Major high street and specialist equity release lenders have said they will not lend of property which has spray foam insulation installed.
An investigation by the BBC has revealed five of the top 20 lenders, TSB Bank, Skipton Building Society, Co-operative Bank, Principality and equity release lender Aviva, will not lend on properties where spray foam insulation is installed. Metro Bank and Yorkshire Building Society said they would ‘not usually’ lend where there is a ‘significant amount of spray foam.’
Lloyds, Nationwide, Barclays, the NatWest Group and Santander told the BBC they would take applications on a case-by-case basis and would take into account the valuer’s report in their considerations with equity release provider More 2 Life saying it would only lend on authorised new build properties with the necessary documentation.
Last year a report suggested up to 250,000 homes could be affected, installed under the government’s Green Homes Grant scheme. There are two main types of spray foam installation; open-cell, allowing moisture to escape, and close-cell, which reduces air circulation. it is applied using powered sprays with the chemical expanding and solidifying. Concerns have been raised over the weight of the foam, which cause roofs to collapse, trapped moisture around wooden joints leading to rot, and a lack of air circulation in properties leading to damp.
The Royal Institution of Chartered Surveyors (RICS) have released consumer guidance on spray foam insulation, which it says has been widely used for decades but ‘can all too often be marketed as an easy and simplistic fix, when in fact the installation of spray foam should really be seen as a significant and fundamental alteration to a home which needs careful consideration and planning.’
The guide has been produced to inform the public about spray foam insulation after several high-profile Trading Standards cases recently reported in the media highlighted poor standards of work, illegal modifications to listed buildings, and high-pressure selling to vulnerable groups, such as the elderly.
Law firm mfg Solicitors recently highlighted a case in Stoke-on-Trent where a couple lost nearly £11,000 following the incorrect installation of spray foam. Fiona and Andre Barton, paid £4,926 for spray foam loft installation following a cold call in December 2022. Six months later, as they attempted to sell their home, a surveyor flagged the insulation to the lender who pulled out. The Barton’s spent a further £5490 engaging a specialist removal company to enable them to sell the property.
Beverley Clinton, a legal assistant in the firm’s Residential Property Division, emphasised the challenges associated with removing this type of insulation, making it difficult for many mortgage providers and equity release companies to lend on properties containing it, even if installed by reputable firms. She warned surveyors are also increasingly vigilant, and insurance companies may refuse coverage for properties with this insulation.
