and wait to see what the lender says.

Can you get insurance? Do they need to transfer their insurance to you? Excess for subsidence claims on a property with an existing recent claim can be a percentage of property price so could be hefty.

Estate agents are legally required to put the fact a house has suffered subsidence in the sales info - example ‘The Property Ombudsman section 7i; requires ‘name of estate agents’ to disclose that a property has been subject to subsidence, resulting in underpinning being carried out in xxxx with a xx year guarantee).

But obviously this only works if the seller tells them.

As subsidence is recent you will need to take over the buildings policy from the current insurer so ask the seller how much their insurance costs and you will be able to see how much additional premium you will have to pay (if any).

It is usual to stay with the same insurer for 10/15 years after subsidence and then there are specialist brokers who will be able to find alternative cover (this may require additional surveys though). Once you get past 25/30 years most insurers will then cover you.

Once your solicitors know they will tell your mortgage company, it shouldn’t change you rate or amount they will let you borrow though.

You need to stop and take care here. The stamp duty deadline is putting pressure on you - but you are potentially buying a house you will find very difficult to sell. So everything you gain on stamp duty now, and much more, could be lost when you try to sell in future. Plus you will pay more in insurance, and repair costs.

Get a proper survey. Take 48 hours to reflect on the report. Do not be rushed into this.

@Finallygrowingup

Oh wow! Didnt realise how big of a deal it is.

It is a 1930's semi in London built on clay. Subsidence was cracking to the walls of the extension built at the back of the property. Remedial action was fixing the cracks with iron rods, taking everything out, replastering etc and removing 'vegetation' the tree that caused subsidence.

Am I being stupid: the cost of a survey plus paying stamp duty (if property bought after June and min 10k) would be more expensive than any potential future problem? On the basis that the tree has been removed and cracks fixed and signed off a year after the work completed I'm swaying towards asking for a lower price and if accepted continuing? Am i being too stupid? Im going to wait for my lender to respond as it wasnt flagged ln valuation and not disclosed to us previously and make a reduced offer - is 20k lower too cheeky - factored in difference of insurance premium over 30 years plus potential impact on resale price

If the subsidence was caused by a tree - now removed as you say- and the damage repaired the issue should be fixed. You will probably need to continue with the sellers insurance or get a specialist insurance provider to quote. Get a surveyor to assess risks of any future subsidence and that the problem is gone. I would first ask to see the structural engineer report that identified the cause and there should be a certificate of works done.

The rush to complete before the stamp duty deadline is seriously clouding your judgement.

Honestly I would walk away. Your biggest mistake was not getting a structural survey done in the first place.

Use it too negotiate. They probably found the subsidence a matter a headache, and now it’s resolved thought to put it on the market and get rid off the property. If it is resolved, and you like the property your probably in a good position, they want to get rid of the property, your concerned and thinking about getting a survey - and they know that any other buyer will likely go through the same process or think about pulling out once they find out too, with the deadline approaching for stamp duty they may also perceive it may be slightly more difficult to sell, as this is partly what’s driving you to think about continuing with the sale.

By the way I think the whole stamp duty thing is Barmey. It’s caused the market to overheat due to buyers trying to save upto 15k but in reality their actions in responding to the stamp duty scenario has properly driven up the house purchase price they are buying by the same amount or more! So they are spending more than the stamp duty amount in the house purchase price ifyswim.

Cracking because of clay soil isn't subsidence necessarily. Our house had a big crack in it due to clay but previous owners had reports done to say it wasn't subsidence i.e. it didn't need structural underpinning as it was only cosmetic.

But you could ask for a reduction in price as it might well happen again.