Law Society releases new flood risk practice note

Law Society releases new flood risk practice note

The new flood risk guidance released by The Law Society of England and Wales is designed to provide solicitors with information that will help clients understand the flood risk that may be associated with owning or occupying property. It will inform clients of the investigations, searches and reports that may be necessary to minimise the risk of property transaction in areas that are a high flood risk. 

Desmond Hudson, Chief Executive of The Law Society said: 

“Flooding has the potential to impact a huge swathe of property transactions. Some clients may perceive that flooding only occurs if you live near a river but the majority of damage caused by flood is from groundwater, surface water or sewer flooding, none of which necessarily relates to rivers or low lying ground.

“Solicitors play a crucial role in the conveyancing process to help clients understand flood risk and what steps they can take when buying property.”
Jonathan Smithers , Chair of the Law Society’s Conveyancing and Land Law Committee considers this new practice note from the Law Society to be a useful resource for solicitors and is necessary when an estimated five million properties are at risk of flooding in England. 
It has been estimated by the Environment Agency that  1 in 6 homes are at risk of flooding in England. 
“It may not always be obvious that a property is at risk of flooding and this is where a solicitor can really help people to understand the risks and the investigations they can make so they can make a more informed decision when they are buying a property.

“Apart from the physically damaging impact of floods, if a property is at risk it may be difficult to obtain a mortgage, obtain suitable insurance cover or sell the property. Solicitors are there to help buyers, tenants and lenders in residential and commercial transactions to understand the options available to them.”

The government is currently undergoing negotiations with the insurance industry on the Statement of Principles. The government’s aim is to ensure insurance cover is affordable for even the properties most at risk of flooding. 

Without successful negotiations to produce an agreement of new measures between the government and the Association of British Insurers (ABI) before the 31st July 2013, the insurance market is likely to drastically change for properties deemed to be at a high risk of flooding. 

The recently revised date of 1st August 2013 for the Statement of Principles which was due to expire on the 1st July 2013 has given the ABI an extra month to negotiate terms with the government. However, if an agreement cannot be reached or a further extension granted, the insurance market is once again likely to drastically change for properties deemed to be at a high risk of flooding. 

“These adverse changes could mean higher insurance premiums and both buyers trying to obtain a mortgage and sellers in areas perceived to be at risk of flooding will face increased uncertainty. Solicitors will need to encourage buyers to investigate the insurance options for property they are looking to buy at a much earlier stage in the transaction. We hope that the ABI’s extension of the negotiation period will mean an agreement on a more sustainable scheme can be reached.” Mr Smithers said.
A Copy of the practice note is available here.

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