Remortgage With Subsidence

What Is Subsidence and How Does It Affect Remortgaging?

Subsidence occurs when the ground beneath a property shifts or sinks, causing the foundations to move and potentially leading to structural damage. Common causes include clay soil shrinkage during dry weather, tree root activity drawing moisture from the ground, leaking drains washing away supporting soil, and former mining activity beneath the property.

When it comes to remortgaging, subsidence is a significant concern for lenders because it affects the structural integrity and market value of the property. Lenders need to be confident that the property they are lending against is sound and will retain its value over the term of the mortgage.

There are several ways subsidence can affect your remortgage application:

• Reduced lender availability — Many mainstream lenders are cautious about properties with any history of subsidence, which can limit your options and reduce competition for your business.
• Higher valuations scrutiny — The lender's surveyor will pay close attention to any signs of movement, cracking, or previous repair work. A specialist structural survey may be required.
• Insurance complications — If your property has a subsidence history, obtaining buildings insurance can be more difficult and expensive. Lenders require adequate buildings insurance as a condition of the mortgage.
• Lower property valuation — A history of subsidence can reduce the market value of your property, which in turn affects the loan-to-value ratio and the rates available to you.

The severity of the impact on your remortgage will depend largely on whether the subsidence is historical and resolved, or whether it is ongoing. Resolved subsidence with proper documentation is far more manageable than active movement.

Historical Subsidence vs Active Subsidence

Lenders draw a clear distinction between historical subsidence that has been fully resolved and active subsidence that is still causing movement. Understanding which category your property falls into is crucial for your remortgage application.

Historical subsidence

If your property experienced subsidence in the past but the issue has been fully investigated, the cause identified and addressed, and the property monitored for a sufficient period with no further movement, this is considered historical or resolved subsidence. Most lenders will consider properties with resolved subsidence, though they will want to see comprehensive documentation.

Typically, lenders expect to see evidence that the property has been stable for a minimum period, often at least 12 months but sometimes longer, after any remedial work has been completed. A structural engineer's report confirming that the property is now stable is usually essential.

Active subsidence

If your property is currently experiencing subsidence or the cause has not yet been fully addressed, remortgaging will be considerably more difficult. Most mainstream lenders will decline applications on properties with active subsidence, as the extent of the damage and the cost of repairs remain uncertain.

However, there are specialist lenders who may consider properties with active subsidence, particularly if there is a clear plan in place for investigation and remediation. These lenders tend to charge higher rates to reflect the additional risk.

Monitoring stage

Some properties fall between these two categories, where the cause of subsidence has been addressed but the property is still in the monitoring period. This is a grey area for lenders, and your options will depend on how far along the monitoring process is and what the early results show. A specialist broker can be invaluable in identifying lenders who will consider properties at this stage.

Documentation You Will Need

Having thorough documentation is absolutely critical when remortgaging a property with subsidence. The more comprehensive your evidence, the more confident lenders will be in considering your application. You should aim to gather the following before you begin the process.

Structural engineer's report

A report from a qualified structural engineer confirming the nature of the subsidence, the cause, what remedial work was carried out, and the current condition of the property. This is the single most important document you will need. Ideally, the report should confirm that the property is now stable and that no further movement is expected.

Monitoring records

Evidence that the property has been monitored for movement over a sustained period following any remedial work. This typically involves regular level monitoring surveys that demonstrate the property has remained stable. Most lenders expect at least 12 months of monitoring data, though some may require longer.

Insurance documentation

Proof that you have buildings insurance in place that covers subsidence. This should include details of any previous subsidence claims, the outcome of those claims, and confirmation that the insurer is continuing to provide cover without exclusions for subsidence. If your current insurer has imposed exclusions, you may need to find specialist subsidence insurance.

Remedial work records

Detailed records of any repair or underpinning work that was carried out, including who performed the work, the method used, building control sign-off, and any warranties or guarantees provided. Photographs taken during the work can also be helpful.

Tree reports

If tree root activity was identified as the cause of subsidence, you should have an arboricultural report detailing what action was taken, such as tree removal or root barriers, and confirmation that the cause has been effectively managed.

Building control certificates

If underpinning or other structural work was carried out, building regulations approval and completion certificates will be required to confirm the work was done to the appropriate standard.

