10 things that cause property values to decrease & how to fix them
There are many factors which affect property prices in general, which are beyond our control. Supply and demand, government schemes such as the Stamp Duty holiday, wider economic downturns, local sold prices of similar properties, and even the time of year. (Higher in summer and lower in winter).
We watch the trends and share our knowledge and experience in our monthly reports, so you can be prepared for the fluctuations in the property market as a whole. We discuss the 10 things that cause property values to decrease which are within your control below, so you can:
- Make an informed decision to purchase a property which is more likely to retain or increase its worth
- Avoid making common changes to the property, which can lower its price
- Solve these problems where possible
Negotiating a price reduction is a fine art. Read more in How to successfully negotiate the house price
How much will it devalue my house?
Flood | Homes in a high flood-risk area are typically worth less because of the premium for the annual insurance and the risk of future flood damage. | £10,000 to £30,000 |
Dated Decor | The effect on the property's price will be lower for the cost of simply decorating, but may be higher than this estimate if you have to replace a whole kitchen or bathroom. Ask your estate agent for an estimate value if you do and don't update the decor. | £1,000 to £3,000 |
Energy & Infrastructure | The decrease in the properties value could be considerable as some buyers see wind and solar farms, railway infrastructure, etc. as an "eye sore". | £5000 to £15,000 |
Contaminated land | The reduction in the house price is difficult to quantify as some cases cannot be remedied at all. It is important not to buy a house on contaminated land, as the local authority may force the current owner to remedy the problem if the party who caused or knowingly permitted the contamination cannot be found. | £20,000+ |
Infestation | Get quotes from local infestation removers and use this to make any reduction precise. If an infestation has compromised the integrity of the house or existing footing then the cost may be much higher. | Under £2,000 |
Pets | Estate agents are inclined to reduce prices by up to 5% as buyers are put off by pet odour. This is incorrect as a good deep clean is relatively affordable. | £300 |
Subsidence | If your property requires underpinning, this can devalue the property by tens of thousands. Check to see if the seller's insurance covers the repairs as a new buyer won't be able to make a claim for a pre-existing defect. | £40,000+ |
Building Defects | Like other defects, you should get a quote for the necessary works to help you negotiate a fair price reduction before you exchange contracts. | £3,000 to £15,000 |
Building Regs | The challenge is that you don't know if the building works require fixing which could mean pulling down plaster board to inspect load bearing walls and electrical sockets. | £5,000+ |
Neighbourhood | Whilst living in a neighbourhood that is close to a desirable school may add thousands to the asking, high crime in the surrounding area could devalue the market price by thousands. | £10,000+ |
Kerb Appeal | Make sure the window frames, roof, front garden and front door look tidy and appealing. If a beautiful exterior can up the price and sell your house fast, a scruffy one will decrease it. Read more on kerb appeal for our top tips on making the best first impression. | 7% |
What causes property values to decrease?
- 1
Flood Risk
Flood risk is becoming a rising concern (pardon the pun) with the environmental impact of global warming. Many homes in flood plains across the UK are affected by steep declines in house prices, with certain affected houses in Carlisle, falling by 40% in just one month, back in 2015. This often makes homeowners in affected areas worry that they will never be able to sell their properties. However, you can still sell if your house has flooded in the past.
Often, in the case of flash flooding, prices bounce back, but it can take years. In areas where sea levels are due to rise, however, this decrease in house prices might not recover at all. This interactive map from Climate Central shows their projected flood level in 2050.
The solution
Aside from doing all we can to slow climate change, the solution is to buy a house that is not at risk of flooding. Extra cautious buyers may want to avoid any locations flagged for future sea-flooding. Any potential buyer can get a fast and affordable Flood Risk Report, to ascertain the risk here and now.
This flood risk report is based on historical data from the Environment Agency in England and Natural Resources Wales, in Wales. It gives information on overall flood risk, including river, sea, surface and groundwater, as well as historic flooding and more. £64 INC VAT. Delivered within 2 hours*.
If flood risk is identified, that doesn't necessarily mean the property is a no-go. If your report states that further action is required, we can arrange an in-depth flood risk appraisal for £264 INC VAT.
