Subsidence Issues: Should You Inform Buyers When Selling?
If you’re selling a house in the UK, one of the big questions you may face is whether or not you need to declare subsidence, especially if it has been a problem in the past. The simple answer is yes, you absolutely must declare it, whether the issue is ongoing or has been fixed. Failing to do so could lead to legal and financial consequences down the road, and it’s vital to be transparent throughout the selling process.
Understanding Subsidence
Subsidence occurs when the ground beneath a property moves, causing the foundations to shift. This often results in visible cracks in the walls, doors, or windows that stick due to the structural movement. The issue is more prevalent in areas with clay soils, such as London and parts of the South East, where the soil tends to shrink in dry weather and expand when wet. Trees planted too close to a house can also exacerbate the problem by extracting water from the soil, further destabilising the foundations
Legal Requirements: Transparency is Key
When it comes to selling your home, UK property law is clear: you have a legal duty to declare any past or ongoing issues with subsidence. According to the Consumer Protection from Unfair Trading Regulations (CPRs), sellers must be transparent about any information that might affect the buyer’s decision-making process. This includes subsidence
You’ll need to disclose subsidence on the Property Information Form (TA6), which is a crucial part of the conveyancing process. The form gathers details about the property, including any repairs that have been made to resolve subsidence. This is required whether the subsidence was a one-time issue resolved years ago or if it is still a concern
What Happens If You Don’t Declare It?
Not declaring subsidence can have serious consequences. If the buyer finds out later, you could face a misrepresentation claim. If a court finds that you deliberately misled the buyer by failing to disclose subsidence, you could be liable for damages. This could mean compensating the buyer for the difference in what they paid and what the property is actually worth with subsidence issues
Moreover, concealing the problem can lead to a breakdown in trust between you and the buyer. The buyer may walk away from the deal entirely, and it could also affect their ability to secure a mortgage, particularly if the subsidence is still ongoing
As Jamie Johnson, CEO of FJP Investment, puts it: “Transparency is paramount in the property market. Declaring subsidence from the start helps build trust and avoids potential legal battles later on.” Buyers are more likely to negotiate fairly when they feel that all the cards are on the table.
The Financial Impact of Subsidence
Subsidence doesn’t just complicate the legal aspects of selling your home—it can also affect the price you’ll be able to get for it. Properties with subsidence tend to sell for less, typically 20-25% below market value depending on the severity of the issue. The potential costs of repairs, such as underpinning or other stabilising work, are often factored into the reduced price
Underpinning, the most common method to fix subsidence, can cost anywhere between £5,000 for a small home and upwards of £17,000 for larger properties. Additional costs for other necessary repairs, like replacing damaged windows, repointing bricks, or redoing plasterwork, will further add to the financial burden
Can You Still Sell a House with Subsidence?
Yes, you can absolutely sell a house with subsidence, but the process may be more complex and slower than selling a property without these issues. One option is to sell to a cash buyer, particularly one who specialises in properties with structural problems. Cash buyers may offer a lower price, but the sale process is often quicker and less complicated
If you’re looking for a more traditional buyer, you’ll likely need to offer a price reduction to account for the subsidence issue. Buyers might negotiate for a lower price to cover the cost of repairs or ask you to fix the issue before the sale is completed. However, some buyers will be hesitant to take on a property with a history of subsidence, especially if it requires further monitoring before repair work can be completed
How to Prepare for Selling
If your property has had subsidence, the best course of action is to be proactive:
- Gather Documentation: Collect all records related to the subsidence, including structural surveys, insurance claims, and details of any repair work. These documents will reassure buyers and mortgage lenders that the problem has been addressed and is unlikely to recur.
- Be Upfront: Disclose the subsidence issue from the outset to avoid delays and the risk of the buyer pulling out. Being transparent will also help you negotiate more smoothly with the buyer on price
- Consider Fixing the Issue Before Sale: If you can afford it, resolving the subsidence issue before putting the house on the market will likely increase your chances of selling the property at a better price. This includes having the home underpinned if necessary, and making any cosmetic repairs to fix visible damage
Does Insurance Cover Subsidence?
Insurance can be a tricky issue when it comes to subsidence. Many standard home insurance policies do cover the costs of repairs related to subsidence, but they often require a hefty excess payment, which can range from £1,000 upwards. If your property has already had subsidence, your insurance options may be more limited, or you might face higher premiums
When selling, it’s advisable to introduce your buyer to your current insurance provider, particularly if they have provided cover despite the subsidence. This will make it easier for the new owner to secure insurance, and some insurers may even allow the policy to be transferred to the buyer, which could make the sale process smoother
Conclusion
In short, yes, you must declare subsidence when selling a house, whether it’s ongoing or was a past issue. Not doing so could expose you to legal risks and lead to a collapse of the sale. While selling a home with subsidence can be more challenging, taking steps like being transparent, gathering all the necessary documentation, and even resolving the issue before listing the property can make the process smoother and help you secure a fair price. Transparency isn’t just a legal requirement—it’s also the best way to maintain trust with potential buyers and ensure a successful sale.
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