Author: info@brownbooth.co.uk

Concerns Over Unqualified Firms Using Incorrect Foam Types, Hindering Home Loans

Spray foam loft insulation is quick to install and promises to reduce energy bills. However, it can create difficulties when re-mortgaging, selling, and unlocking equity release. Lenders are worried that unqualified firms may not be using the correct type of foam, causing these issues.

After their monthly energy bill soared to £500 this year, pensioners Rudi Szczerba and his wife Pat decided to quickly insulate their draughty terrace home.

The timing seemed ideal when a salesman contacted them about a type of loft insulation called spray foam.

Promising a 40 percent reduction in their bills, Rudi, 72, described the decision to install the insulation as a ‘no-brainer’.

The foam was installed in September at a cost of £3,800. If energy bills remain high, they could recoup this expense in less than five years through savings.

This is a decision that around a quarter of a million households have made in the past decade. However, many are unaware that spray foam insulation comes with potential drawbacks.

Due to the unregulated nature of the industry, lenders are increasingly concerned that unqualified firms may not use the correct type of foam or properly assess a property’s suitability.

Consequently, homeowners are finding it difficult to re-mortgage, unlock equity from their homes, or even sell them.

Rudi and Pat’s Discovery

Rudi, 72, and Pat, 75, both retired Polaroid employees, have encountered an unexpected scenario. The couple aimed to release £25,000 in equity from their newly improved £1 million end-of-terrace home in Knebworth, Hertfordshire.

With no children to inherit their property wealth, they planned to gift the money to a lifelong friend in poor health to assist with his finances.

However, their equity release adviser informed them that no lender would approve an equity release loan due to the spray foam insulation. They claim the installer never disclosed this potential issue.

Equity release lifetime mortgages, available to homeowners aged 55 and older, have grown in popularity. According to a trade body, a record £3.1 billion of property wealth was withdrawn in the first half of the year.

These mortgages allow homeowners to obtain a tax-free loan while retaining ownership. The loan is repaid when the home is sold, the borrower dies, or the borrower moves into care. However, homeowners with spray foam insulation are being excluded from the market.

No equity release loan permits spray foam insulation installed after a property’s construction. Only one lender, More2life, will consider it if installed during construction and meeting strict quality criteria.

Mark Gregory, chief executive of Equity Release Supermarket, states, “We think any spray foam installation company should inform homeowners that using spray foam would currently make them ineligible for a lifetime mortgage if they consider equity release.”

Rudi and Pat are among the 250,000 households that have used spray polyurethane foam for insulation. Before the scheme was withdrawn in March 2021, spray foam was eligible for installation under the green homes government grant. It can insulate lofts, roofs, walls, and floors to improve energy efficiency.

Industry Practices and Homeowner Concerns

There is no industry code of practice, and installers are not required to inform homeowners that spray foam insulation could impact their ability to secure a mortgage or equity release.

Lenders worry that some installers may have used the wrong type of foam or failed to verify if it was suitable for the home. This oversight can lead to rotten beams and costly roof replacements. Additionally, there is no straightforward way for a surveyor working for a mortgage lender to inspect the roof timbers after spray foam has been applied, making the home potentially un-mortgageable and unsellable, as Lorna Rolfe discovered.

Lorna paid £5,000 to have foam installed in 2020 after seeing a Facebook advertisement. However, when she tried to sell her home near Dartmoor this summer, the buyer’s bank refused the mortgage after the surveyor noticed the foam insulation in the loft. To prevent the sale from collapsing, Lorna, an occupational therapist, spent £4,000 to have it removed.

“I needed to sell my home to move closer to my 90-year-old uncle who has moved into a care home,” says Lorna. “The whole situation caused me a lot of stress and anxiety. I also found out the foam was flammable, toxic, and sprayed directly onto electrical cables. My life was at risk the whole time.”

Claims management firm Hydrogard Legal Services is handling over 250 claims from vulnerable or elderly homeowners who were targeted by cold-callers and not informed that the foam could hinder their ability to sell their homes.

