Receivership and Recovery Tip: To Lend or Knot?

Posted by Strettons on 7th April 2022 -

Although Japanese Knotweed, or to give its scientific name, Fallopia Japonica, was introduced into the UK in the mid-1800s as an ornamental plant and even used by farmers as animal feed, it wasn’t until the 1981 Wildlife and Countryside Act, which made it an offence to ‘plant or otherwise cause Japanese knotweed to grow in the wild’, that awareness of its impact on property became more widespread.

Lenders were reluctant to put money into a property affected by the highly invasive bamboo-like plant, be it in the property or within a 7 metre ‘danger zone’.

With improved understanding of Japanese Knotweed, however, a recent guidance note by the Royal Institution of Chartered Surveyors (RICS), effective from 23 March 2022, has relaxed the ‘7 metre rule’. This will allow valuers to make a more reasoned judgement on the effects of the plant, which should give greater comfort to lenders.

The RICS guidance note, which replaces an earlier information paper, focuses on residential property, but it should help when Japanese Knotweed is encountered in other property types.

The so-called ‘7 metre rule’ focused more on an overstated risk of Japanese Knotweed to buildings rather than its sometimes-serious impact on amenity. It is now generally accepted that Japanese Knotweed poses little or no risk of structural damage to robust buildings with substantial foundations.

New RICS Guidance

So, based on the latest research, and depending on the type of survey and what is practical and reasonable in the circumstances, the new RICS guidance note suggests that 3 metres is now the most appropriate distance to adopt.

Defra (Department for Environment, Food and Rural Affairs) has recommended that Japanese Knotweed be reframed as a ‘mitigatable environmental issue’, calling for guidance that would ‘provide clarity for lenders and enhance coherence in lending policy.’

Case Study

The last significant receivership appointment where we dealt with this involved a 12.5 acre industrial estate in South Wales. A large Japanese Knotweed infestation on the neighbouring land was to the east of our properties. Appointing a specialist contractor and putting a management programme in place proved relatively easy to organise once we identified the source and extent of the problem.

Final Comment

By allowing valuers and surveyors to carry out a structured assessment, this new assessment process suggested by the RICS should go a long way to providing an objective categorisation of an infestation. This will provide lenders with greater clarity on the risks posed by Japanese Knotweed and allow them to decide whether to lend…or knot!