A Flood Of Property Data |
Managing and addressing flood risk has never been more important. According to the Environment Agency, over two million properties in England and Wales are at risk from flooding, however experience has shown that this figure could in fact be much higher. Changes in our climate, such as more severe storms and wetter winters, will increase that risk. James Sherwood-Rogers from Landmark Information Group assesses the role of estate agents and solicitors in advising clients on the potential risks
Words by James Sherwood Rogers, Landmark Information Group
With the dramatic impact of last year’s widespread flooding across the UK, the need for accurate and current information on flood risks is vital to homeowners and prospective purchasers.
Following the summer 2007 floods, this year many victims are facing yet more problems, with some insurance policies encumbered by large excesses, some now exceeding £30,000, while others have been denied insurance all together.
We recently spoke with a Tewksbury flood victim who was shocked when they recently received their contents renewal premium to find that it had increased four-fold.
In Hull, where 7,000 homes and 1,300 businesses were hit by the recent flooding and causing an estimated £200million of clean-up costs, the council is working with the Association of British Insurers (ABI) to ensure residents have access to quality and affordable insurance.
Whilst properties are technically insured they are not always effectively covered. With the Met Office’s 10-year climate forecast warning of more of last summer’s kind of flooding; and the Government allowing house builders to construct new homes on flood plains; not only must solicitors ensure their clients are certain about current insurability, but also about any risk of flooding.
In many of these cases, property professionals, conveyancers and homebuyers were unaware of the information available on flood and instead relied on local knowledge to make a decision on risk. With recent record flooding and suggestions that the nature of flood risk is changing - even in areas that have not previously been affected – we urge property professionals to fully consider the due diligence implications of flood risk information to protect both themselves and their clients, and to make flood reports a standard part of the conveyancing process.
With the anniversary of last year’s summer floods just passed and a new report just published in early July from Sir Michael Pitt providing 92 recommendations on what can be done to protect UK consumers from flooding, one area raised is that flood risk should be part of the mandatory conveyancing search requirement when buying property, and should form part of the Home Information Pack.
In Sir Michael Pitt’s final report of his review, ‘Lessons Learned From The 2007 Floods’, he described the situation to be ‘as severe a threat as pandemic flu and terrorism.’ The Pitt Review called for the Government to address the ongoing flooding issue and raise awareness among homeowners and potential buyers.
Landmark are aware of cases where solicitors have depended on local knowledge or insurance information to make a decision on risk, but this is not sufficient protection. It will not safeguard clients against a potential fall in the value of their home, neither will it protect against the distress caused by being in temporary accommodation for lengthy periods. Crucially, insurance quotes can change, potentially becoming effectively unaffordable in some extreme cases. A reasonable quote today is no guarantee for the future.
Research by Central Law Training (IRN Research, August 2007) found that 93 per cent of homeowners rated the provision of information on the proximity of flood plains as important. Including such reports in the HIP as a matter of course would provide homeowners and prospective purchasers with details of the full potential flood risk related to the property in question, offering peace of mind, or at least enabling individuals to fully understand the risks and plan accordingly. Forewarned is forearmed after all.
Looking at this from the estate agent or Home Information Pack providers point of view, this also creates an opportunity to generate some additional income from the provision of the value-added supporting reports, or develop a point of difference from competitors who are not yet offering such information to its clients.
It is essential that conveyancers and HIP providers are able to supply their client with what they need. Our research clearly demonstrates that solicitors will continue to carry out environmental due diligence, and recent press coverage of HIPs highlights how concerned people are that this is not a required element. By providing a more flexible approach we hope to encourage HIP providers to offer at least some element of environmental due diligence upfront, and to enable solicitors to carry out the relevant due diligence in every case.
Ultimately, we believe Sir Michael Pitt’s report should be a real eye-opener to all who, up until now, have not fully appreciated the potentially devastating damage that floods can cause to their properties.
Landmark’s new website www.homecheckflood.co.uk has been launched to highlight the issues associated with flooding, along with providing practical guidance on how to obtain detailed flood risk assessment information.
Key recommendations from Sir Michael Pitt:
The report includes several recommendations of relevance under the heading of ‘Better advice and helping people to protect their families and homes’. A summary of the key points and recommendations of interest in relation to measures to raise awareness of flood risk before an emergency is as follows:
•The report states that a key area which the public need more support on is awareness and education. Pitt states that “the public need to be aware of a flooding risk before they can take action to minimise it”
•Amongst wider recommendations about risk education, including a recommended focus on children, Pitt stresses that there is not enough information made available in the property market in relation to flood risk and the location of flood plains. He comments: ‘A large proportion of property owners and tenants do not know if their property is on a floodplain and there is currently no requirement for people purchasing a property to be informed about flood risk by estate agents, lawyers or the previous owner.’
•This gives rise to concerns that the first time a potential purchaser might become aware of a problem with flood risk or a history of flooding is when they come to exchanging contracts and, on organising insurance, find their application is refused or subject to excess premiums.
•The report also states that there is currently no legal obligation on estate agents to inform potential buyers that the property is at risk of flooding or has a history of flooding, and that if an estate agent gives the wrong information as a result of being unaware of a problem, they have not committed an offence.
•The report notes that at present, the only question asked on flooding in HIPs relates to surface water flooding as part of the mandatory drainage and water searches.
•It further notes that vendors, unless asked, do not have to disclose whether they are aware of the property ever having flooded, because no relevant question features on the Law Society’s ‘Sellers Information Form’ or in the option HIPs ‘Home Use/Contents’ forms. It says: “The Review has discussed this with the industry and we welcome the National Association of Estate Agents, the Association of Home Information Pack Providers, the Royal Institute of Chartered Surveyors and the Law Society agreeing to consider how to take this forward, with one option being that flood history is a mandatory question in the ‘Sellers Information Form’.
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Posted On
27
August
2008
at
05:24
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