Rudi and Pat are currently negotiating with a lender willing to review the guarantees provided by their installer. If they are denied, the installer has promised to remove the foam and refund their money.

Kunle Barker, of architect and design studio Barker-Walsh, notes, “If spray polyurethane foam is not installed correctly, it may not provide the right ventilation, which could cause roof timber to rot.” Properly installed spray foam allows the roof to breathe and prevents moisture build-up.

Homeowners are advised to work only with installers who conduct a hydrothermal evaluation, assessing the roof’s condition, the felt underneath, and the risk of condensation. While this documentation improves a homeowner’s chances of selling the property or obtaining equity release, it is not a guarantee.

Trade Body for Independent Surveyors Retracts Guidance, Collaborates with Manufacturers to Reissue It

Independent Surveyors Trade Body RPSA Revises Guidance on Spray Foam Insulation problems

The Independent Surveyors trade body, RPSA, has reversed its stance on spray foam insulation.

Spray Foam has been blamed for making approximately 250,000 homes ineligible for mortgages, as lenders fear its long-term effects. Many experts believe that spray polyurethane (PU) can cause damp issues within roofs, leading surveyors to often recommend its removal before a house purchase can proceed. This has tightened lending criteria and hindered many homeowners from selling their properties owing to spray foam insulation problems.

The RPSA (Residential Property Surveyors Association) has now retracted its guidance from December last year, which advised surveyors to recommend the removal of spray foam and replacement of the roof if no detailed technical information was available.

A group of stakeholders, supported by the Insulation Manufacturers Association (IMA) and including spray foam manufacturers and installers, surveyors, valuers, and lenders, is now collaborating to standardise installation procedures and develop inspection protocols to help with spray foam insulation problems.

Factually Inaccurate

Elizabeth Lalli-Reese, global vice-president of Huntsman Building Solutions, states, “We believe that the guidance issued by the RPSA in December 2021 was factually inaccurate, creating unwarranted concern among homeowners and lenders. We call for it to be retracted. Spray foam is a proven technology for making our homes more efficient and is a practical, sensible, and safe option for homeowners.”

Alan Milstein, Chairman of RPSA, now says that the RPSA is reviewing this guidance. He comments, “We recognize the concerns raised by Huntsman and are encouraged by the positive way all parties have approached this initiative. Therefore, we have agreed to retract our current guidance pending a full review. Our goal is to republish it based on the outcomes from the industry group by Spring 2023, providing our members with the detailed knowledge necessary to risk assess any spray foam installation.”

When Susan Brameld agreed to have spray foam roof insulation installed in her Hilsea home, she had no idea she was opening the door to a nightmare that would leave her home virtually worthless.

The 78-year-old widow, now residing in Fareham, was cold called by a spray foam insulation company in 2019 who mis sold spray foam insulation and persuaded to spend £4,800 under a government backed ‘green deal’ scheme aimed at reducing energy bills.

However, just two years later, she had to pay an additional £5,500 to have it removed after discovering she had been scammed and mis-sold spray foam insulation. Her three bedroom home, valued at £360,000, had become unsaleable.

In poor health, she discovered the problem only when she decided to downsize to a two bedroom bungalow after the death of her husband, Arthur.

Susan discovered that banks and other lenders were unwilling to provide financing to potential buyers for properties with timbered roof spaces sprayed with foam insulation.

Spray foam insulation has been in use for around 30 years and has gained popularity over the last decade. However, property surveyors caution that the foam, which expands and dries solid, can restrict air circulation, leading to roof timber rot and putting stress on a building’s structure.

Concerned that other homeowners might fall into the same mis-selling trap, Susan wanted to warn others that the only way to sell their home might be to spend thousands of pounds to have the foam removed.

‘I now know I was scammed by the sales patter,’ she said, ‘but the company who installed it went bust and the work wasn’t guaranteed. I found the so-called guarantees invariably didn’t extend to any damage caused by rogue workmanship or dodgy technology.

