Massive excess for Subsidence, Landslip and Heave- leasehold: mortgage Nationwide

[anxiousship]

Hi all
I am super new to all this property buying thing, so where would I go if not to the wise google mumsnet? :)

I am planning to buy my first property, which is a standard small flat/maisonette alike in South London. I am running out of time to get on a property ladder ( single mum, late 30's) and I will have a very small deposit ( 5% only). Only one bank currently is able to lend me money on these terms and it is Nationwide.

My solicitor just told me that she will need to go to my lender ( bank) and let them know that the excess from a landlord/freeholder insurance is £30,000 (!!!!) for Subsidence, Landslip and Heave "due to previous Subsidence claims, these have all been due to tree root encroachment, mainly from the trees in the adjoining woodland" .Root encroachment claims were made in 90's, 2013 and 2022 around the block of the flats but not directly to my flat ( if it even matters). The solicitor said she is obliged to let the bank know and she is worried, meaning that the bank might not lend me money when they know this.
There were quite few flats sold and still on sale in the same road/block so they somehow managed to do it (?)... anyway, while I am waiting to hear back from the bank/solicitor, I would appreciate your thoughts.

1. What are my chances of the bank actually be OK with it knowing this excess of the landlords(freeholders) insurance is so high due to previous claims?

2) If my bank is OK with that, do I actually proceed with it, will it be harder to sell this property myself later? will my service charges be super high? Or is it nothing to worry about knowing all or most of the London properties have had some issues like this?

Probably should add to it that I am not overly in love with this property, it just I can't afford anything better at this stage and I see it more of a step on a property ladder rather than buying "a home" and I am hoping to be able to sell it in a couple of years when my child is older and go further away from London and hopefully then get " a home". Of course all of this is if life permits. My point is that I can't accept the risk of not being able to sell later if there is a risk.

Thanks again and hope it all makes sense, sorry again for so much info.

I wouldn't proceed I don't think. A £30000 excess would cripple me. I had to sell a flat I owned because I couldn't pay a £15000 maintenance bill one year, so I am nervous of flats now. Can you actually afford the building insurance policy? Have you had a quote?

Personally I would walk away. It sounds as if the property may become uninsurable at some future point.

Hi, the place is leasehold and the building insurance is freeholders responsibility, not mine, so if the claim would need to be done it would be a freeholder to pay this excess but I guess that could then bite me back with the higher service charge or something? I am no sure on this, but these 30k would not be from me only, it would be from all the block of flats, the solicitor still said it is quite high though hence she had to go to the bank on this.

p.s. of course I would not be able to have 30 grand 😥
and I have checked again, it deffo says the building insurance is from a "landlord" aka management company/freeholder.

It is insured by a freeholder/management company, as it is leasehold... still walk away you think?

But if there was a claim, Im sure the landlord will be passing that cost on to the leaseholders, they're not going to foot the bill. How many flats are there? Is it a mansion block with multiple residencies or a converted house with two or three?

@anxiousship it is your decision based on the advice of your lawyer as to whether you proceed or not. Personally I would not. There was a fire in an apartment block where a relative lived. The following year the maintenance charges doubled to enable the owners of the building to start recovering the increase in insurance premiums and they will likely continue to increase.

It looks like that, 4 flats per block. I think there is around 35-40 flats so few blocks (10 maybe).
Currently we know that first block had extensive undepinning in 90’s, then at least 3 other claims during these years with one still unsettled from 2022 on subsidence on tree root encroachment. There was no work /claim done on the block where my flat would be but it is all linked and the freeholders insurance is for all of them and the field which roots made problems are still next door…
I will obvs need to wait what the bank says…

Thank you… I will think, strangely the management company ( freeholder) are saying they do not have a bill for the new year service charged yet ( dodgy)!
yeah, my worry is very high service charges, the subsidence to the block and potential loss in sale when I want to sale… what a dissapointment :(

Up, just in case any more thoughts. Thank you 🙏🏻

Ask your solicitor to get details of how the excess would be shared/paid. 30k excess sounds a lot but if its shared between all the blocks on the freehold that is split between 30-40 properties.

Its tricky because with leasehold properties you are not in full control of how such works are approached but at your end of the market a free hold property may be out of reach.

Have you had a structural engineer's report on the underpinning work? The structural engineer can advise on likely future risk or the extent of underpinning in place.

Those dates align with years of heavy clay shrinkage all around London so whilst some types of tree will contribute its fundamentally a clay soil issue. If the bulk of the properties are already underpinned with root barriers in place where appropriate then realistically the risk of future claims is smaller. If you consider that most London houses will have a subsidence excess measured in low thousands a 30k excess for a group policy on 40 properties doesn't sound so high and may come down if no further work happens in the next few years.

All of this is stuff which really needs engineer advice though. Most regular surveyors are not also structural engineers but may be able to recommend someone.

Also might be worth talking to your solicitor about proposed changes to leasehold laws (which would give leaseholders more control in this area but also more responsibilties).

Thank you, that is very useful. No, I have not had structural engineer to be honest, at this stage I already spent so much that I am not sure if I can bring them in to be honest.
I have few questions, when the underpinning for trees as a reason happens, do they stop the tree roots going further to protect other properties or is it just beneficial for that particular property?
My concern is that there is 10 identical blocks, quite few of them had work done already hence the excess so it almost feels like my block/building is just a ticking bomb, like if it has happened to the identical blocks from 90's up until now and the field/trees are still there too, then is it just the matter of time when it would happen to my block which then will result in massive service charge and problems to sell?

As a general rule, I would always get a structural engineer's report wherever there is clay soil and known shrinkage leading to subsidence (ditto if I were in a mining area etc). The whole of London is on clay and much of it has already experienced this issue. Not all of it has anything to do with trees - its prolonged dry weather which causes clay to dry and and shrink and unlike some other kinds of soil it doesn't readily expand back when it rains.

On older properties with shallower foundations the shrinkage can cause movement/subsidence. Modern properties and modern extensions have deeper foundations but those older properties are generally very desirable and not going anywhere!

Where there is a tree involved which is considered to be aggravating the shrinkage its common to put in root barriers between the tree(s) and the property to reduce the impact on the soil under the house. This can be in conjunction with underpinning or instead depending on the movement experienced.

I know its disconcerting but honestly I would start by asking the solicitor to clarify with the freeholders how such costs are distributed between the leaseholders. I would also speak to the local tree officer since they will be involved in these cases (woods are a local amenity) and often have good historic knowledge. You can also look at planning applications for the blocks to see what work was actually done (underpinning would normally need building and/or planning consent).
I would then find the money for a local structural engineer armed with those responses - I know you have spent a lot already but really a local structural engineer is the person needed to advise on both the work already done and the local risk of future issues.

It might also be the case that the excess before work was already between 20-30k as the policy for 40 properties would be large in itself. It might be useful to know what the increase was after the work as it may be solely due to the recency of the work.

Thank you, appreciate that, will ask those questions.
It does feel like a lot of work for the property which would be a "step on a ladder" rather than a home for me yet, I just want to make sure it is sellable at any stage going forwards.
I will ask my solicitor all the questions you have raised, thank you.