23 August 2023

Cracks and subsidence in property – is it a cause for concern?

By John Perry, Solicitor, Hayes + Storr.

If you are looking to buy a residential property, any mention of subsidence can be disconcerting. But what is subsidence, and how can it affect a property transaction?

Subsidence, settlement and shrinkage

Subsidence occurs when instability in local subsoils and the geological conditions of the area cause a building’s foundations to sink. This underlying instability compromises the building’s structural integrity and cracks appear as walls shift and floors drop.

However, not all damage is attributable to subsidence. Some movement occurs where the weight of a building compresses the subsoil and this bedding-in is known as ‘settlement’. “Shrinkage” may occur in new-build properties when building materials dry out.

Settlement and shrinkage do not usually affect a property’s structure.

What causes subsidence?

Subsidence can be down to the type of subsoil upon which a property is built. The county of Norfolk rests predominantly on glacial deposits from the last ice age and the subsoil is prone to disturbance by being washed away. Such disturbance is commonly caused by leaks from damaged pipes and drains. Subsoils, like clay and silt, will shrink and expand with changes in their moisture content.

Subsidence can also occur to developments built on infilled land and in areas of past mining activity.

How do I know if a property has a history of subsidence?

If you are about to purchase a property, to manage the risk, you should commission a comprehensive survey from a qualified surveyor who has professional indemnity insurance cover. If buying with mortgage finance, please note that a lender’s valuation is not as thorough as a survey and, while a valuation may identify major structural issues, the aim is merely to ensure the lender’s security is covered.

The lawyer plays a key role in identifying the risk. The conveyancing searches and enquiries may reveal whether subsidence is a potential issue or requires further investigation. For example, searches should reveal whether the property is in a mining affected area or rests on infilled land. Previous structural repair work such as underpinning should be revealed by Building Regulations entries in the local search results.

The seller’s Property Information Form should provide details of any remedial works carried out to the property. Moreover, details of past insurance claims should be included and a Certificate of Structural Adequacy issued by the insurer’s surveyor produced.

Duty of the seller to disclose

While the common law principle ‘buyer beware’ prevails in conveyancing transactions, full disclosure of any subsidence issues is always the best policy.

First, your buyer may uncover the issue through their own inspection, survey and searches. Non-disclosure may shatter any notion of trust the buyer has in the seller’s credibility. If remedial work has been carried out on the seller’s property, then full disclosure will reassure the buyer, especially if survey reports can be produced and the benefit of a guarantee or warranty can be assigned on completion.

Secondly, where a seller makes an untrue statement of fact which is relied on by a buyer who suffers loss, the buyer may rescind the contract and seek damages for misrepresentation. The seller must ensure that all replies to the Property Information Form are accurate.

What should I do is there is a current or potential subsidence issue?

Take professional advice. Your surveyor can indicate the likely physical impact to the property moving forward. For example, if subsidence is historic and the cause has been remediated, it may be of little practical effect. If there is an ongoing unresolved risk of subsidence you may consider re-negotiating a price reduction to reflect the additional risk, ask the seller to remediate, or look for another property.

Following on from the survey, you may require more information before making an informed decision. If the seller’s replies to pre-contract enquiries reveal a historical subsidence claim, your lawyer will make further requests for information.

Finally, a history of subsidence may mean you struggle to get buildings insurance or can only get insurance cover at a hefty premium. It is important to check early on with your insurer whether insurance for the property is available at the usual rates.

How we can help

Our team of residential property lawyers have the breadth and depth of experience to deal with the key issues relating to subsidence in property transactions and advise you accordingly.

For further information, please contact John Perry in the residential property team on 01328 863231 or email john.perry@hayes-storr.com.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.