There’s a new headache looming for 250,000+ UK homeowners, and many folks simply won’t be aware of it until they attempt to sell their house or release some equity. Spray foam insulation is currently hitting the headlines as mortgage lenders refuse to offer mortgages on properties with the much-touted energy-efficient insulation.
Extracts of this blog are taken from a powerful article written by Hugh Graham in the Times on Sunday 11th June 2023 that explains and describes the main issues.
Case study: The Shaws
When Geoff Shaw received a cold call from a company offering to install spray-foam insulation in the loft, he and his wife were enticed by the promise of lower energy bills. “We were told spray-foam insulation was government-recommended,” says Shaw, a retired oil distribution director. “We’re 80, and we didn’t want to leave our kids a house that isn’t saleable in terms of the energy [EPC] rating.”
In December 2021, Shaw paid £7,250 to have the foam sprayed in the loft of his 1990s bungalow. The next year, however, when he applied for equity release so he could buy a new car, lenders turned him down because of a potential liability in his attic: spray-foam insulation.
In some cases, moisture can get trapped behind the foam and cause condensation and rotting timber; cowboy firms have plagued the industry. But even if the roof is not damaged, surveyors can’t inspect it behind the foam, so are reluctant to declare it safe to lenders. “It’s appalling that spray foam is still advertised and installed without a legal requirement to tell you the downsides,” Shaw says.
No loan = no buyers = no sale
“The reticence of lenders to accept properties with foam installed is causing distress to many homeowners who either cannot sell, mortgage or remortgage their homes,” says Andy Wilson, an equity release specialist. “In many cases the foam may have caused no damage, but to measure this effectively the foam needs to be removed. As surveyors cannot say definitively that a property is free of defects (mainly rotten roofing timbers), it is safer and easier for lenders to decline to lend.”
Are you due compensation?
Shaw took out a loan to pay for the £9,960 cost of removal. But he is so annoyed with the installers he has enlisted Hydrogard Legal Services, a claims management company, to fight for compensation on a no-win, no-fee basis.
Chris Brown, the owner of Hydrogard, says his firm has 700 open inquiries about compensation for spray-foam insulation. “We probably take 35 to 40 calls a day, it’s staggering,” Brown says. “We’re winning about four or five claims a week, and the average payout is somewhere between £7,000 and £10,000.”
Seek professional advice
In March, the Royal Institution of Chartered Surveyors (RICS) released guidelines on installation. According to its Consumer Guide: “Before introducing spray foam, thermal calculations and condensation risk checks need to be undertaken by a qualified professional who has surveyed all parts of the roof. This documentation should be kept by the homeowner for future reference.”
It cautions: “RICS advises homeowners to seek independent expertise, commercially separate from the installer and manufacturer, to advise if spray foam is appropriate for their property. Most pitched roofs are designed to be ventilated, and spray foam is a change to the original design.”
Open cell vs closed cell
Spray-foam businesses say that problems mainly occur with hard closed-cell insulation, whereas open-cell insulation is breathable and safe, but many surveyors dispute this. If it is not sprayed onto a vapour permeable underlay, problems can occur, and black mould has been found in lofts where open-cell was installed incorrectly.
In a bid to break the impasse with lenders, last autumn mortgage companies, manufacturers, surveyors, and installers met to create a protocol with clear guidelines for surveyors when inspecting roofs with foam. This protocol would make it easier for surveyors to determine if a roof was safe for mortgage companies to lend on.
The result, released by the Property Care Association in March, is the Spray Foam Insulation Inspection Protocol. The trouble with it is they are only guidelines, according to Steve Hodgson, chief executive of the Property Care Association. “And where surveyors are unable to decide about risk factors, there is a call for a specialist, but such specialists just don’t exist. Without further training of specialists, the document is not going to work as hoped.”
What the insulators say:
Simon Storer, chief executive of the Insulation Manufacturers Association, which last week released an inspection protocol of its own, hopes that once one mortgage lender starts approving roofs with foam, others will follow suit. “I understand there are plenty of examples where mortgage approvals have been made. Spray foam has been used in this country for 30 or 40 years. If there was the problem that people were claiming, you would see all these collapsed roofs everywhere. I know the lenders and surveyors have a job to do, and therefore we’ve worked with them to help them better understand the product. The protocol is a method by which they can be satisfied about whether the job has been done correctly.”
Storer cautions against having the foam removed from your roof in haste. “There are cowboys who will try to persuade you to remove it.” Indeed, some of the same cowboys that installed foam have reinvented themselves as removal specialists.
TO REMOVE OR NOT REMOVE – that is the question
It’s all very confusing. Removal is still the best option if you want to sell or apply for equity release now, according to Wilson. “Currently no lender in either the mainstream mortgage market or equity release market has announced any intention of accepting the protocol for properties they are looking to lend on where the foam is installed,” Wilson says.
“The only guarantee of a safe roof is one that has had the foam removed and where an inspection of timbers suggest there has been no damage. My advice to those who ask about installing it is to not do so. There are so many problems that will potentially affect the homeowner in the future — whether it be from wet rot damage, lack of mortgage funding options, or an inability to sell to a wide market of buyers.”
Government is on the fence
A spokesman for the Department for Levelling Up, Housing and Communities says: “We are looking into the issues some homeowners are facing and are working with the industry and stakeholders to resolve this as quickly as possible.”
Since the publication of The Sunday Times expose, Hydrogard Legal Services CEO Chris Brown has stated: “It is very interesting that there are still no rules or regulations to govern this industry. There are now a very large number of companies who have changed direction, including many of the original installation companies that mis-sold it in the first place, and are now re-charging their victims to remove the foam.
Don’t believe what you see on TV, one insulation company was found to be operating three or four businesses under different guises all selling spray foam, and the chairman recently appeared on TV to decry the actions of these companies while he himself was heading up one of the subsidiaries.
Do your research
Check out Companies House to see how long your chosen supplier of spray foam has been in business, some are claiming to be the market leader but have only been trading a couple of months. Others who sold foam insulation previously have now rebranded and opened as removal companies. It’s easy to check who is legitimate by seeking assistance from your local trading standards office.
Be very careful who you use or trust, because you could be paying the same company to remove it that sold it to you it in the first place.