Recent extreme weather conditions have increased the number of both residential and commercial properties at risk of damage from flood water. In June 2009 the Environment Agency estimated that one in six properties in England are at risk from flooding, with this estimate including for the first time properties considered to be at risk from surface water flooding.
Flood risk may be of both immediate and long-term concern to existing owners, tenants and buyers for the following reasons:
- The effect on insurance premiums and availability of cover. You may not be able to get insurance cover.
- The mortgage lender's reluctance to lend because of the risk. You might not be able to raise a mortgage on the property.
- Potential cost of structural repairs. Do you really want the builders in?
- Damage to goods, fittings and services. It is likely that an insurer will not pay all the costs.
- The effect on continuity of business with resulting loss of profit. Trading could be disrupted.
A flood search will assess the risk from the four main types of flooding - river, coastal, ground water and surface water.
Some searches are suitable for residential properties and others for commercial sites. The cheapest are desktop searches where the search provider collects and sometimes analyses the data from a variety of sources but does not visit the property. A more expensive desktop search will offer a wider range of information and a more tailored assessment. Top level and even more expensive searches can include further investigations and a site visit. Even then an overall assessment of the risk will probably be required and it may well be beneficial to have the result reviewed by a consultant.
Depending on the level of risk a buyer/tenant may wish to:
- Re-negotiate a lower purchase price/lease premium so as to retain funds to pay for increased insurance premiums, a policy excess, repairs and flood protection measures.
- Re-arrange the layout/use of the premises to minimise the scope for damage.
- Include flood protection measures in fitting out works.
- Re-negotiate lease terms to allocate liability for flood damage.
- Simply not proceed.
A buyer/tenant may also wish to supplement the result of a flood search with information available from the flood map on the Environment Agency website, enquiries of the seller/landlord and an environmental desktop report.
It is essential that enquiries are made – although the degree of investigation will depend on the individuals and mortgage lender's requirements. Buyers/tenants may wish to commission a more detailed search or more specific enquiries so that the implications can be considered in greater depth – better to find out if the property to be bought/rented is one of the one in six at risk before commitment!