Borrowing money against your home in retirement was once a cumbersome process, but this has become easier over the years, thanks to lenders becoming more relaxed in criteria when offering home equity release plans.
There are many benefits to releasing equity from your home, which are commonly written about such as home improvements, holidays etc, however one area not discussed very often is cases where homeowners are ‘unable’ to obtain an equity release mortgage.
This article discusses a growing issue of certain properties ineligibility to meet lenders underwriting criteria. Occasionally, we do come across unusual reasons where lending with equity release has difficulties.
Let’s discuss one growing problem; Japanese Knotweed.
First brought to Britain in 1840 by Dutch botanist Philipp Von Siebold, Fallopia Japonica (Japanese Knotweed) was an unassuming plant that grew in the unyielding soil on the sides of volcanoes.
Within a few years, the bamboo-like plant with tiny cream flowers was hugely popular. It thrived in the UK’s gentle climate with unabated growth and people shared cuttings of the plant and was once considered the pinnacle of any garden.
The striking plant is now considered a menace. Its roots bury 3m deep and stretch out 7m affecting foundations and drainage systems and pillaging the soil, killing nearby plants. Removing it is difficult. Even the tiniest remaining trace of root will regrow. Because of the damage it can cause, it is illegal to grow the plant in the wild and you can be prosecuted if you allow the plant to spread from your property to another.
Unsurprisingly, these Japanese Knotweed dangers affect house prices. In East Cornwall in the 1930s, £100 was lost in property value. Today, it wipes thousands off property prices. Insurance policies won’t pay out if the weed is discovered on the property and equity release mortgage companies fear Japanese Knotweed dangers, too.
Where is Japanese Knotweed Situated in the UK?
From an equity release perspective, Japanese Knotweed seems to have a particular concentration in South Wales, but additionally we have evidence of it affecting properties in the Midlands, London, Scotland's central area and parts of Cornwall.
Therefore, over 55’s who are looking towards releasing equity from their property, or even those looking to buy a new home should now take extra measures to ensure this pest isn’t prevalent. In fact there is now a phone app which helps to indicate whether Japanese Knotweed has been found nearby, or at least reported - Get Plant Tracker app for iOS phones here.
The Japanese Knotweed issue costs the UK economy over £166 million per year for treatment of the condition and the effect it has on properties receiving down valuations. We are now starting to see this occur with equity release too and where Japanese Knotweed is notified by the valuation officer, the lender then has to make an informed decision.
This is a serious blight to any property, as Japanese Knotweed can penetrate concrete and tarmac, with roots delving down to depths of upto 3 metres. The problem is that the UK has no natural predators to control the weed. Hence, it can grow at staggering rates of 10-20cm a day, which will drown out & suffocate surrounding flora as they drown out any light.
What Does Japanese Knotweed Look Like?
- Dense thickets of green, purple-speckled, bamboo-like stems up to three metres tall
- Heart or shield-shaped leaves
- Alternate leafing pattern along stems
- Completely hollow stems that can be snapped easily
- Tiny creamy white flowers August to October
How Can I get Rid of Japanese Knotweed?
If you find the offending plant growing in your garden, speak with a trained specialist who can eradicate it safely. Your property and your lender will thank you for it.
And while it does not produce seeds it can grow from minuscule fragments of rhizomes – the underground network of stems and roots, therefore thorough cleansing is necessary.
- One option is digging up every trace of the Japanese Knotweed. Beware though as any missed pieces, and there only needs to be 0.8g of root left behind, for a new plant to grow again. Once dug up the remains of the plant must be disposed of in a controlled manner. Under the Environmental Protection Act 1990 Japanese Knotweed can only be disposed of at a licensed landfill site.
- Alternatively, there is the option to dry the plant out and incinerate the plant to be absolutely sure.
- Although, the UK had no natural predators to the weed, in 2010, a Japanese bug called aphalara itadori, was introduced to the UK and this bug actually feasts on the Japanese knotwee Further research is being carried out to check whether longer term this is a solution to the problem.
- Chemicals are now available containing glyphosates which are being used to control the spread. However, these do not offer an immediate solution as it can take up to five years of such treatment to eradicate using this method of treatment & cost a significant amount of money, starting at about £2,500, and going upwards to £30,000 for a major infestation.
Which Equity Release Lenders Accept Japanese Knotweed?
Japanese Knotweed is now on the radar of most equity release companies and is obviously a concern as we have already seen many properties valuations being blighted by this weed. There also needs to be an understanding of the structural damage it can do to the property including worryingly, the foundations. With equity release providers using the property as security, this is an obvious concern about the structural nature of their security too.
For this reason, many lenders will take a tough stance on Japanese Knotweed and will judge any application by the surveyor’s comments on his valuation report. This will boil down to the severity of the infestation and the proximity of the weed to the house. One equity release lender will actually accept Japanese Knotweed as long as it isn’t within 7 metres of the vicinity of the property. Hence, eligibility will be determined on a case by case basis.
As Equity Release Supermarket has access to the whole of the market, we can act on any property owner’s behalf, to establish whether the presence of Japanese Knotweed would be acceptable for equity release purposes with any lender.
Alternatively, contact our team of equity release specialists on Freephone 0800 802 1051 to discuss whether you qualify for an equity release scheme where Japanese Knotweed is located near to you.