With flooding on the increase in the UK, it is often advised that conveyancers obtain a flood report for their clients. If a full flood report is commissioned, then the conveyancer has the reassurance of knowing they have supplied the mortgage lender and the buyer with as much information as possible to enable them to assess the likely risk before proceeding.
Why commission a flood report?
The Environment Agency has estimated that over five million homes in England alone have a higher than normal threat of flooding. It is not always obvious that a property could be at risk, with only 50% of the danger coming from rivers and the coast. The remaining 50% comes from ground water, sewers or flash flooding.
New build properties may be particularly at risk, with an estimated 11% of new homes in 2016/17 built in type 3 flood zones according to figures released by the Ministry of Housing, Communities and Local Government.
This means that one in ten homes in the UK has been built on land with a 1 in 100 or greater probability each year of experiencing river flooding or living on a floodplain susceptible to flooding.
In 2019 alone, there has been at least one severe weather warning causing flooding per month, dislocating many and causing thousands of homes to deal with the aftermath of a serious flood.
During the opening days of October, the remnants of Hurricane Lorenzo bombarded the UK, causing particular damage in the Isle of Man, leaving residents trapped in their homes following the bursting of a river bank.
With climate change experts anticipating extreme weather to only increase in the future, the current housing sector is vulnerable and lacking the relevant policies to adequately defend against such rampant and unpredictable weather patterns.
A recent Committee on Climate Change publication condemned Governmental policy for lacking sufficient resource to address concerns and make progress on adapting to and mitigating the impact of climate change.
The report claimed that current standards and planning guidance in England fail to encourage high quality sustainable drainage systems in all new housing developments and although flood defences are included in the planning design stages, these safeguards are often legally amended to bring down costs. Whilst a flood defence certificate is recommended, Government policy does not require properties to comply with these standards.
If more properties than ever are at risk of adverse weather patterns, a flood report has never been more important to ensure all due diligence has been considered by the legal service provider.
Solicitors are not expected to be flood experts, but by obtaining an up to date report from a well-respected source, they can discharge their liability both to the lender and to their client. GlobalX are able to advise when a flood report is necessary.
An in-depth report will detail where the danger areas may be as well as the level of risk, allowing a potential buyer to decide whether there are any remedial measures that can be taken. A GlobalX report is easy to read and will include the likelihood of insurance being available at standard terms. By providing buyers with this information, law firms can ensure that clients won’t have any unpleasant surprises after moving in.
They will also be able to comply with their mortgage conditions, which will require insurance to be in place throughout the term of the loan.
Insurance against flooding
With flooding now more likely than burglary, homeowners will need to be certain of adequate insurance for both building and contents. Conveyancers need to make their clients aware that they may experience difficulties in finding affordable insurance cover for an at-risk property. Alternatively, providing the insurer with a flood report may reassure them that it is a good proposition for them to undertake the insurance.
The Association of British Insurers (ABI) say that only 55% of homeowners in areas under threat of flooding are aware of the risk. Ensuring the buyer has a flood report carried out will mean that they not only have awareness of the situation, but that they can ensure that it is possible to obtain appropriate insurance.
Where a property is at risk of flooding, the conveyancer will have the opportunity to explain to the buyer the possible insurance problems and how they could potentially be addressed.
In 2007, around £6 billion of property damage was caused by intense flooding. It was estimated that 70% of the damage was caused by surface water and the insurance industry started to withdraw policies from some properties, deeming the risk no longer commercially acceptable. It is estimated that some 350,000 properties now face such a high chance of flooding that they are not a viable proposition for insurance companies. According to the ABI, the cost of drying, repairing and restoring a flooded home is usually in the region of £20,000-£45,000.
In 2016, an organisation called Flood Re was created by the ABI and its insurer members to make flood cover more widely available and affordable. Flood Re specialises in re-insurance for households at the highest risk of flooding. The group does not deal directly with homeowners but works with insurers to provide cover. It is funded by a levy paid in by all insurers in respect of all of the home insurance policies that they sell.
There are certain eligibility criteria to be met in order to rely on Flood Re. The property must have been built before 2009, be in Council Tax Bank A-H and not be a leasehold property with more than four flats. The insured householder must also live at the property. This rules out buy-to-let investment properties as well as the most expensive houses.
By providing a flood report, the insurer can see the likelihood of future problems and if they are not prepared to offer standard insurance, they can approach Flood Re and ask them to cover the flood risk element of the policy. In the event of a flood-related claim, the insurer would pay a valid claim, then ask Flood Re to reimburse them.
When clients wish to proceed with the purchase of a property in a flood zone
While flooding can be devastating, in some cases people still choose to live in an at-risk area. They will no doubt expect the level of risk to be checked. The GlobalX portal allows conveyancers to quickly and easily request a flood report, as well as any other required searches. Using a network of well-respected partners, accurate, accessible and cost-effective information is provided at a competitive price and quickly enough for even the most urgent transaction.
Where a client wishes to go ahead with a purchase in a flood zone, by requesting an in-depth report, the conveyancer can ensure that the lender, insurer and buyer all have the full picture. This covers the conveyancer in the event of future flood damage.
As well as finding an adequate and affordable insurance policy, buyers should also ascertain whether mortgage lenders would be prepared to lend in respect of the property, even if they don’t need a mortgage themselves. If lenders are reluctant to offer a loan for the property, then the buyer needs to understand that this will affect the resale value. The flood report will also give guidance as to the likelihood of standard insurance being available.
Obtaining a flood report
As a leading provider of conveyancing searches in England and Wales, GlobalX provides efficient, fast and trusted search information. We offer a range of flood reports, prepared by expert researchers, for property or land nationwide.
With a quick turnaround time and dedicated and experienced helpdesk, we can provide an in-depth report and answer any queries that may arise. Flood reports are available, and recommended, for both commercial and residential properties, to include flats, where the building may be damaged, resulting in liability to upper flat owners as well as ground floor flats.
For drainage and water search, environmental searches, land registry searches, mining searches, miscellaneous searches and flood reports, our fast, thorough service will ensure the home buying and selling process is fully informed whilst avoiding damaging delays.