Japanese Knotweed on the Development Is Stopping Buyers Getting Mortgages

A newly built home might seem one of the least likely properties to be affected by Japanese knotweed. The buildings are new, the development has recently been planned and the land has usually passed through the hands of a professional developer.

But what happens when Japanese knotweed is found elsewhere on the development and a buyer’s mortgage lender refuses to proceed?

That question emerged in a MoneySavingExpert forum discussion about mortgages and Japanese knotweed. One contributor described reserving a new-build plot and later selecting another property. The person who subsequently reserved the original plot reportedly had to withdraw after knotweed was found on the site and the available Help to Buy lenders would not lend.

The discussion dates from 2015 and should not be treated as evidence of what any named lender would decide today. It does, however, expose a problem that can reappear years later when one of the completed homes is sold.

The knotweed may not be in the seller’s garden

A buyer’s concern may begin with knotweed growing inside the property boundary. On a development, however, the relevant questions can extend beyond an individual plot.

The plant might be found:

• on another residential plot;
• within a communal landscaped area;
• on retained land still owned by the developer;
• beside an access road, drainage feature or boundary;
• on neighbouring land outside the development; or
• in an area previously treated during the construction process.

The precise location matters. Knotweed elsewhere on an estate should not automatically be treated as though it is growing underneath every home. Equally, a clear garden does not necessarily resolve the problem if rhizomes, continuing growth or responsibility for treatment extend across the wider site.

The buyer’s surveyor, valuer and lender may want reliable evidence about the location, extent, treatment history and likelihood of recurrence.

Why would knotweed elsewhere affect a mortgage?

A mortgage lender is concerned with the property offered as security. That includes its present value and the lender’s ability to sell it if possession ever becomes necessary.

The lender or its valuer may therefore consider:

• how close the knotweed is to the property or its boundary;
• whether the affected land provides access or services to the home;
• whether growth has spread or could spread between plots;
• whether a specialist survey has been completed;
• whether a management or treatment plan covers the entire affected area;
• whether the treatment contractor is suitably qualified;
• whether an insurance-backed guarantee exists;
• whether that guarantee benefits future owners and mortgage lenders; and
• who will remain responsible for monitoring and treatment.

A lender may also distinguish between knotweed which is currently visible, historic growth which has been treated and a suspected risk which has not yet been professionally assessed.

The result is not always a simple choice between lending and refusing to lend. A lender might proceed subject to a satisfactory report, treatment plan, guarantee or further approval from its valuer. Another lender may reach a different decision on the same evidence.

But the property was bought new

The description “new build” relates to the age of the home. It does not mean the land itself has no history.

Before construction, the site may have been industrial land, railway land, commercial premises, gardens, open land or part of a larger estate. Japanese knotweed could have been present before the developer acquired the site.

Is Japanese knotweed now affecting your sale or remortgage?

If the problem only became apparent when you tried to sell or change lender, read our guide to Japanese knotweed stopping a house sale. It explains which records from the original purchase may now need to be examined.

Where the question concerns what the original mortgage lender required, our analysis of historical Japanese knotweed lender requirements explains why the lender and completion date matter.

Development works may also disturb the ground. Because knotweed can regenerate from fragments of rhizome, excavation and movement of soil require careful professional management.

Where knotweed was identified before or during construction, relevant evidence may include:

• the developer’s environmental and ecological surveys;
• a Japanese knotweed management plan;
• site plans showing the affected area;
• records of excavation, treatment or disposal;
• monitoring and inspection reports;
• planning documents or remediation conditions;
• specialist contractor certificates;
• insurance-backed guarantees; and
• information supplied to the original purchaser and lender.

The absence of visible growth today does not necessarily prove that no previous treatment was undertaken. Conversely, a general statement that the development was treated may not establish that the seller’s plot, communal areas and adjoining land are all protected by the same plan or guarantee.

The seller may only discover the problem years later

A homeowner may live in the property without any obvious difficulty. The problem can surface when they decide to move.

A buyer’s surveyor might notice suspicious growth elsewhere on the development. The buyer’s solicitor may find a reference to treatment in the original planning or estate documents. A valuer may ask for a specialist report before confirming that the property is suitable security.

The buyer may then be unable or unwilling to proceed until the position is clarified.

For the seller, that can produce an understandable response:

My own lender accepted the property when it was brand new. Why is my buyer’s lender refusing it now?

The earlier mortgage does not provide a complete answer. The circumstances may have changed, new growth may have appeared or the present evidence may be incomplete. The buyer may also be using a different lender with different requirements.