 

Rogue installers are exploiting the opportunity to make doorstep and cold calls to vulnerable homeowners.

Rise in Loft Spray Insulation Scams in South Gloucestershire and Gloucestershire

South Gloucestershire Council, along with six other Gloucestershire authorities and Trading Standards, reports an increase in doorstep and cold-call scams targeting homeowners to invest in spray in insulation.

Scammers are deceiving homeowners by claiming that their current insulation is either likely to cause damage or will soon become illegal. They then persuade homeowners to opt for an alternative spray in insulation, sold at inflated prices.

These dishonest companies often use databases of people aged 70 and over, as well as lists of properties that already have loft spray foam insulation, to target potential victims. Commission based salespeople pose as expert surveyors and pressure homeowners into signing contracts for unnecessary and expensive work, which is often carried out within days to avoid cancellations.

The councils’ home energy advice service, Warm and Well, encourages homeowners to stay vigilant and avoid feeling pressured into paying for any property upgrades.

South Gloucestershire Council Cabinet Member for Adults and Housing, Cllr Ben Stokes, said: “Through our Warm and Well service, residents can access independent expert advice and, in many cases, grant funding for work that improves their property’s energy efficiency. This helps people make significant savings on energy bills and supports our efforts to tackle the climate emergency. Unfortunately, scams like this undermine confidence in legitimate insulation schemes, which rarely use doorstep selling tactics. Our advice is always to seek information independently and if you’re concerned you may have been targeted by a scam, contact Trading Standards via the Citizen’s Advice helpline.”

In collaboration with the Trading Standards team at South Gloucestershire Council, Warm and Well has published advice on spotting and avoiding scams, available online at warmandwell.co.uk/scams.

Bernadette Muldowney, who leads the Warm and Well team, explains the risks: “We love insulation! It is one of the best ways to reduce the energy needed to heat our homes and is a powerful tool in the fight against climate change. But this also opens the door for unscrupulous companies to take advantage of people’s best intentions by selling them unnecessary and expensive improvements. This not only incurs unnecessary costs but may also cause long-term damage to the property. We strongly encourage homeowners to stay vigilant, recognize the signs of scams, and seek independent advice rather than agreeing to unsolicited offers.”

The Warm and Well service is delivered by local charity Severn Wye Energy Agency and funded by South Gloucestershire Council along with Cheltenham Borough Council, Cotswold District Council, Forest of Dean District Council, Gloucester City Council, Stroud District Council, and Tewkesbury Borough Council. Warm and Well offers free home energy advice and grant funding and can be contacted on freephone 0800 500 3076.

 

Herefordshire Council’s Trading Standards service is warning elderly residents to be cautious of spray loft insulation foam scams currently targeting the county.

Unscrupulous companies are targeting residents with loft spray insulation foam at exorbitant prices. Repeat scams are being attempted on those who have already had the insulation installed. These homeowners are falsely informed that the spray foam has caused dangerously high moisture levels in their lofts. Fraudsters then sell them unnecessary solutions at grossly inflated prices, such as ventilation systems for £4,500, five times their actual value.

Other residents have been misled into purchasing ‘roof coatings’ under the pretence that they are necessary for properties with spray foam insulation. This service involves jet washing roof tiles before applying a waterproof coating. Once again, this service is entirely unnecessary and vastly overpriced, costing up to £5,000.

Herefordshire Council’s Trading Standards service manager, David Hough, says:

“We believe many hundreds of local homeowners are being targeted at the moment. The scammers find their potential victims by using databases of those in their 70s and 80s. Spray foam loft insulation is simply not necessary and at best all homeowners require is a top up of their existing ceiling level insulation. The scammers also use lists of properties that have already had spray foam insulation fitted.

“They then send a commission only salesman to the resident’s home, often pretending to be a qualified surveyor. The salesman then pressurises the homeowner to sign a contract for unnecessary, expensive work. This is carried out within days to minimise the chances of the homeowners cancelling the order,”