- 2
Dated Decor
You might be reluctant to pay to decorate a house you're moving out of, but it can be really cost-effective to give your home a spruce-up before selling. If the walls, fittings and furniture look old, your less likely to get the higher offer you're looking for.
The solution
Renovate the house where it will make the most impact, particularly in kitchens and bathrooms. When choosing your materials and colour palette, aim for timeless and neutral. If you really can't afford to do the work, even a thorough declutter and a lick of white paint will brighten the place up, make it appear bigger, and help it sell for a better price.
- 3
Energy & infrastructure developments
Energy and infrastructure include a range of developments which could cause property values to decrease. For example:
- Fracking
- Wind or solar farms
- High speed or Crossrail
- Pipelines
Some of these may actually increase property value, for example, it might fall while while construction is underway due to noise and pollution, but then increase once completed due to being a convenient commuter location. However, ground works which may affect subsidence risk, such as fracking, may drag house prices down longer-term.
The solution
Check before you buy. The energy and infrastructure report identifies any identified impact Get a quick and affordable Energy and Infrastructure report for a fixed fee of £42 Inc VAT. Delivered within 2 hours*.
- 4
Contaminated land
Contaminated land is a factor which more often affects properties built on ex-industrial sites. Contamination includes:
- heavy metals, such as arsenic, cadmium and lead,
- oils and tars
- chemical substances and preparations including solvents and gases
- asbestos or radioactive substances
These substances, at high enough levels, can cause serious harm to people & animals, as well as significant pollution to surface and ground water. This risk and the related cost of decontaminating the land can cause affected homes to decrease in value.
The solution
If there is new contamination coming from a neighbouring plot, contact your local authority immediately. They can force the person who caused or allowed the contamination to remedy the problem at their own expense, and provide further advice.
Order an environmental report for a fixed fee of £69 Inc VAT. This report includes several factors in one:
- Contaminated Land;
- Flood;
- Energy and Infrastructure;
- Ground Stability;
- Radon; and
- Other Influential Factors.
What if a risk is identified?
You can purchase Residential Contaminated Land Indemnity Insurance, for ease, which will cover the cost of complying with a remediation notice. However, these policies can range upwards of £180. If a risk is identified, it is often cheaper to contact the environmental health agency and/or the local council to confirm or deny actual contamination.
- 5
Infestation
Rodents, rot, woodworm, termites and Japanese Knotweed are just a few examples on infestation which can the value down as they pose a risk to the sanity and structural safety of the building.
The solution
One mouse shouldn't put you off, but if there are 100 more hiding in the walls, you could be looking at a costly expense. In the worst case scenario, rodents can chew through wires and cause an electrical fire, burning your house to the ground. This risk could bring the value down and put buyers off altogether. Whether you book a level 2 or a level 3 RICS survey before your purchase, your surveyor will be on the lookout for warning signs of infestation.
What if a risk is identified?
If there are signs of infestation in a house you own, or are looking to buy, you'll need to get a specialist in as soon as possible. The longer you bury your head in the sand, the worse an infestation can take hold, with serious consequences for the value of the property (not to mention your safety)!
- 6
Pets
Pets cause wear and tear. Scratch marks, muddy pawprints, and particularly smelly carpets have been known to knock the price down by around 5%.
Many pet owners become immune to their own pet's smell and if you're an animal lover, its unlikely to offend you. However, we rely on our sense of smell for many unconscious decisions and if a buyer can smell your dog, it can create a real mental block to imagining themselves living in your space. If they still love the place, concerns over expensive deep cleaning or even reflooring can bring their offer down.
The solution
Be sure to rub down and refinish any scratch marks on the woodwork and scrub or repaint muddy shake splatters on the walls. Most importantly, neutralise any odours before your valuation and viewings. Shampooing your carpets and soft furnishings is a worthwhile expense. It may help to ask a friend who lives in a pet-free home to give your house an honest sniff test.
You'll also want to fill in any digging-holes in the outside space, keep the pets out of the house, and put pet beds, bowls and toys out of site during viewings.