Even the same lender may have changed its Japanese knotweed instructions since the original purchase.

What did the original lender require?

Where the owner is questioning what happened when they bought, the current lender handbook should not be applied retrospectively.

The historical investigation should identify:

• the original mortgage lender;
• the date of the purchase;
• the lender requirements applying at that time;
• what the valuation or survey recorded;
• what the developer disclosed;
• what enquiries the conveyancer raised;
• whether the lender was told about the knotweed;
• what treatment evidence or guarantee was obtained; and
• what the purchaser was advised about future saleability.

The Lexsure Lender Archive Japanese knotweed page provides access to dated lender-specific Part 2 records. This can help establish what the purchaser’s lender recorded in its requirements on the relevant date.

An archive record does not establish that anyone acted properly or negligently. It records the lender-specific Part 2 wording. That must be considered alongside the general instructions, mortgage offer, valuation, transaction correspondence and conveyancing file.

The fact that a lender made an advance is not proof that it was told about the knotweed. It is also not proof that the lender would have refused had the matter been reported. The file evidence is essential.

What should a seller do now?

The immediate objective is usually to prevent the sale from collapsing. The seller should establish exactly what concern has been raised rather than responding to a general reference to knotweed.

The following questions may help:

1. Where is the suspected knotweed? Identify the land and its owner.
2. Has it been professionally confirmed? A suspicion or photograph is not necessarily a specialist diagnosis.
3. Is there a development-wide treatment history? Ask the developer, management company or estate manager for the original records.
4. Does an existing guarantee apply? Check the covered land, duration, transfer provisions and insurer.
5. What exactly does the buyer’s lender require? The buyer’s conveyancer may need to obtain a clear response rather than speculate.
6. Can the evidence be supplemented? A current specialist inspection or revised management plan may resolve an evidential gap.
7. What is recorded on the original purchase file? Earlier searches, enquiries, guarantees and lender correspondence may remain relevant.

The proposed solution should be tested against the buyer’s lender requirements. Spending money on a report or treatment plan which does not cover the lender’s concern may simply cause further delay.

A treatment plan must cover the actual problem

The existence of a treatment plan can be reassuring, but its scope needs to be understood.

A plan limited to the seller’s garden may not resolve growth on land owned by the management company. A plan relating to a communal area may not cover an individual plot. A guarantee may be valid only if inspections continue or particular conditions are observed.

The seller should also establish whether the benefit of any guarantee can pass to the buyer and whether the buyer’s lender will recognise it.

A lender may want its valuer to consider the specialist evidence. It should not be assumed that supplying a treatment plan to the conveyancers will automatically result in mortgage approval.

What should the original buyer have been told?

Not every later knotweed problem indicates that something went wrong during the purchase. The plant may have appeared or spread after completion. Professional standards and lender requirements may also have changed.

Nevertheless, where knotweed was known or suspected during development, the purchaser may reasonably ask whether they were told:

• that knotweed had been identified on the site;
• where it was located;
• what remediation had been undertaken;
• whether further monitoring was required;
• who was responsible for continuing treatment;
• what protection the guarantee provided;
• whether the mortgage lender had been informed; and
• what the issue could mean when the property was sold.

A reference buried in a bundle of documents is not necessarily the same as advice which enables a buyer to understand the decision they are making.

Our earlier article, Japanese Knotweed and the Evolving Mortgage Landscape, explains why the relevant lender and transaction date matter when examining an earlier purchase.

The separate article Japanese Knotweed: Why Buyers Walk Away considers the effect that uncertainty, mortgage restrictions and consumer concern can have on marketability.

Earlier contemporary coverage also shows how lender requirements were developing, including Japanese Knotweed: Knot Disclosing to Lenders and Lenders Put Conveyancers in a Stranglehold over Japanese Knotweed.

A new home can still carry an old land problem

The lesson is not that every home on a development becomes unmortgageable when Japanese knotweed is found nearby. The location, current condition, treatment arrangements, professional evidence and lender requirements all matter.

The more important lesson is that a newly built property should not be confused with land that has no history.

When knotweed stops or delays a later sale, the seller may need to examine two different questions. First, what evidence will satisfy the buyer and their lender now? Second, what was known, disclosed and explained when the seller originally bought?

If the answer to the second question is unclear, the development records, original conveyancing file and historical lender instructions provide the proper starting point.

This article provides general information and does not constitute legal advice. The forum experience described above is an individual historical account and is not evidence of any lender’s current policy. A mortgage decision depends on the particular property, evidence, valuation and lender requirements.