Can you sell a home with subsidence?

Subsidence sounds like a pretty scary and expensive issue when you first come across it. The idea of your home’s foundations sinking can be stressful - particularly if you’re looking to sell your property soon.

If you know about the subsidence problem before you sell, there are a number of precautions you can take to make sure your home sale goes ahead smoothly. We’ll outline a few below. We’ll also look at what to do if you didn’t know you had subsidence and it comes up in your survey.

Subsidence can make it harder to sell your home, but it’s not the end of the world. In many cases subsidence is a manageable issue.

What is subsidence?

Subsidence is when the land underneath your home is unstable and begins to shrink, causing your property’s foundations to sink. Subsidence can be pretty damaging to your home’s structural integrity, and can cause cracks to appear in your building’s walls.

The most common signs of subsidence include:

• Large cracks in your interior and exterior walls. These cracks will be thicker than 3 mm wide, and they’ll usually be wider at the top than at the bottom.
• More cracks close to windows and doors, or where an extension joins onto a property.
• Doors and windows sticking. This is because the movement of the foundations is causing their frames to warp.

Is subsidence common?

Subsidence is more common in some parts of the country than in others. Some soil types are more susceptible than others to shrinkage. Clay and silt for example expand when they are wet, then shrink when they dry out. Properties on these types of soil can be at a higher risk for subsidence.

Trees and shrubs planted close to homes can also encourage soil shrinkage and subsidence. The plants extract the water they need from the ground near the house to grow, drying up the soil under the foundations, and causing it to shrink.

London is a ‘hotspot’ for subsidence. A lot of buildings in London are built on London Clay which is sensitive to moisture levels in the ground. South East London is particularly affected by subsidence. But, other areas of the UK are also impacted.

It’s predicted that about 20% of homes in Britain are affected by subsidence.

How much does subsidence devalue a property?

Some people suggest that subsidence can devalue a property by up to 20%, but it really depends on your specific situation. Often these figures are designed to scare homesellers into selling for a low price to professional cash buyers.

For more information about professional cash buyers, and whether they are worth considering - or avoiding, take a read of this article, which covers the basics.

There are two ways that subsidence might devalue a property:

• If a mortgage lender is unwilling to lend a potential buyer the full asking price, you may have to sell for a discount, or to a cash buyer
• A buyer may ask to reduce your home’s sale price to cover the cost of repairs, or undertake the repairs yourself

The amount subsidence could devalue your property also depends upon whether it’s a historic issue, or one that’s just been found in the buyer’s survey.

If the property has a history of subsidence, but has undergone works to repair the issue and hasn’t had any issues for a number of years, it will be easier to sell your home for the asking price. Some insurers might still be wary, but you could introduce your buyer to your buildings insurance provider so that they can take out a policy with them.

However, if you did not know you had an issue with subsidence, and it comes up as a surprise in your buyer’s survey, you may find you have to undergo costly repairs, or end up selling for significantly less than you might have hoped.

If a survey finds evidence of subsidence a mortgage lender might want to conduct an independent investigation. They will use this to decide whether your property is suitable security for a mortgage. If they find that it’s not, it’s likely that your buyer will have to pull out of the sale.

You may be able to negotiate with your buyer a reduction to cover the cost of repairs. But, this may not be enough to convince the mortgage lender. Many mortgage lenders will only be satisfied if repairs, such as underpinning have already been commissioned. You could conduct these works before completion. But, repairs like underpinning are invasive and take a long time, so this is not a particularly feasible solution if you need to move quickly. If this is the case you may need to sell your home at a reduced price to a cash buyer.

If you suspect that your property has subsidence it’s important to take remedial action as soon as possible - particularly if you’re planning to put your home on the market. This begins by having a surveyor come to inspect any cracks that have formed. They may wish to monitor these over the course of a few months to see whether the problem is actually subsidence, or something else.

Getting inspections done early will not only make repairs cheaper and more manageable, it can also reduce the amount your home is devalued by the damage.

Do I have to declare subsidence when selling a house?

Yes. It’s very important that you are completely honest about any problems with subsidence your house has, and the work you’ve done to rectify the problem.

Consumer protection laws mean that it’s your legal responsibility to disclose any information about your property which might influence a buyer’s decision to purchase your home. This means if you’re aware of any issues (subsidence or otherwise) you have to tell your estate agent, and your conveyancing solicitor.

You’ll also need to include any information on the Property Information Form (also known as TA6) that you will fill in as part of the conveyancing process. This form is used to gather details about your property - both its features and its problems.

On the TA6 form you'll need to provide a record of any claims made on your buildings insurance that relate to subsidence. You’ll also need to share details of your insurance policy, particularly if you have an unusually high premium. This includes any historic information. Currently you are required to talk about subsidence if it has affected your property at any time in the past, even if it’s no longer a problem.

Disclosing problems upfront reduces the risk of having a buyer pull out of the sale, or asking for a reduction in asking price part way through the sale. It also provides you an opportunity to show the work you’ve done to rectify the problem.

If you’ve had your property underpinned, share the local council’s completion certificate with your potential buyer, and let them know how long it has been without any issues. If you’ve had any other repairs completed by your insurer, you should have a Certificate of Structural Adequacy too. Documentary evidence like this can do a lot to encourage an on-the-fence buyer, (or their insurer and mortgage lender) that the subsidence problems have been resolved.

If you’re unsure when or what to disclose about your property’s subsidence problems, your conveyancer will be able to provide you with guidance. If you’re using a local conveyancer they’ll likely have particular experience in dealing with subsidence problems caused by the soil in your area. They will be able to go through any potential legal problems, and advise how subsidence problems might affect your home sale.

There's lots of good advice about how to pick the right conveyancer out there. We recommend starting by reading 'How Should I Choose My Conveyancer?'. Head there now.