Mortgage Lenders Decline Properties with Spray Foam Insulation

The BBC has discovered that homeowners whose properties feature spray foam insulation are encountering difficulties in selling or remortgaging, as several prominent lenders are declining to finance homes equipped with this material. According to research conducted by the BBC, approximately 25% of the largest mortgage providers in the UK are unwilling to offer loans for properties that have spray foam installed in their roofs. This insulation type is present in an estimated 250,000 homes across the UK, with a significant portion of these installations occurring through the former government’s Green Homes Grant initiative. Wendy Rowe stated, “We were blissfully unaware of any issues to do with it until we put the house on the market.” Her family faced considerable challenges in selling her deceased father’s residence and incurred costs amounting to thousands of pounds for the removal of the insulation. Certain mortgage companies are hesitant to approve loans for properties containing spray foam insulation, citing worries that improper installation could lead to moisture retention and subsequent deterioration of roof timbers. Conversely, the Insulation Manufacturers Association asserted that spray foam offers advantages when installed correctly. The association expressed concern that homeowners might be unnecessarily compelled to engage unregulated “cowboy” companies for removal services. Ms. Rowe informed the BBC that her father, Alan Chawner, believed the spray foam insulation offered for his loft would enhance the warmth of his former council property in Leicester and reduce his energy expenses. As a pensioner receiving the attendance allowance, Mr. Chawner had the full installation cost of £4,331 covered by the Green Homes Grant scheme, which was operational in England until March 31, 2021. Nevertheless, a report by Stephen Hodgson, who previously headed the Property Care Association (PCA) and now conducts inspections of properties with spray foam while also training surveyors, indicated that the installation work was substandard. Following a halt in sales and challenging discussions with lenders, Ms. Rowe consented to a complete roof replacement, sharing the expense of almost £10,000 with the prospective buyers. She noted that this situation has incurred additional thousands for her family in surveyor and administration charges, as well as increased utility bills. SealSixty, the company responsible for installing the spray foam, provided the family with £400 as a gesture of goodwill and affirmed that the work complied with all criteria stipulated by the Green Homes Grant scheme at that period. Ms. Rowe expressed that her family had been “left high and dry,” adding, “It was installed under a government initiative, and you really don’t expect them to turn their back.” For several decades, spray foam insulation has been employed to prevent heat loss from roofs, lofts, and attics, and it is available in two distinct types. Closed cell spray foam solidifies into a rigid state upon setting. It offers superior thermal insulation and was historically marketed for reinforcing compromised roofs. However, if applied incorrectly or installed inadequately, it carries the potential to exert pressure on timbers, impede air circulation, and increase their susceptibility to decay. Open cell spray foam retains its softness after setting and serves exclusively as insulation. While more breathable, it is frequently applied in locations where a highly resistant underlay, such as bitumen felt, already exists, thereby preventing vapor from escaping. A recent report from the Health and Safety Executive identified scenarios where the use of open cell spray foam presented a low risk, yet it advised against its direct application onto roof tiles. The inherent characteristics of spray foam can complicate the process for valuers, who work on behalf of lenders, to thoroughly assess the state of roof timbers. Upon contacting the 20 largest lenders in the UK, the BBC found that five institutions – TSB Bank, Skipton Building Society, Co-operative Bank, Principality, and equity release provider Aviva – declared they would not provide loans for properties containing spray foam in the roof area. The Yorkshire Building Society and Metro Bank indicated that they typically refrain from lending where a substantial quantity of spray foam is present. Equity release provider More 2 Life informed the BBC that it would only consider lending on properties with spray foam if it was installed as part of an approved new build and accompanied by the required documentation. Other financial institutions, including Lloyds, Nationwide, Barclays, the NatWest Group, and Santander, have stated their policy is to evaluate applications on an individual basis, considering a valuer’s report. They might, however, request homeowners to provide evidence of correct installation or commission a specialist assessment. In 2023, the PCA released an inspection protocol designed to assist surveyors and lenders in evaluating potential risks associated with pitched roofs. Nevertheless, homeowners such as Gary Wright report feeling “left in limbo.” When his two-year fixed-rate mortgage was due for renewal, Mr. Wright had anticipated securing a more favorable interest rate. However, upon application, he was surprised to learn that open cell spray foam had been installed in his property in 2009, a fact that had not been revealed during surveys conducted when he purchased the house. After obtaining multiple costly estimates, he opted to personally remove the majority of the foam from his loft. Despite this, a surveyor still advised a comprehensive roof report, leading Mr. Wright to feel compelled to renew his mortgage with his existing lender at a less advantageous rate. He stated, “We know that in the next two years, we need to get this fixed, and I can’t afford to right now.” Simon Storer, chief executive of the Insulation Manufacturers Association, informed the BBC that “This phrase ‘spray foam’ has created fear [among lenders] based on a lack of knowledge.” He proposed that “hares were set running” due to earlier industry guidance which has since been retracted. He commented, “Insulating is a very good thing,” further remarking, “But as with any building work, it needs to be done correctly.” He also conveyed the organization’s apprehension regarding unregulated firms targeting elderly, potentially vulnerable, homeowners through cold calls, pressuring them into paying for excessively priced removal services. The Homeowners Alliance (HOA) advises against the installation of spray foam until concerns involving lenders and unscrupulous traders have been addressed. For properties where spray foam is already installed, the HOA suggests: A government spokesperson stated that they had “consulted lenders about this matter who say they rely on the views of valuers and surveyors on this issue.” They further noted that any installations carried out under government initiatives must be performed by a Trustmark-registered installer “to the highest standards with issues promptly and properly rectified.” Additional details regarding Trustmark’s dispute resolution procedure are accessible via this link. This content is copyrighted by the BBC in 2024, with all rights reserved. The BBC disclaims responsibility for the material found on external websites. Information concerning the BBC’s policy on external linking is available for review.