Flooding the property market

Although the UK is no stranger to rain, the sheer volume of it in more recent times has seen severe flooding around the country, most notably in 2007 and 2012.

The vulnerability of communities to the devastating effects of flooding has been apparent and recently DEFRA estimated that 5.2 million properties were at risk of flooding in England.

The Flood and Water Management Act 2010 came into force in August last year to try and protect communities from the risk of flooding and to try and improve the way we manage water. There are of course several different types of flooding; Surface Water Flooding, River Flooding, Coastal Flooding and Ground Water Flooding – all of which can be very expensive for affected home-owners.

The Act itself moves the focus from flood defence to risk and water management and encourages the use and development of Sustainable Drainage Systems (SuDs for short) which manages rainwater in developed areas in a way that mimics what would have happened to it had there been no development on the land so that is it efficiently drained away and released back into the system slowly.

The Act also creates bodies called Lead Local Flood Authorities (LLFA) that will maintain a register of features that are likely to have a significant effect on flood risk in their area. Those might be natural or man-made and might include walls, embankments, raised ground, channels etc. Once a feature has been placed on the register it cannot be altered, removed or replaced without the consent of the Environment Agency or the LLFA.

That might have an impact in the future on how land is developed or dealt with in terms of planning.

More significant for home-owners, however, are the risk of flooding and the issue of insurance.
Checks and searches are ordinarily done during a property purchase but those commonly cover only river and coastal risks. The issue of surface water flood risk needs careful consideration. Sellers should be aware about these issues and how they might affect the saleability of the property or their ability to obtain the asking price. Buyers are best advised to make sure that full checks are undertaken, as this may affect not only the price of the property that they are purchasing but also how easily the property can be insured and mortgaged.

There is currently an agreement in place between the Government and the Association of British Insurers dealing with insurance for properties at risk of flooding. That ensures that people can still insure properties even where there is a significant risk of flooding, as long as there are plans to reduce the risk within the next 5 years. That agreement comes to an end in June 2013 and at present it is unclear what the position will be after that. It may well be that home-owners will struggle to find insurance for their properties after that time or that policies will become very expensive.

Property transactions can be stressful and usually all parties want to make progress as quickly as possible. Skipping searches or not undertaking sufficiently detailed searches as to flood risk could have major implications for any property purchase – a small amount of effort at the outset, as with so many things, can avoid problems down the line.