Subsidence. If ever a word was likely to strike terror in the heart of a property owner, that’s it. But for anyone looking for a property bargain, buying a PUP can make sound sense, according to household insurance specialist Adrian Flux Insurance Services. That’s because PUPs (previously underpinned properties) often sell for less than unaffected (but otherwise identical) houses.
The difference in price can be very significant. Yet provided the movement has stopped and the building is safe, the price difference is a reflection of perception rather than reality. In a buyer’s market the PUP’s perceived lack of ’saleability’ can be a powerful negotiating tool to lower its price even more.
However, a major issue a PUP-buyer will probably have to face is insurance. Many companies won’t want to touch a PUP. So how to avoid the problems?
First find a specialist insurer willing to consider a PUP. Obviously it’s vital to establish the cause of the movement – the insurer will only consider the property if there’s proof that no more movement is likely and that any remedial work required has been completed. Historic subsidence, perhaps caused decades ago by settling when the house was first built, shouldn’t be an issue. On the other hand, subsidence caused by ongoing external factors, such as quarrying, drainage or dehydration, will put off any insurer, since there’s no way to predict future damage.
Before even considering the property the insurer will require a structural report – but provided they are happy with the report’s findings, they should be able to offer cover.
It’s not sensible to buy a PUP without proof that the movement affecting the property has stopped. However, for anyone who already owns such a property and needs insurance for it, all is not lost. Specialists like Flux may be able to offer cover that specifically excludes damage caused by the ongoing problem. It’s not ideal but it’s a lot better than no insurance at all.
The bottom line? Flux’s Julie Carter sums things up: "In the current market, provided you are cautious, acquiring the right PUP needn’t be buying a pup – and it can be an absolute bargain."
Adrian Flux aims to offer cheaper home insurance and has a range of policies for homes, contents, including specialist schemes for hard to insure properties such as thatched homes, underpinned buildings and those at risk of flooding. For information call the Flux Household Insurance hotline on 08700 772266, email household@adrianflux.co.uk or visit the website, www.adrianflux.co.uk, and click on the relevant button under the ‘Home Insurance’ section.