Rental property with suspected mica - what should we do?

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TheLoneRanger

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Fact pattern:
- Rental property in urban Donegal - value of similar properties sold nearby €120k
- Semi detached 3 bed
- Bought in 2006
- Built in 1995
- Rental income €6.6k per year
- Mortgage remaining €135k
- Interest rate on mortgage 3.15%
- Rental losses available to offset future rental profits €2k

Our tenants recently told us there was some paint bubbling on the window sill at the top of the stairs. On a visit to inspect the property we noticed hair line adjoining vertical and horizontal cracks on the gable wall. Tenants say these have been there since a deep freeze in 2010. We've had both an engineer and builder inspect visually. Both say cracks are consistent with MICA defective blocks and that water likely has gotten through the outer leaf via the cracks to soak the insulation which has now seaped through by windowsill. As this is not our principle private residence we don't qualify for the MICA redress scheme.

It would be great to get your thoughts on the following options.

1. Cut our losses and sell the property for whatever we can get today. Provided the residual was no more than 60k we'd have enough room to gear up on our existing home to settle the balance. Would there be a market to buy at 75k?

2. Repaint the exterior and reseal all windows to slow any water ingress. Up the rent to €750 (current market rent for similar properties), keep for 10 years with the intention we'll have mortgage settled in that time. Property likely will have deteriorated by then but it's taken 25 years for hairline cracks to show so perhaps condition remaining good enough to rent for 10 years isn't unreasonable.

3. Borrow to rebuild the outer leaf of the property. Estimated cost 75k. One issue with this is we might get half way through the job only to find inner leaf needs to be redone also which would double the cost.
 
Has the engineer suggested taking core samples to test for Mica? I don't know what this would cost, but without knowing, to sell you'd be looking for a cash buyer willing to take a gamble. You already know the estimated remediation cost - deduct that from the value of a house without an issue, and another 10k for the risk to give you an idea of maximum value if you try to sell it.

In fact, getting a sample tested would be the first step before thinking of rebuilding the outer leaf also.

As it's a semi-detached, I'm assuming it's in an estate? Are there other houses with Mica issues?

Talk to the engineer again (or another one) about how to proceed.
 
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RedOnion said:
Has the engineer suggested taking core samples to test for Mica? I don't know what this would cost, but without knowing, to sell you'd be looking for a cash buyer willing to take a gamble. You already know the estimated remediation cost - deduct that from the value of a house without an issue, and another 10k for the risk to give you an idea of maximum value if you try to sell it.

In fact, getting a sample tested would be the first step before thinking of rebuilding the outer leaf also.

As it's a semi-detached, I'm assuming it's in an estate? Are there other houses with Mica issues?

Talk to the engineer again (or another one) about how to proceed.
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Thanks Red. We are reluctant to get sampling done given up front cost of c.5k and they'd basically be putting holes in the wall which they won't replaster or paint and they'd need to dig up surrounding footpath to get under house tested. It's in an estate yes and other houses look to have similar crack patterns.

Will give an engineer a call to discuss options
 
Option 2 is an obvious starting point. It will buy you some time and you will be making some money along the way.

Then keep investigating. A visual inspection is not much of a basis to decide on. €5k seems excessive to have samples taken. Is there a homebond scheme in place, would your insurance cover you. Consult with a loss assessor, don't listen to casual opinions, insurance is complex. Talk to your neighbours, if they have similar cracks, what are their plans.
 
RedOnion said:
As it's a semi-detached, I'm assuming it's in an estate? Are there other houses with Mica issues?
Click to expand...

This seems to be the key point.

By all means seek ideas on askaboutmoney, but you should talk to your neighbours to see if there is some joint response possible which could cut costs.

If a few neighbours have tested positive for mica, then you probably don't need to do that test yourself.

Brendan
 
Leo said:
Yet you're considering €75 on anew outer leaf?
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The reluctance is because once we've bored those holes we can't put back to finished condition to sell without incurring further costs if selling is what we decide to go with.
 
Brendan Burgess said:
This seems to be the key point.

By all means seek ideas on askaboutmoney, but you should talk to your neighbours to see if there is some joint response possible which could cut costs.

If a few neighbours have tested positive for mica, then you probably don't need to do that test yourself.

Brendan
Click to expand...
Hi Brendan. Thanks. Yes, I agree with you and we have spoken to multiple neighbours. One neighbour recently did the test and confirmed mica present. As this is his home he will seek a rebuild under the redress scheme. Three other neighbours have decided to replaster and hope no recurrence. We have been advised not to do this as its only a superficial solution.
 
What are the tell tale signs of mica?
Does it take decades for the house to become unlivable or isnit more like a few years?
If a house is found to have mica is it essentially worthless?

I understand its impossible to get a mortgage on a house that has mica.
 
TheLoneRanger said:
The reluctance is because once we've bored those holes we can't put back to finished condition to sell without incurring further costs if selling is what we decide to go with.
Click to expand...

Patching should not be that expensive and finishes should be a DIY job. The €5k might be an investment, you are likely to get a better price for a house with a clear bill of health. A purchaser's surveyor is likely to advise that they insist on getting such a test done at your expense or negotiate a significant discount.
 
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