Monday, January 13, 2014

Flooding – A risk to property that cannot be ignored!

The Association of British Insurers highlight the financial cost of flooding in the UK: Since 2000 insurers have paid out £4.5 billion to customers whose homes or businesses have been hit by flooding. This is up 200% on the £1.5 billion paid in the previous decade in real terms’

Meriden, West Midlands 2012 - Source: Own
Over recent years flooding in the UK is something that has become a regular news event and something that seems to be happening on a much more frequent basis.  In fact even at the time of writing this article (7th January 2013), we are experiencing prolonged periods on heavy wind and rain, resulting in flooding in many parts of the UK.The disruption caused is often extremely stressful, expensive to rectify and sometimes even life threatening.  The facts and figures below (Environment Agency, Defra and Parliament UK cited in provide a stark reality of the impact of flooding, some of which my raise a few eyebrows: 
  1. Around 5 million people live in flood risk areas in England and Wales.
  2. One in six homes in England is at risk of flooding.
  3. Total rainfall in the UK during 2012 was 1,330.7mm, just 6.6mm short of the record set in 2000.
  4. 2012 was the UK’s wettest year on record.
  5. Annual flood damage costs are in the region of £1.1 billion across England.
  6. 5.2 million properties are now at risk of flooding in England
  7. Flash floods can bring walls of water from 10 to 20 feet high.
  8. 25% of flooding occurs outside areas formally designated as being flood prone.
  9. 40% of businesses do not reopen after suffering a catastrophic loss.
The Association of British Insurers highlight the financial cost of flooding in the UK: ‘Since 2000 insurers have paid out £4.5 billion to customers whose homes or businesses have been hit by flooding. This is up 200% on the £1.5 billion paid in the previous decade in real terms’. Insurance cover is provided for flooding by a range of insurers however as with any insurance, premiums will reflect the level of risk to the insurance company. This could result in significant rises in premiums or indeed insurance cover being refused.  In order to try to ensure that flood insurance remains widely available and at ‘affordable’ levels a new Government backed scheme is currently being formalised in the Water Bill which is in the process of going through Parliament: ‘An insurance deal that links flood insurance premiums to the size and value of your home, based on council tax bands, comes into force in 2015. Under the plans, a non-profit-making insurance company called Flood Re will be set up to provide insurance cover to 500,000 households in the worst affected parts of Britain. It will be funded by a contribution of £10.50 from every household across the country, resulting in an estimated income of £180m a year, which will be used to pay for repairs’

Meriden, West Midlands 2012 - Source: Own
If flood insurance cover were to be refused it would significantly reduce the value of a property as well as resulting in a property being virtually impossible to sell. Avoiding this scenario is undoubtedly the main drivers behind the proposed new government scheme.  In any event, due to the amount of publicity that flooding has received in recent years, purchasers have become much more wary of the possibility of flooding during the conveyance process, with Solicitors advising their Clients of the importance of undertaking a flood risk assessment. There are however a number of things that a prospective purchaser can do to help establish if flooding is a possibility, before Solicitors are instructed.  A visit to the Environment Agency Website, provides access to their flood map, which details information relating to flooding around rivers and the sea, by simply inputting a postcode. This information is free to access and can provide an indication of whether flooding may be an issue, and if so can then lead to more extensive investigations. Given the disruption, cost implications and difficulties with insuring properties at risk of flooding, this is a simple way of making an initial assessment at a very early stage.

During the purchase of my current home, approximately eighteen months ago, my Solicitor advised me that a flood risk assessment was necessary.  After reviewing the environment agency flood map, I established that my property was not within two miles of a river or flood plain and that the risk of flooding was negligible/unlikely. I advised my Solicitor of this and informed them that I would not require this ‘search’, saving myself £75 in the process. 

If you are not confident with or do not want to rely on the free information from the Environment Agency Flood Map you can undertake a further on-line search with Land Registry ‘Find a Property’ (Link).  This search will cost you £9 currently and provides a little more detail than the Environment Agency Flood Map and also includes an indication of the likelihood of flooding.  I am not a Solicitor however I would suspect that this is where a ‘Solicitor’s search’ takes place. The Law Society recognise that conveyance Solicitorsare not qualified to give advice on flood risk or interpret technical flood reports’ However, the Law Society ‘do consider that conveyance Solicitors can at least pass on information to help clients who are purchasing property’. This begs the question therefore of why a person would pay a Solicitor in the order £75 for something that they can easily obtain for £9 themselves, bearing in mind that the Solicitor will not provide any interpretation or guidance from the search.

Buildings located near watercourses are often perceived as desirable places to live due to the views that are often provided.  Whilst this may be true for the large majority of the time, it only takes a period of adverse weather, sometimes occurring many miles away that can change a small stream into a raging torrent, raising river levels, bursting banks and causing flooding. The risk of flooding is unlikely to be visually obvious at most times of the year, so it is imperative to take the time to assess the risk of flooding to establish whether this may become an issue.  Simple, free or cheap research, as described above, which almost anyone can undertake provides a simple effective way of finding this information.

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