Buying or selling an underpinned house, or one with subsidence

Subsidence is one of the words most likely to frighten a buyer. Often they first meet it in the lender’s valuation report, and it can turn a straightforward purchase into a wait for paperwork.

It does not have to end the sale. What decides the outcome is whether the movement is history, with evidence that it has been put right, or a problem still waiting to be fixed.

What subsidence is, and why it is common

Subsidence is the ground beneath a home moving downwards and taking part of the foundations with it. The usual cause is clay soil. Clay swells when it is wet and shrinks as it dries, and tree roots and long dry summers draw more water out of it. The British Geological Survey calls shrink-swell clay the most damaging geohazard in Britain. The most susceptible clays are mainly in south-east England, with London Clay a well-known example.

It is also local. In parts of Southampton where Jon worked, and in Southbourne near Bournemouth, subsidence is a known factor. Two streets in the same town can have quite different ground.

Buying: when the valuation asks for an engineer

The buyer often first hears about subsidence from the lender. If the valuer sees cracking or signs of past movement, or the home has a subsidence history, the mortgage valuation report will usually ask for a structural engineer’s report (SER), or for proof that the subsidence has been put right. Until the lender has that evidence, the mortgage offer waits. The valuer can also place a full retention on the mortgage: the lender holds back the whole loan until the queries are answered or the work is completed.

For a buyer who has not met this before, it is scary news. It sounds like a verdict on the house. It is not: it is the lender asking a question, and the answer decides what happens next.

• If the movement is historic and was properly repaired, the papers usually answer the lender’s question, and the purchase carries on.
• If an engineer finds movement that is still active, or work still to be done, the picture changes. The cost, the timescale and whether insurers will cover the home all become open questions, and the price agreed may no longer reflect the home you are buying.

Take a 1930s semi on clay, agreed at £550,000. A valuation that asks for an engineer’s report adds weeks and the cost of the report. If the report shows the old repairs are sound, the sale goes on at the agreed price. If it finds work still needed, the buyer is weighing an unknown bill against a price that assumed none.

Insurance belongs in the same conversation. Insurers ask about past subsidence, and some homes are easier to insure with the insurer that handled the original claim. Ask about cover before you exchange, not after.

Selling: the paperwork is the sale

If your home has had subsidence put right, everything connected with the repairs should be kept with the title deeds. That usually means the insurance claim file, the engineer’s reports and monitoring results, the certificate confirming the repair was adequate, any guarantee from the contractor, and building control sign-off for underpinning.

The buyer’s lender is likely to ask for it, and a seller who can hand it over at once removes the fear before it grows. A seller who has to go looking for it, or cannot find it, leaves the buyer and the lender to imagine the worst while the sale waits.

You also have to be open about it. The Property Information Form asks about structural movement and related insurance claims, and the answers must be accurate.

When remedial work is still needed

If the home still needs work, it can kill a sale. Buyers and their lenders are being asked to take on a job of unknown cost and length, and many will walk away rather than wait to find out. Whether to fix it before selling, sell with the work outstanding, or reflect it in the price is a judgement that depends on the home, the cost and how soon you need to move. If a buyer has already raised it, our guide to renegotiating after a survey covers how that conversation tends to go.

Why an underpinned home can be the better buy

Underpinning strengthens or deepens a home’s foundations so that they reach firmer ground. Once the work is done and signed off, an underpinned home is arguably a better property than the houses either side of it, which sit on the original foundations and the same clay.

That is the upside, and it only works when it is presented in a positive way and backed by the papers. The repair is not a defect to apologise for but completed work with a guarantee behind it. The home that struggles is not the one that was fixed. It is the one where nobody can say whether it was.