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Assessing diminution in value of residential properties affected by Japanese Knotweed
Japanese Knotweed continues to affect residential property transactions and owners, despite significant improvements since RICS introduced guidance in 2012. The stigma attached to the problem and periodic uninformed media comments mean that public perception of the problem remains at variance from the real risks the plant poses. Consequently, the value and saleability of a property can still be severely affected if an infestation comes to light. Diminution in value is a long-established principle for assessing financial loss, typically following negligence during a prepurchase survey, where case law has established that if the cost of reinstatement is significantly greater than the impact of a defect on market value, then the diminution in value will take precedence. Japanese Knotweed poses a different problem for the valuer because the market impact may be many times greater than the cost of remediation. This paper proposes a structured approach to assessing the impact of a Japanese Knotweed infestation on value by individually considering and then consolidating five separate elements which can affect value when Japanese Knotweed is present, providing a logical rationale in support of an assessment of diminution in value.
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Philip Santo is a Fellow of the Royal Institution of Chartered Surveyors with over 40 years’ experience as a residential surveyor and valuer. He has acted as a consultant for RICS, represented RICS on the Council of Mortgage Lenders Valuation Panel and has contributed to a number of professional guidance notes and papers. He sits on the RICS Residential Survey and Valuation Group and the RICS Property Journal Editorial Advisory Group. He chaired the Working Party which developed the RICS Information Paper Japanese Knotweed and Residential Property in 2012. He is RICS media spokesperson on the subject of Japanese Knotweed and is currently supervising a proposed second edition of the paper. He provides a range of CPD training and presentations and is a visiting lecturer at Portsmouth University. He writes for a number of professional publications and has edited second editions of two books about residential surveys published by Routledge: Inspections and Reports on Dwellings: Assessing Age and Inspections and Reports on Dwellings: Inspecting.