Has the current climate of financial austerity in the UK contributed to a spate of subsidence insurance claims?
There is certainly evidence of an upsurge in such claims – we wrote about it in an article dated the 30th of October 2018, identifying a wave of four times as many claims as last year.
To what extent might this be explained by a general tightening of belts and cutting back on essential expenditure?
Government funding is the main source of funding for local authorities. According to a story in the Independent newspaper on the 1st of October 2018, however, that funding is to be slashed by up to 36% next year – representing the biggest cut in the funds available to local authorities for almost a decade.
Cuts of anything like this scale to local council budgets has brought financial austerity to practically every area of expenditure, including landscaping and tree maintenance. Through the need to cut back on tree pruning and arboreal management, councils have unwittingly contributed to the damage caused by the untrammelled growth of tree roots, their absorption of huge volumes of water from the ground, the ensuing shrinkage of the soil, and the subsidence problems which follow as building foundations fail and collapse.
Trees that are left to grow out of control tend to spread their damaging roots still further during periods of hot, dry weather – and the summer of 2018 was one of the hottest on record, explained an article in the Financial Times on the 9th of September 2018. As the ground shrinks, foundations near any neighbouring trees may cause parts of the building to rotate, with cracks spreading along its walls. The problem is especially severe in the south-east of the country, said the article, where some types of soil are capable of shrinking by as much as 10 to 15%.
Recession in the housing market
House prices in the UK are currently overvalued by as much as 12%, argued a story in the Telegraph newspaper on the 12th of August 2018.
Uncertainty about the market has prevented many homeowners from moving house and instead deciding to extend their current home. In some cases, building standards have been poor – with instances where the extension has been built directly onto an existing patio, without additional foundations being laid. With inadequate structural support, the extension is vulnerable to subsidence.
Extensions may also have moved the external walls of many homes closer to trees in the garden and, over time, these may also pose further threats of subsidence. Even more subsidence claims may still be in the pipeline, therefore.
It remains to be seen whether more insurers will respond to such claims by invoking “defective construction” clauses in relation to inadequate building standards when the extension was built. They may take a hard line, for example, and decline the claim, even if the property has changed hands since the extension was built.
Other insurers may adopt a less strict approach and allow a “test of time” with respect to such claims.
In either case, however, any homeowner making a claim must expect a lengthy wait as the possibility of subsidence is investigated and the foundations dug out and exposed.
Further reading: Guide to subsidence and subsidence insurance