News & views

Wednesday, October 11, 2017

Subsidence – it’s one of every property owners worst nightmare, but relatively little is known about it. Justin Clarke, Director of Underwriting and Pricing at NIG, takes a closer look at the implications it can have for landlords, both residential and commercial.

As many as one in five homes in England and Wales may be at risk of subsidence damage, which affects as many properties as flooding on an annual basis.

Subsidence occurs when the ground under a property sinks lower, causing a downward movement of the foundations. This puts a strain on the building’s structure, and cracks start to appear. The very thought of it strikes fear into the hearts of property owners everywhere…

What causes subsidence

There are numerous causes of subsidence, however, soil shrinkage is the main culprit and is responsible for around 75% of all subsidence claims. Other common causes include tree roots absorbing water and causing soil shrinkage and leaking drains and pipes, which can soften the ground around a property and reduce its load-bearing capacity, resulting in foundation movement.

Weather can also play a role in increasing the risk of subsidence with long periods of dry, mild weather putting the UK at risk of a subsidence ‘event’ – a period when there is a significantly higher than average number of subsidence claims.

However, these are not all that common. Despite a few near misses, the last time the UK experienced a subsidence event was 2006, when we experienced a particularly dry winter.

Areas most at risk

A combination of dry weather, high temperatures and trees growing close to a building’s foundations is a common cause of subsidence, but it can also depend on whereabouts a property is.

Homes built on highly absorbent clay soil are particularly at risk, with properties in London and the South East particularly susceptible to subsidence issues. Victorian homes with shallow foundations can also be problematic, so landlords need to be careful about the types of property they buy.

Financial cost of subsidence

Severe cases of subsidence can have a serious effect on the structural integrity of a property, and can even damage the contents inside.

Apart from the damage it causes, one of the biggest issues with subsidence is that an affected property might need to remain empty while repairs are carried out. That means landlords may lose out on rent and, in the long term, face problems when trying to sell the property.

In less severe cases, subsidence simply causes minor cracking, which will often close up as the house returns to its original position once the ground is rehydrated.

Most insurers recommend repairing the cracks and monitoring any ongoing movement rather than going to the expense of having the property underpinned at the first sign of trouble.

How to reduce the risk of subsidence damage

Ensuring the structural safety of a rental property is crucial for landlords, particularly owners of residential properties where trees and shrubbery can be an issue. Subsidence is hard to predict, but steps can be taken to reduce the likelihood of it occurring:

  • Make sure shrubs or trees aren’t planted too close to the property. The Association of British Insurers’ handy guide shows how far away different tree types should be.
  • Landlords with several properties should hire a gardener to regularly prune the vegetation.
  • Maintain outside guttering, pipes and plumbing to avoid leaks into the soil, and monitor the exterior of buildings for distress cracks.
  • Before buying a new property, check the surveyor’s report for signs of subsidence.

Insurance Requirements

Landlords need to make sure they’re sufficiently covered if their properties are affected by subsidence to avoid a financial disaster.

At NIG we have a range of products that can cater for the needs of both residential and commercial property owners.

For smaller risks, we offer our full-cycle Property Owners eProduct. The product is suitable for single and multi-location portfolios of up to 25 premises and provides cover of up to £10m Building Sum Insured and £500,000 landlord’s contents. 

For larger risks, we offer our regionally-traded Essential Property Owners product. This product is designed for professional property owners or managing agents with residential UK portfolios.