- 7
Subsidence
Man-made and environmental factors can cause soil shrinkage. Your first warning of potential risk will be either in the ground stability section of your environmental search or in the form of cracks or sloping floors appearing. This can be a sneaky one, as even a really solidly built house is at risk if the ground underneath it could subside. Subsidence is likely to decrease the property's value, and in the worst cases, the building could be condemned and un-mortgageable.
The solution
In many cases of subsidence, the solution is as simple as cutting down a tree, whose roots are interfering with the foundations. In others, the building may need underpinning. We recommend all buyers get a subsidence report and a RICS home survey before exchanging contracts. Where a risk is identified, our structural engineers can carry out a specialist subsidence survey to determine the extent of the problem.
If the existing foundations are severely compromised, there may be underpinning required. This is expensive structural work; expect a negotiation process to reduce the asking price by the amount your potential buyers will have to spend to fix the problem. If you can't fix the problem yourself, you may have to accept a reduced offer from a cash buyer, as lenders are less likely to secure a loan on a subsiding home.
Does underpinning devalue a house?
An underpinned house should not result in a lower offer so long as the structure is now sound. An underpinned house would attract higher offers than a house in need of underpinning, but perhaps less than a house with no subsidence issues at all.
- 8
Building defects
As well as the specific issues listed above, there are other building defects which cause property values to decrease. For example:
- Rising damp
- rotten windows & doors or frames
- Leaks
- Worn or unsafe wiring
- Faulty drainpipes
- Missing, damaged or insufficient insulation
The longer that issues like these are left, the more they can decrease value. If you've not moved in a long time, you might not be familiar with the EPC (energy performance certificate) required for all sales. Poor insulation and damaged doors, windows or roofs can affect the energy efficiency rating which will bring the value of your house down further.
The solution
If you're buying, these defects will be checked for in your homebuyers' report or building survey. We strongly recommend that you get one of these as well as your lender's valuation, as they serve different purposes.
If you're worried about defects like these in a house you already own, make sure you ventilate and maintain rooms, roofs and woodwork and get problems mended properly before they escalate, which brings us on to the next point:
- 9
Building works
Building works carried out without planning permission or building control sign off, can cause property values to decrease. It is easy for homeowners to assume that any 'improvement' would be a boost to the value. Don't fall for this well-intentioned mistake; always check if the work you are doing requires:
These requirements give any prospective buyer assurances that the work is of an acceptable quality and that they won't be ordered to undo it by the council. If they are missing this can devalue the home due to the potential cost to the buyer if they have to repair shoddy building work or remedy work which did not meet planning codes.
The solution
Step one is to get planning permission, if required, and to employ a member of the competent persons scheme to undertake any work which is covered by building regulations - they will provide a certificate of compliance when their work is completed. If it is too late for that, you may be able to get the work retrospectively signed-off with a letter of regularisation.
Step two is for your buyer to purchase indemnity insurance through their solicitor, which is relatively affordable and will offer some protection against these potential costs. However, the seller is usually expected to knock this cost off of the price. In some cases, the buyer may need to get a structural engineer in to assess the integrity of the building and may seek to negotiate this expense off of the value of the property also.
What building works cause property values to decrease?
Knocking a wall through to create an open plan kitchen/dining room can increase value as part of a larger renovation creating a much higher spec family home. However, in many cases knocking through two rooms can actually decrease the value. Where one room served as a smallish kitchen/diner room, buyers (especially buy to let landlords) will see the second as a potential extra bedroom, lost.
- 10
Neighbourhood
When a neighbourhood is suffering socially and economically, the value of property decreases. Warning signs of localised economic downturn include:
- Closure of the local school, or poor ratings
- Closure of public services such as libraries, pools, & municipal facilities
- Diversion of public transport, for example, some bus services are cut
- Rising crime rates
- Foreclosures
The solution
These factors are largely external and beyond our individual control. You could get involved in community projects, such as neighbourhood watch, community gardens, or campaigning to keep public services running. Or, you could spot the signs early, cut your losses and move to a more up-and-coming neighbourhood. The problem with the latter is that the more people in one neighbourhood who do this, the further the property prices can fall.
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
