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Spray foam mortgage warning issued by Nationwide and brokers

As the cost of living crisis deepens and energy prices continue to soar, many homeowners are installing spray foam insulation to help keep heating bills down. However, for many this is leaving them with an unmortgageable property.

Nationwide has released a warning that it is seeing a sharp increase in the number of people installing spray foam done in a bid to ease the cost of living. The issue is that disreputable companies are installing spray foams in ways that don't comply with manufacturer recommendations. As a result, it puts the home at risk of damage and as a result a risk of being turned down for lending.

Nationwide: ‘Spray foam can damage roof structure’

Rob Stevens, director of property risk at the lender, said: “Spray foam insulation can be a good way to improve the energy efficiency of a home.

“However, if it isn’t installed in line with manufacturer recommendations, there is an inherent risk of causing damage to the roof structure, which can lead to costly repair bills and the need for the spray foam to be removed.

“Consequently, where a valuer sees evidence of spray foam we will require documentary evidence that it has been installed correctly before we will lend.”

There may be an opportunity for surveyors to help educate consumers on what is the correct and incorrect ways for foam to be installed to help prevent issues with either the roof structure or lending.

‘Zero tolerance’ from some lenders

It has been reported that some lenders appear to have a zero tolerance approach to lending when spray foam is present – regardless of how the works have been done.

Dan Osman, head of later life lending at UK Moneyman, said: “For older clients looking to explore equity release, the spray foam loft insulation they installed to make their homes more energy efficient is likely to result in an immediate decline.

“There are currently no lifetime mortgage lenders who will consider a property with spray foam insulation in the loft, which means that clients are either unable to raise any money or have to commit a significant amount from their savings to have the insulation professionally removed.

“We are currently referring at least one client a month for specialist legal advice to recover some of these costs but there is a clear need for an unambiguous campaign to educate homeowners about this issue.”

Imran Hussain, director at Harmony Financial Services, said: “Spray foam insulation is a resounding ‘no’ for quite a lot of lenders and when you have one of the largest lenders in the country warning about it, it should be taken seriously.

“I have never known a valuation come back on a property with spray foam insulation and for a lender to be happy to proceed with lending on that property.”

There are ‘Good and bad installations’ - but how to tell the difference?

The Residential Property Surveyors Association (RPSA) retracted advice around spray foam in October after last year saying an investigation failed to identify any circumstances at all where a roof with spray foam could be given a “clean bill of health”.

The RPSA trade body is now conducting a full review after calls from industry stakeholders. Last year, the trade body estimated 250,000 properties could be unmortgageable due to the works.

RPSA chairman Alan Milstein said: “We have agreed to retract our current guidance pending a full review. Our ambition is that we can republish it, based on the outcomes from the industry group by Spring 2023 and provide our members with the detailed knowledge necessary to risk assess any spray foam installation.

“We know there are both good and bad installations but until now there has been no documented way to accurately differentiate one from another.”

Outlook for 2023

Hopefully, 2023 will bring clearer guidance for both homeowners and lenders to help consumers make more informed decisions and to help surveyors to advise lenders when foam has been installed in a suitable way.

This will help homeowners with insulation installed already to work out their next steps and for others looking into installation to decide more easily if it is right for them.


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