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- Includes Contaminated Land and Flood
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To assist your client in making their decisions, the report includes insurability considerations, which are even more relevant as a result of the recent information set out below.
Flooding Insurance and Problems Downstream
The flood events of 2014 have thrown into stark relief the vulnerability of communities, both urban and rural, to extreme weather events. The uncertainty facing most businesses and home owners after the floods, is who will pay for the immediate clean-up and when can my business or home be used again. But the challenges for all sectors of the economy lie ahead in the form of potential losses to real estate values, due to the unavailability or lack of affordable flood insurance.
After the floods in Somerset and the Thames Valley, Parliament passed the Water Act 2014.
This Act introduces Flood Re which is designed to allow insurance companies to charge every home owner £10.75 and raises £180 million each year. This is to be put into a pooled fund to help the clean-up efforts after future events. For some that’s a very positive step forward, however that isn’t the case for everyone.
Flood Re is only designed to last for 25 years and it is a transitional arrangement to a free market pricing structure for domestic flood insurance. In a letter to the Earl Lytton dated 30th January of 2014 the Parliamentary Under Secretary, Lord de Mauley stated, “We want households to become more aware of their risk. Therefore allowing them to make informed decisions and providing incentive for investment in flood defences and resilience at both the community and individual level.
“Adjustments in house prices whilst insurance premiums will be a necessary part of this transition. We believe that 25 years is a reasonable period of time in which to manage a gradual transition for those affected personally.”
Unless homeowners make their properties resilient or resistant to flood ingression there will be impacts on property values as a result.
Flood Re does not apply to commercial property, neither does it apply to leasehold properties which may include blocks of flats or the private rented sector. It does not apply to small and medium sized enterprises nor does it apply to properties above Council Band H.
Yet, 80% of insurance claims for one insurer in the floods of 2014 came from homes that were not considered to be at risk of flood. Furthermore, of 385,000 properties in high risk flood areas more than 350,000 (over 90% which is the equivalent of 3.8% of the total housing stock) will be excluded from accessing Flood Re.
So it is important to get the full facts when establishing flood risk as well as other environmentally related issues. CLS provides a new suite of reports from Future Climate Info Limited that not only interrogates all relevant data but gives an RICS accredited Professional Opinion on every section. These reports assist conveyancers in getting the full picture, enabling homeowners and businesses to make informed decisions about their house purchases. Climate change isn’t going away so it’s important to get the best advice.
Click HERE to check out more Flood, Environmental, Ground Stability, Energy & Infrastructure case studies.
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