Sub­si­dence claims heat up af­ter record tem­per­a­tures

The Daily Telegraph - Your Money - - MONEY - Sam Barker

Un­der­manned in­dus­try is over­whelmed as five times as many home­own­ers get that sink­ing feel­ing, re­ports Mar­i­anna Hunt

Home­own­ers suf­fer­ing with warped walls and sink­ing floors are find­ing that the creak­ing sub­si­dence in­sur­ance in­dus­try is strug­gling to cope with what is ex­pected to be the high­est num­ber of claims in the past quar­ter of a cen­tury, ex­perts have warned.

The num­ber of monthly sub­si­dence claims since Au­gust has been five times higher than in the first half of 2018 as Bri­tain be­gins to feel the full ef­fects of this sum­mer’s heat­wave, ac­cord­ing to a re­port by loss ad­justers Craw­ford & Com­pany.

This comes at a time when the sub­si­dence sec­tor is short-staffed be­cause of job losses af­ter a se­ries of wet sum­mers. As claims were low, in­sur­ers culled their sub­si­dence man­age­ment teams.

Michael Law­son, chief ex­ec­u­tive of sur­veyor Prop­erty Risk In­spec­tion, said: “We have the small­est amount of man­power in a decade, and the most claims.”

This sum­mer was the joint hottest on record, with daily tem­per­a­tures in parts of the coun­try con­sis­tently ex­ceed­ing 86F (30C). But while house­hold­ers soaked up the sun in their gar­dens, many failed to no­tice fences start­ing to shift, deck­ings dis­tort­ing and ponds cav­ing in.

In high tem­per­a­tures the ground un­der your home can dry up, caus­ing floors to sink, win­dows to warp and foun­da­tions to weaken or even col­lapse com­pletely. This is known as sub­si­dence. Spells of hot weather have his­tor­i­cally led to sharp in­creases in sub­si­dence claims, with the years 2003 and 2006 par­tic­u­larly bad.

Sne Pa­tel, head of sub­si­dence at Craw­ford & Com­pany, pre­dicted that in­sur­ance claims for sub­si­dence dam­age in 2018 would be dou­ble last year’s fig­ure. “Sub­si­dence al­ways oc­curs where there is veg­e­ta­tion. The warm weather loosens the ground, but it is the dry­ing ef­fect from plant and tree roots that causes one part of the prop­erty to move down faster than the rest, lead­ing to cracks,” he said.

While the im­pact of storms and floods on a prop­erty is im­me­di­ately ev­i­dent, it of­ten takes months to no­tice the frac­tures in walls caused by sub­si­dence. Home­own­ers should look out for di­ag­o­nal cracks that are thicker than a 10p coin, par­tic­u­larly around doors and win­dows – tell­tale signs that the foun­da­tions are sink­ing.

High-risk ar­eas are those with clay soil, which shrinks and swells de­pend­ing on mois­ture. Mr Law­son said there were around 15 mil­lion homes in low-ly­ing parts of Eng­land on shrink­able soil.

Ian Ma­cLean, a sub­si­dence con­sul­tant, said: “In most in­stances, the ex­tent of the dam­age is a few small cracks, but there are some dra­matic cases. I had a client who was walk­ing in his gar­den and sud­denly found the ground was sink­ing un­der­neath him.

“An­other had an ex­ten­sion built, not re­al­is­ing that it sat on a spot that used to be a pond. The ex­ten­sion be­gan to move and wob­ble around.” Top three causes of sub­si­dence 1. Hot sum­mers cold snap such as Warm weather the “Beast from tends to be the East” that fol­lowed by froze and cracked sud­den spikes drain pipes across in sub­si­dence Bri­tain ear­lier this claims, as the year. dried-up ground desta­bilises build­ing foun­da­tions. This is ex­ac­er­bated when the hot spell fol­lows a

2. Nearby trees

The big­ger the tree, the more mois­ture it will ab­sorb from the soil. Avoid plant­ing oaks,

In­creases in sub­si­dence claims may also have been in­flu­enced by years of fi­nan­cial aus­ter­ity, lead­ing the Gov­ern­ment to cut bud­gets for man­ag­ing ur­ban trees. “Most coun­cils have re­duced their tree prun­ing pro­grammes, al­low­ing thou­sands of ur­ban trees to grow far larger than is de­sir­able, ex­ac­er­bat­ing the risk of sub­si­dence,” Craw­ford & Com­pany’s re­port stated.

Re­pair­ing dam­age caused by sub­si­dence can some­times be achieved by re­mov­ing trees close to the house and re­hy­drat­ing the ground.

More se­ri­ous cases may re­quire the wil­lows, planes and other large trees with long roots close to your home. Ev­er­green hedges such as cy­press also suck up a lot of wa­ter.

