How rows with your neighbours could hurt your house price

Rows with your neighbour are not just an inconvenience - they could hit the value of your home!

An astoundingly high number of Brits are falling out with their neighbours and ending up in court. A recent survey by Saga found that 28% of over-50s have been involved in a legal dispute.

Nearly 40% of those clashes related to neighbour and property disputes, such as arguments over boundaries and noise, the study found.

In fact, noise is a really common complaint. A survey from Which? last year found that 60% of people said they’d been irritated by loud neighbourly noises, from raised voices to music.

And resolving these disputes can be a costly affair. The average fee for legal advice relating to a row over property is £1,331, while for nuisance neighbours it’s £879, Saga found.

But the cost could be even higher if you’re planning to sell your home. That’s because sellers have to declare any problems they’ve had with their neighbours, even if doing so devalues their property.

How much could a problem neighbour devalue your home and what do you have to declare? If you love money, should you try to love your neighbours too?

What do you have to declare?

You might think that you don’t have to declare a problem with the neighbours if it’s never been to court. If their dog barks incessantly, but you’ve never complained, can you just keep quiet? The short answer is: no.

When you sell, you’ll fill out a Seller’s Property Information Form. This requires you to highlight any previous or current disputes with neighbouring properties. However, it also questions whether you know of any issues that could lead to a dispute.

You could find yourself on shaky legal ground if there was an obvious problem that you kept quiet. By preventing would-be buyers from making an informed choice, you’ve effectively committed fraud.

That may seem incredibly unfair if it isn’t your fault that your neighbours are awful. However, hiding a problem could mean you face costly legal challenges later on.

How much can a dispute devalue your home?

It’s hard to assess how much a neighbourly dispute might knock off the value of your home. It depends on the kind of dispute you’ve had and whether it’s likely to be an ongoing problem for new owners.

Clive Beer is head of UK and international mediation for the estate agent Savills. He’s also an accredited mediator of the Chartered Institute of Arbitrators. He says you can’t make generalisations about the potential loss of value as it’s hugely dependent on fact and degree.

Internet searches for problem neighbours throw up cases ranging from boundary disputes and hedge heights, to far more extreme examples.

After all, is a house devalued if the neighbour is pushing dog excrement through the post box, or ordering prostitutes to turn up at the door? At that more extreme end of problem neighbours, the property could simply be unsalable.

It’s hard to imagine how distressing that might be for a vendor who’s desperate to get away from such abuse. It also illustrates how difficult it can be to determine exactly how badly a property could be affected; there’s such a huge scale of possible problems.

Beer explains: “Most people would pull out if there’s a serious dispute, especially in this kind of market. Of course, it depends on the property; if it’s unique then you stand more of a chance of selling it. But if you’re buying a house that’s fairly standard then there are plenty of alternatives and most buyers would simply say ‘I don’t need this, I’m pulling out’.”

What if you’ve been left with a problem?

If you’ve bought a property in the belief that there were no problems, and you’ve moved in to discover the neighbour from hell, what can you do?

After all, even if you can live with the issue, you could be hurt financially in the future.

If you honestly admit to the problem neighbour when you come to sell it, your home could take a dive in value – meaning you’ll be the one swallowing the loss.

“It puts you in a massive dilemma, what do you do about selling it? In this kind of market where it’s a buyer’s market, the temptation to keep quiet can be very strong,” Beer warns.

“And had the valuer known about it, then the bank might not have lent on the property. It can really be very serious.”

One option is to pursue the vendor for financial compensation, to reflect the loss you will make should you sell.

There was a case earlier this year where a buyer inadvertently bought a house next door to a man with an ASBO who had previously been charged with chasing three teenagers with a knife.

In that case the buyer claimed the property was worth £94,500 instead of the £180,000 he paid and demanded the difference from the vendor.

So that’s one option. However, if you can’t bear to live in the house as a result of the problem, the solution becomes trickier.

Beer suggests: “You could sell the property on and sue for the difference. You would need to demonstrate that because of the problem, you wouldn’t have purchased the house. Then you could pursue the vendors for the additional costs as well as the reduction in value.”

Everybody needs good neighbours

However bad your neighbours may be, Beer’s words highlight the importance of being totally honest with any potential buyers. If you keep your mouth shut and hope for a quick sale, you could find yourself at the wrong end of an extraordinarily costly legal challenge.

These examples also highlight the importance of fully exploring a neighbourhood before committing to a purchase. Consider chatting to the neighbours and call in at local shops. After all, this is your home and not just a financial investment with a rising or falling value.

Beer concludes that the stress of moving to a dream home and discovering problem neighbours can be considerable: “This is not business property; this is property when you go home and expect to have peace and quiet. It’s not just the loss in value; there’s an emotional hit that’s not compensable.”

Have you ever had a dispute with the neighbours? Were you able to resolve it? Did you declare it when selling your home? Share your experiences with other readers in the comments below.

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