MRT1 LO9: Property defects, lending decisions and new-home guarantees

A lender's security is only as good as the building. If the valuer or surveyor finds a defect, the lender may lend less, hold back part of the loan, ask for specialist reports or decline altogether. LO9 of the CeMAP® MRT1 unit asks you to recognise the main defects, how they affect the lending decision, what remedies are available, and how new homes are protected.

1. The main property defects (AC9.1)

Structural movement

Defect	What happens	Typical signs
Subsidence	The ground beneath the building sinks or moves down, taking the foundations with it. Often caused by clay soils shrinking in dry weather, tree roots drawing out moisture, leaking drains or old mine workings.	Diagonal cracks, wider at the top, near doors and windows; sticking doors and windows
Heave	The ground swells upward, usually when clay soil takes up water, for example after a large tree is removed	Cracks, lifted floors, upward movement
Landslip	Ground moves down a slope	Movement on sloping sites
Settlement	Normal early movement as a new building beds down; usually not progressive	Minor cracking that does not worsen

The key question for a lender is whether movement is historic and stable or progressive. Progressive movement usually needs a structural engineer's report and possibly monitoring.

Damp

Type	Cause
Rising damp	Ground moisture rising through walls where the damp-proof course is missing, failed or bridged
Penetrating damp	Water entering through defective roofs, gutters, walls, windows or pointing
Condensation	Moisture from cooking, washing and drying clothes forming on cold surfaces, often with mould; linked to poor ventilation and heating

Timber defects

• Wet rot: decay of timber that stays wet, usually confined to the damp area.
• Dry rot: a fungus that can spread through masonry into sound timber well away from the original damp. It is serious and expensive.
• Woodworm: beetle larvae boring through timber; active infestation needs treatment.

Other common defects

• Roof problems: slipped or missing tiles, sagging, roof spread where the roof pushes walls outward.
• Wall tie failure in cavity walls: corroded metal ties expand and crack mortar joints.
• Japanese knotweed: an invasive plant whose roots (rhizomes) spread quickly. Government guidance says a new plant can grow from rhizome pieces as small as 1cm, treatment usually takes at least three years, and owners must stop it spreading off their land. There is no legal duty to remove it unless it causes a nuisance, but causing it to spread into the wild can lead to prosecution. Contaminated soil may be controlled waste.
• Non-standard construction: for example concrete, steel or timber frame systems. Some post-war prefabricated reinforced concrete houses were officially designated as defective. Many lenders restrict lending on non-standard construction.
• Building safety issues in flats, such as unsafe external cladding.
• Services: old wiring, unsafe gas appliances, failing drains.
• Alterations without consent: extensions or structural work without planning permission or building regulations approval.