3. Bad ex­ten­sions

The parts of a house most com­monly af­fected by sub­si­dence are con­ser­va­to­ries, bay win­dows and porches. There are fewer checks on the qual­ity of th­ese add-ons than on the build­ing of an en­tire house, so their foun­da­tions are of­ten of much lower qual­ity and more prone to sub­si­dence.

build­ing to be un­der­pinned. David Har­bour of char­tered sur­veyor e.surv said this could cost tens of thou­sands of pounds. He said: “Al­ways seek a pro­fes­sional opin­ion when you find a crack. If the prob­lem is mi­nor, such as weak lin­tels, this will cost just a few hun­dred pounds to fix. But if there is an is­sue with the foun­da­tions, things get very costly very quickly.”

Most build­ings in­sur­ance poli­cies cover sub­si­dence, but the claims process can take months. Brian Brown of fi­nan­cial in­for­ma­tion com­pany De­faqto said: “In­sur­ers some­times in­sist on mon­i­tor­ing the build­ing for a pe­riod of time be­fore de­cid­ing on a course of ac­tion. This can be frus­trat­ing for the home­owner.”

Cus­tomers may find them­selves wait­ing longer than usual this year. Mr Law­son said: “It’s not just that the num­ber of claims has shot up: more of th­ese claims are be­ing up­held. In an av­er­age year six in 10 claims turn out to be other prob­lems that cost a frac­tion to re­solve. This year, in nine out of 10 cases home­own­ers have se­ri­ous sub­si­dence dam­age.”

The in­crease in claims could cause in­sur­ance pre­mi­ums to rise. Mr Brown said: “The in­sur­ance in­dus­try has al­ready started ad­just­ing pre­mi­ums to be able to cover the likely ex­pen­sive costs of re­pairs.”

But what about when it comes to sell­ing the prop­erty? Mr Har­bour warned: “In the worst-case sce­nario, sub­si­dence could ren­der the prop­erty un­mort­gage­able, mak­ing it saleable only on a cash ba­sis un­til it has been fully re­paired.” Some prospec­tive pur­chasers may not wish to buy a prop­erty with a his­tory of sub­si­dence.

Buy­ers should re­quest doc­u­ments de­scrib­ing the re­pair work done, prov­ing to lenders that the prop­erty is still a se­cure in­vest­ment.

The Gov­ern­ment is ac­ci­den­tally un­der­es­ti­mat­ing the ex­tent of the lease­hold prob­lem be­cause of­fi­cial fig­ures ex­clude mil­lions of homes, ac­cord­ing to new re­search.

Many lease­hold prop­er­ties re­quire ex­pen­sive and un­fair pay­ments to be made to the free­holder.

Th­ese can in­clude a yearly ground rent that rises over time, leav­ing prop­er­ties un­sellable, as well as other high charges.

In De­cem­ber 2017, Sa­jid Javid, who was the Com­mu­ni­ties Sec­re­tary at the time, said the Gov­ern­ment would set ground rent on all new long leases to zero. But in a con­sul­ta­tion last month the Gov­ern­ment wa­tered this down. It now wants th­ese to be al­lowed, but capped at £10 a year.

Cam­paign­ers for lease­hold re­form want stronger pro­tec­tions and now claim that gov­ern­ment fig­ures un­der­play the scale of the prob­lem.

Of­fi­cial fig­ures pub­lished by the Min­istry of Hous­ing, Com­mu­ni­ties and Lo­cal Gov­ern­ment last month said there were 4.3m lease­hold homes in Eng­land, or 18pc of the to­tal hous­ing stock.

How­ever, ac­cord­ing to statis­tics due to be pub­lished by the Lease­hold Knowl­edge Part­ner­ship (LKP), a pres­sure group, the true num­ber is 6.5m, 51pc higher.

Mar­tin Boyd, of the LKP, said a third of all lease­hold homes, or 2.21m, would have some sort of is­sue with un­fair terms.

Mr Boyd said the gov­ern­ment method­ol­ogy was “to­tal horse­feath­ers” and led to fig­ures that un­der­es­ti­mated the prob­lem.

He said: “Un­less you’ve got the right num­bers, how do you plan prop­erly?”

The main rea­son for the gap is be­cause the Gov­ern­ment ex­cludes many lease­hold so­cial homes.

Gov­ern­ment fig­ures say there are 244,000 of th­ese, whereas the LKP says there are as many as 1.9m.

Gov­ern­ment statis­tics also said there were no new lease­hold homes built in 2016-17. The LKP said there were around 50,000.

Jo Der­byshire, of the Na­tional Lease­hold Cam­paign, an ac­tion group, said el­derly and so­cial lease­hold­ers were among the most af­fected.

As Bri­tons sunned them­selves, as in Lyme Regis, many of their homes were suf­fer­ing

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