Which Lenders Accept Properties With Subsidence?

The lending landscape for properties with subsidence varies considerably. Your options will depend on the nature and status of the subsidence, the quality of your documentation, and the overall risk profile of your application.

Mainstream lenders

Several high street lenders will consider properties with a history of resolved subsidence, provided the documentation is thorough and the property has been confirmed as stable. Each lender has its own criteria, and some are more flexible than others. Some may require a longer monitoring period or specific types of remedial work before they will lend.

Building society lenders

Some building societies take a more individual approach to underwriting and may be willing to consider cases that larger lenders would decline. They often have the flexibility to assess applications on their own merits rather than applying rigid automated criteria.

Specialist lenders

For properties with more complex subsidence histories, active issues, or incomplete documentation, specialist lenders may be the best route. These lenders understand the risks associated with subsidence and have the expertise to assess applications on a case-by-case basis. Rates from specialist lenders tend to be higher than mainstream offers, reflecting the additional risk.

The role of a broker

A whole-of-market mortgage broker, particularly one with experience in properties with structural issues, can be extremely valuable. They will know which lenders are most likely to accept your application, what documentation to emphasise, and how to present your case in the strongest possible way. They can also save you the time and credit score impact of applying to multiple lenders who may ultimately decline.

Insurance Considerations for Subsidence Properties

Buildings insurance is a mandatory requirement for any mortgage, and obtaining suitable cover for a property with subsidence can be one of the biggest challenges you face when remortgaging.

Finding subsidence insurance

Standard home insurance policies may exclude subsidence cover or charge significantly higher premiums for properties with a subsidence history. You may need to approach specialist insurers who focus on non-standard risks. Brokers who specialise in subsidence insurance can help you find cover at a competitive price.

What lenders require

Your mortgage lender will require buildings insurance that covers the full reinstatement value of the property. They will also typically require that subsidence is not excluded from the policy. If your insurer has placed a subsidence exclusion on your cover, this could prevent you from completing a remortgage.

Previous claims history

If you have made a previous insurance claim for subsidence, this will be on record and will affect both your insurance options and your remortgage application. Be upfront about any claims history, as lenders and insurers will discover this during their checks.

Excess levels

Some insurers may offer cover for subsidence but with a higher excess than standard policies. The current standard excess for subsidence claims is typically around one thousand pounds, but specialist policies may have different terms. Ensure you understand the excess levels before committing to a policy.

Ongoing monitoring requirements

Some insurers may require ongoing monitoring as a condition of providing subsidence cover. This could involve periodic surveys or level monitoring to confirm that the property remains stable. Factor in the cost and logistics of this when planning your remortgage.

Steps to Remortgage a Property With Subsidence

If you are planning to remortgage a property with subsidence, a structured approach will give you the best chance of success. Follow these steps to prepare effectively.

Step 1: Assess the current situation

Determine whether the subsidence is resolved, under monitoring, or still active. If you are unsure, commission a structural engineer's inspection to establish the current position. This will inform your entire approach and help set realistic expectations.

Step 2: Gather all documentation

Compile every piece of evidence relating to the subsidence, including investigation reports, monitoring data, remedial work records, building control certificates, and insurance claim documentation. Organise these chronologically so they tell a clear story of the problem, the solution, and the outcome.

Step 3: Secure appropriate insurance

Ensure you have buildings insurance in place that covers subsidence without exclusions. If your current policy does not provide adequate cover, shop around with specialist insurers before you begin the remortgage application.

Step 4: Speak to a specialist broker

A broker experienced in properties with subsidence will know which lenders are most suitable for your situation. They can review your documentation, identify any gaps that need to be addressed, and recommend the most appropriate lenders to approach.

Step 5: Apply strategically

Rather than applying to multiple lenders simultaneously, work with your broker to identify the most suitable lender and submit a well-prepared application. A targeted approach is more effective than a scattergun strategy, particularly for non-standard cases where each declined application can impact your credit score.

Step 6: Be prepared for the valuation

The lender's surveyor will scrutinise your property carefully. Having your documentation readily available and ensuring the property is well presented can help the valuation process go smoothly. If there are cosmetic repairs that would improve the surveyor's impression, consider carrying these out before the inspection.