How to Evaluate the Risk of Subsidence in Potential Real Estate Investments?

April 5, 2024

When it comes to real estate investment, you are not just buying a property, you are securing a substantial financial asset. It is thus critical to identify any potential risks that might significantly decrease the value of the property. One such risk that can often be overlooked is subsidence. Subsidence could potentially lead to structural damages and lower the value of your investment dramatically. Therefore, it is crucial to understand what subsidence is, how to identify its signs, and what the implications are for your insurance and mortgage.

Understanding Subsidence

Subsidence is a term used in the property and insurance industry to describe the sinking or downward settling of a building’s foundation. This often happens when the ground beneath the property becomes unstable. The main cause of this instability is the changes in the moisture content of the soil. Droughts, for instance, can cause the soil to dry out and shrink, which in turn leads to movement in the ground.

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There are certain areas more prone to subsidence due to the type of soil found there. Clay soils, for instance, are particularly susceptible to changes in moisture content, making properties situated in such areas at higher risk of subsidence.

Identifying Risks of Subsidence

Typically, subsidence is indicated by cracks appearing in the walls, floors, or ceilings of the property. These cracks tend to be thicker at the top than the bottom, and usually appear suddenly. They are most commonly found around windows and doors, where the structure of the house is weaker.

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However, not all cracks are a sign of subsidence. Small cracks might appear over time due to natural ageing of the house or minor settlement. Therefore, a professional surveyor should be consulted to adequately diagnose if the cracks are a result of subsidence or not.

Another way to identify potential risk of subsidence is to investigate the history of the area where the property is located. If there have been prior cases of subsidence in the area, it raises the probability that the property you are considering might also be at risk.

Impact on Insurance and Mortgage

Subsidence can have a significant impact on both your property insurance and mortgage. From the insurance perspective, it is seen as a high-risk issue. If your property has a history of subsidence, it might increase the cost of your premiums. In some cases, it might even lead to denial of coverage. Therefore, it is important to disclose any known subsidence issues to the insurance company upfront.

From the mortgage perspective, lenders might be hesitant to provide a mortgage for a property with a history of subsidence. The potential risk of structural damage and the associated repair costs might make the property less appealing as a security for the loan.

Evaluating Subsidence Risk before Investing

Before investing in a property, it is crucial to thoroughly evaluate the risk of subsidence. This can be done by carrying out a detailed survey of the property and the ground it sits on. A professional surveyor can help identify signs of subsidence and assess the stability of the ground.

Another way to evaluate the risk is by researching the area. Local councils or environmental agencies often have data on areas prone to subsidence. This information can help you make an informed decision about your investment.

Additionally, you can check the property’s history for any past claims related to subsidence. This can be done by asking the current owner or checking with the insurance company that covers the property.

In conclusion, while subsidence can significantly impact the value of your property investment, a careful assessment can help mitigate this risk. By understanding what subsidence is, how to identify it, and its impact on insurance and mortgage, you can make a more informed decision about your real estate investment.

Precautions to Mitigate Subsidence Risk

Purchasing a property with a history of subsidence can be a daunting prospect, but taking the right precautions could reduce the associated risks. Firstly, hire a structural engineer to conduct a thorough inspection of the property. These specialists have the expertise to identify minor subsidence, which could escalate into a serious problem. They will look for subsidence cracks in the walls, floors, and ceilings, which are often thicker at the top.

Also, examine the exterior of the building. Signs of land subsidence such as leaning walls, uneven floors, or a roofline that isn’t straight can also be warning signals. A structural engineer will check for these during their inspection, but it’s also beneficial to be aware of these signs yourself.

In addition, ensure that the property has a solid insurance plan. Subsidence issues can be costly to fix, and having the right insurance can save you significant financial stress. Before buying a house, check the insurance conditions thoroughly. Remember, it’s crucial to disclose any known subsidence issues to the insurance company. Failing to do so might lead to denial of coverage or increased premiums.

Lastly, be aware of the property’s history. An investigation into past claims related to subsidence can provide vital insights. The current owner or the insurance company that covers the property should be able to provide this information.


Investing in real estate is a significant financial commitment. Evaluating potential risks such as subsidence is therefore essential. Understanding the signs of subsidence, its impact on insurance and mortgages, and how to mitigate its effects can help safeguard your investment.

By employing the services of a professional structural engineer, examining the exterior of the property, ensuring it is properly insured, and researching its history, you can make a well-informed decision. This will not only minimize the risk of encountering unforeseen subsidence issues but also save you from financial stress in the future.

Subsidence is a risk that should not be overlooked when investing in real estate. However, with careful planning, research, and professional input, this risk can be managed. By following these steps, you can be confident in your decision to invest in a property, regardless of its susceptibility to subsidence. Remember, making an informed decision is the key to a successful real estate investment.