The 2014 year saw almost unprecedented floods in many areas of England and Wales. Apart from the physical damage caused by floods and the practical and emotional impact on property owners, if a property is at risk of flooding it may be difficult to:
- obtain a mortgage
- obtain insurance cover or
- sell the property.
Such issues are likely to affect the value of your property. The Environment Agency estimates that one in six homes in England are at risk from flooding and of these 2.4 million are at risk from flooding from rivers or the sea alone, 3 million are at risk from surface water alone and 1 million are at risk from both. Whether a property is at risk of flooding will not always be immediately obvious. Clearly if a property is near to a river or the sea the owner or a prospective buyer is likely to be thinking of flood issues.
However increasingly common causes of flooding are issues such as:
- surface water flooding which occurs when heavy rainfall overwhelms the drainage capacity of a locality
- sewer flooding which occurs when sewers are overwhelmed by heavy rainfall (or are blocked)
- groundwater flooding which occurs when underground water levels rise above surface level.
Until the middle of 2013 insurance companies were obliged to ensure that all property owners could obtain buildings insurance on reasonable terms and that those owners at higher flood risk not be unduly penalised. This agreement came to an end in 2013 thus putting the issue of buildings insurance for properties in a flood risk area in a state of flux.
In June 2013 the government agreed a Memorandum of Understanding with the Association of British Insurers (ABI) to develop a not for profit flood insurance scheme known as 'Flood Re'. The purpose of the scheme is to attempt to ensure that home owners whose properties are at high risk of flood can obtain affordable flood insurance with cover at a set price. It is anticipated that Flood Re will go live in summer 2015. In the meantime the ABI members will voluntarily continue to abide by earlier agreements relating to insurance.
If you are thinking of buying a property it is important to ensure that your Solicitor carries out all appropriate searches on your behalf including if necessary making full enquiries and investigations about the risk of flooding.
Whilst your Solicitor will not be qualified to give advice on flood risk or interpret technical flood reports, a prudent buyer will want their Solicitor to carry out all appropriate searches and enquiries and will want to ensure that corners are not cut in the name of modest cost savings.
To discuss this or other property related matters contact us.