Written evidence submitted by Phlorum Ltd (JKW0012)

“How does the presence of JKW affect mortgage lending decisions and property valuations?”

Introduction:

Phlorum Ltd is a multi-disciplinary environmental consultancy that has been trading for over 15 years. Since our formation, one of the main service areas we have specialised in is the control and management of Japanese knotweed.

Initially, this work was focused on commercial sites, mainly development projects. However, in the late 2000s the mortgage industry started to refuse mortgage finance on residential properties where Japanese knotweed was observed during associated property surveys. At that time, various specialist companies, including Phlorum, were contacted by desperate homeowners who needed a solution to their inability to secure mortgage finance due to Japanese knotweed. However, at the time the knotweed control industry was unregulated and a number of firms were making false claims about how to manage it. This resulted in a lack of lenders’ ability to effectively understand and manage property risks, which caused them to refuse finance on knotweed-affected properties.

In order to seek surety for lenders about their lending decisions in relation to Japanese knotweed, a meeting was organised with a few of the principal invasive weed management companies, including Phlorum, and the lenders’ bodies, the Council of Mortgage Lenders (CML) and the Building Societies Association (BSA). The invasive weed industry was informed that it needed to set up a trade body to ensure minimum standards were set. As a result, the invasive weed sector approach the Property Care Association (PCA), which led to the creation of the PCA Invasive Weed Control Group (IWCG).

A small working group of PCA IWCG, which included Phlorum, helped draft the Royal Institution of Charted Surveyors (RICS) guidance on Japanese knotweed and residential property risk. Initially, the thinking was that a herbicide spraying regime would be the most appropriate way for knotweed risks to be effectively managed on the majority of affected properties. However, the issue of diminution in value soon became an issue. Some lenders also decided not to lend where Japanese knotweed risk was identified as being in the highest RICS risk category (i.e. Category 4, where knotweed is within 7m of the main building). This led to frustration in the Invasive weed industry and resulted in the PCA IWCG approaching the RICS and suggesting that the 7m distance should be reduced. However, the RICS were reluctant to make this change in their guidance without the support of formal scientific evidence to back it up. One reason for the PCA IWCG making this recommendation was that its members were reporting that structural damage to buildings was rare within 7m of a knotweed infestation.

Question 1. What guidance for the sector currently exists, the impact of existing legislation, What scientific evidence exists on the effects of Japanese Knotweed on the built environment.

There is limited scientific evidence published into the specific effects of Japanese knotweed on the built environment.

In response to the RICS requirement for scientific evidence to reduce the 7m distance stated in their Risk Rating 4, members of the PCA carried out research, in 2018, with the University of Leeds, to assess the potential of Japanese knotweed to cause structural damage compared to other plants (Fennell et al. 2018). The research stated that Japanese knotweed does not cause structural damage in excess of that caused by other plants, and indeed causes less than many woody trees.

This was jumped on by some media sources who implied that the invasive weed industry was set up as a scam. However, as described above the industry had been around for years on commercial projects. The industry was effectively created by the Wildlife and Countryside Act 1981, which stated Japanese knotweed, and Giant hogweed should not be allowed to grow in the wild. This was then backed up by the legal case, Flanagan vs Wigan Metropolitan Borough Council 1995.

In the recent PCA IWCG conference, the issue of impact on the built environment from other invasive plants, notably bamboo and buddleia, was addressed. The talk provided photographic examples where bamboo had been found a way through a brick structure. It was not known if bamboo in this example caused the hole in the brickwork or took advantage of an existing hole. The talk suggested that the impact on the built environment was similar from Japanese knotweed and bamboo. Photographic evidence was provided showing impacts of these plants on tarmac, paving, and some retaining walls. Plus if there is a fault in a house then both can exploit this.

The impact from buddleia was described as a much greater threat to the built environment, and photographic evidence of it growing within a brick wall was provided, courteousy of Network Rail.

Question 2. How the presence of Japanese Knotweed in the UK affects mortgage lending decisions and property valuations.

From our experience we are aware that the presence of Japanese knotweed has had a big effect on mortgage lending and property valuations. Prior to the PCA IWCG being set up, mortgage lenders were refusing mortgages if the word Japanese knotweed was mentioned anywhere in a surveyor’s report.

Since the establishment of the PCA IWCG, mortgage lenders have been better able to make sensible lending decisions on knotweed affected properties. However, some lenders appear to have made it policy to refuse a mortgage application if a Category 4 risk, and sometimes a Category 3 risk, has been identified. Other lenders are happy to lend provided that a PCA IWCG member has been appointed to control the growth and that payment of the treatment package has been made in full (usually covering a 3 to 6 year treatment period). This is important as often the vendor could lose interest in paying for ongoing treatment once they have disposed of their property to the new owner.

Question 3. Whether mortgage lending decisions relating to the presence of Japanese Knotweed are currently based on sound scientific evidence of its effects on the built environment.

