As a property investor, the allure of older buildings can be captivating. Their unique architectural charm, historical significance, and attractive purchasing prices create an appealing investment proposition. However, they often come with a hidden menace – asbestos. Asbestos was widely used in the UK construction industry until its ban in 1999 due to its serious health implications. As such, many older buildings contain this dangerous material and pose a significant health risk. In this article, we’ll explore how property investors can navigate the potential pitfalls of asbestos in older UK buildings.
Understanding the Risk of Asbestos
Before delving into the strategies for dealing with asbestos, it’s crucial to understand the inherent risk associated with this material. Asbestos is a group of naturally occurring minerals used extensively in the past due to its unique properties such as resistance to heat, electricity, and corrosion.
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When materials containing asbestos are disturbed or damaged, they release microscopic fibres into the air. If inhaled, these fibres can cause serious long-term health conditions including lung cancer, mesothelioma and asbestosis. The World Health Organization estimates that 100,000 people die each year from asbestos-related diseases.
Properties built or renovated before 2000 in the UK are likely to contain asbestos. Typical locations include roofs, pipe lagging, insulation boards, floor tiles, and textured coatings. Understanding the potential presence and location of asbestos is the first step towards mitigating its risks.
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The Importance of Asbestos Surveys
Once you are aware of the dangers asbestos poses, the next crucial step is to carry out an asbestos survey. An asbestos survey is a detailed inspection performed on a property to determine the presence, type, and condition of any asbestos-containing materials (ACMs). It is a critical part of due diligence in property investments, and particularly vital for older buildings.
Two types of asbestos surveys are typically conducted: a management survey, which identifies asbestos in a property and assesses its condition, and a refurbishment and demolition survey, which is more intrusive and is required before any construction or demolition work is undertaken.
The survey will provide detailed information on the location, amount, type, and condition of asbestos in the building. This report will help in formulating an appropriate asbestos management plan and ensuring the safety of occupants and workers alike.
Managing Asbestos in Properties
After identifying the presence and condition of asbestos, the next step is managing it. This involves either leaving it undisturbed if it’s in good condition or removing it if it poses a risk to health.
If asbestos is in a good state and unlikely to be disturbed, it can be safely managed without removal. This involves regular inspections to monitor its condition and ensuring no disturbance occurs during building works or routine maintenance.
However, if asbestos is in poor condition or prone to disturbance, removal is the safest option. Asbestos removal is a highly specialised task that requires professional contractors with the appropriate safety equipment and disposal methods. It’s critical to ensure that the appointed contractor complies with all legal and safety regulations, as improper removal can lead to severe health hazards and legal penalties.
Factors Affecting Mortgage Approval
Asbestos in a property can also pose challenges when seeking a mortgage. Most lenders will require an asbestos survey report before approving a mortgage application, particularly for older buildings.
If asbestos is found to be present and in poor condition, it will likely affect the mortgage approval. Lenders may require evidence of removal and safe disposal of asbestos before granting a loan.
Therefore, factoring the potential cost and time of asbestos surveys and removal in your investment calculations is crucial.
Incorporating Asbestos Management into Property Investment Strategy
Finally, asbestos management should be an integral part of your property investment strategy. This entails incorporating the potential costs and timeframes for asbestos surveys and removal into your investment calculations.
Consider also possible future liabilities such as health claims from tenants or workers who might become ill due to asbestos exposure. Having a comprehensive insurance policy that covers such eventualities is advisable.
Remember, while the presence of asbestos can add complexity to your investment, it doesn’t necessarily make a property a bad investment. It simply requires a diligent approach to risk assessment and management. By understanding the risks, conducting thorough surveys, and effectively managing or removing asbestos, you can confidently invest in older UK properties, knowing you’ve navigated one of the main potential pitfalls.
The Cost and Legal Implications of Asbestos Removal
The presence of asbestos in a property can lead to significant costs and legal complications. The cost of an asbestos survey alone can range between £200 to £400 for a residential property, depending on the size, and up to £2,000 for larger commercial properties. However, this is just the initial expense. If asbestos materials are found, the cost of professional removal can vary significantly depending on the extent of the problem. It can range from several hundred to several thousands of pounds.
In addition to this, there are legal obligations that property owners must adhere to when dealing with asbestos. In the UK, the Control of Asbestos Regulations 2012 dictates that anyone who owns, occupies, manages or has responsibilities for properties that may contain asbestos has a ‘duty to manage’ the risk from this material. Failure to adhere to these regulations can result in hefty fines and legal penalties.
On the other hand, if managed properly, the existence of asbestos in a property could be turned into an advantage. If an investor is aware of the presence of asbestos and has a plan for its professional removal or management, there may be the opportunity to negotiate a lower purchase price, reflecting the cost and risk involved.
Moreover, properties that have been professionally cleared of asbestos might fetch higher rental or resale values. This is due to potential tenants or buyers not having to bear the risk and expense of asbestos surveys, removal, and potential health hazards.
The Role of Mortgage Brokers and Insurers in Asbestos Management
Engaging the services of a mortgage broker can be beneficial when buying a property with asbestos. A knowledgeable broker will be aware of the lenders who are more understanding towards properties with asbestos. They can guide you to these lenders and help you navigate the mortgage application process, thus increasing your chances of approval.
Also, a mortgage broker will have a detailed understanding of the lender’s valuation process, and their requirements for an asbestos report. They can help you understand whether a management survey will be sufficient or if a more detailed refurbishment and demolition survey will be required. This can help you avoid unnecessary costs and delays during the mortgage application process.
In addition to mortgage brokers, insurers also play a crucial role in asbestos management. If you’re planning to rent out a property with asbestos, it’s essential to have landlord insurance in place that covers asbestos-related claims. Be aware that some insurers might increase premiums or even refuse coverage for properties with asbestos, so it’s important to shop around.
Conclusion
Investing in older UK buildings presents a unique set of challenges, not least those posed by the potential presence of asbestos. However, by understanding the risks and legal implications associated with asbestos, and by implementing a sound asbestos management strategy, these challenges can be addressed.
This strategy should include conducting comprehensive asbestos surveys, hiring professional contractors for asbestos removal where necessary, and engaging with mortgage brokers and insurers who understand the complexities of asbestos management.
Remember, the existence of asbestos does not automatically render a property a bad investment. The key is to approach the situation with due diligence, understanding the risks and costs involved, and ensuring you have a plan in place to manage or remove the asbestos safely.
By doing so, property investors can confidently navigate the potential pitfalls of asbestos and make informed decisions that maximise the value of their investments while prioritising health and safety. Asbestos management may seem intimidating, but with the right knowledge and approach, it can be effectively handled to protect both your investment and the health of those occupying the property.