This is not our area of expertise, but it is our experience that lending decisions appear to be made on risk assessments that react to the market conditions, which appear to us to be based on the perception of buyers to knotweed risk, rather than on any factual or scientific evidence.

That being said, it is clear that lenders are alive to, and in the main follow, recognised sources of guidance (principally the RICS guidance).

Question 4. What guidance for the sector currently exists, the impact of existing legislation, and how else evidence-based responses to the presence of Japanese Knotweed can be encouraged.

Table 1. A summary of guidance in England and Wales specifically for dealing with Japanese knotweed

Table 2. A summary of key legislation and regulation that impacts Japanese knotweed and its management in England and Wales

How else evidence-based responses to the presence of Japanese Knotweed can be encouraged?

This is provided through training, the anecdotal experience of rural resource management and invasive weed control professionals, and through ongoing, albeit relatively limited, research. Some members of the PCA IWCG have funded a range of scientific research into the physiology, biochemistry and damaging effects of Japanese knotweed. This is summarised below.

In 2008, PCA IWCG member, Phlorum, undertook, with academics at Sussex University, a literature review of research on the invasion ecology, physiology and biochemistry of Japanese knotweed. This was in order to identify potential strategies for new research into novel ways to control this plant. The outcome is reported in Bashtanova et al. (2009). Some of the principles were tested in the widely reported field trial research undertaken by Dan Jones as part of his PhD at Swansea University (see below), particularly the use of xylem and phloem mobile herbicides at different times of the year.

In 2011, Phlorum secured funding for a PhD studentship at Sussex University to examine the potential for seeking novel control strategies to inhibit biochemical respiration pathways in knotweed. This was with the Moore Laboratory, which is a world-renowned research centre on mitochondria, alternative oxidase in plants, and the use of respiratory inhibitor compounds to control pests and pathogens. The outcome of this is reported in the PhD thesis, Shearman (2015). Apart from the thesis, the research has not yet been published. However, it has provided useful protocols for establishing Japanese knotweed tissue and cell cultures and has revealed some interesting aspects of knotweed’s mitochondrial physiology, which could lead to novel control strategies.

In 2017, Phlorum secured funding for another PhD student. This time with EU Regional Development Fund funding at Lancaster University. This research takes a chemical biology approach to test a number of compounds on the physiology and biochemistry of Japanese knotweed, with a view to developing novel, low-carbon, control treatments. It continues some of the work started at Sussex University on respiration inhibition and uses some of the techniques developed to grow Japanese knotweed tissue and cell cultures. They are also testing the potential for the commercial development of compounds that appear to come from an allelopathic effect produced by a species that is subject to a non-disclosure agreement with a third party. This research is in the second year of the PhD studentship.

In 2016, PCA IWCG member, Compete Weed Control, funded Dan Jones, PhD student at Swansea University, which became the most extensive field-trial undertaken of the efficacy of Japanese knotweed control treatments. A large number of physical and/or chemical control treatments were tested over the three year period of the project. The treatments focused on phenology, resource allocation and rhizome source-sink relationships to reduce the ecological impacts of controlling Japanese knotweed (Jones et al. 2018).

In 2018, Complete Weed Control secured funding for another PhD student at Swansea University. The research is looking into re-vegetation strategies after Japanese knotweed treatment has occurred.

In 2018, PCA IWCG member AECOM undertook research with the University of Leeds to assess the potential of Japanese knotweed to cause structural damage compared to other plants (Fennell et al. 2018). This had a number of limitations but it did indicate that the perceived risk to the structural integrity of buildings and property caused by Japanese knotweed had been overblown in the media. This generally supported the views and aims of the PCA IWCG since its inception in 2012, that Japanese knotweed is a manageable risk that can be ameliorated by appropriate treatment strategies and guarantees. The PCA IWCG was founded on the need to provide lenders with an assessment process to allow them to acknowledge and meet the risk requirements of mortgage finance.

December 2018

References

Bashtanova, U.B., Beckett, K.P. and Flowers, T.J. 2009. Review: Physiological Approaches to the Improvement of Chemical Control of Japanese Knotweed (Fallopia japonica). 57(6):584-592.

Fennell, F., Wade, P.M. and Bacon, K.L.. 2018. Japanese knotweed (Fallopia japonica) an analysis of capacity to cause structural damage (compared to other plants) and typical rhizome extension. PeerJ 6:e5246 HTTPS://doi.org/10.7717/peerj.5246

Jones, D., Bruce, G., Fowler, M.S., Law-Cooper, R., Graham, I., Abel, A., Street-Perrott, F.A. and Eastwood, D. 2018. Optimising physiochemical control of invasive Japanese knotweed. Biological Invasions. 20, (8), 2091-2105.

Shearman, J. 2015. The Regulation of Respiration on Plant Growth and Development of Fallopia japonica, Japanese Knotweed. DPhil Thesis: Sussex University.