News & insights

Recent flood events call us all into action

Between 23 December 2013 and 28 February this year the Association of British Insurers (ABI) recorded 17,500 flood claims:  9000 from homeowners, 5400 for flooded vehicles and 3100 from businesses.

The floods may have subsided, and with media attention now focused elsewhere, we must not allow our memories of the devastating impact of the floods on individuals, businesses and infrastructure to fade.  The clean-up and recovery process for those affected by the floods is ongoing, with badly flooded properties potentially taking months to become habitable again.

According to data issued by RICS the average cost of restoring a flood-hit three bedroom semi-detached house is £30,000, and the claims process can take many months.  Those who were unable to afford insurance cover will, of course, have to foot the bill themselves.

This highlights just how imperative it is that buyers know about any potential flood risk as early as possible and have appropriate insurance in place before contracts are exchanged and they become fully responsible for the property.  Until Flood Re comes into force in 2015, properties found to be ‘at significant risk’ of flooding may prove extremely expensive, if not impossible, to insure.

There are also notable exclusions to Flood Re.  Homes built since 2009 will not be covered, nor will small businesses, properties in council tax band H, those owned by buy-to-let landlords or leasehold properties. The British Property Federation estimates that there are 840,000 leasehold properties at risk of flooding, 70,000 of which are deemed to be at high risk.

Conveyancers therefore have a key role to play.

The Law Society Practice Note, launched last May, states that 'In all conveyancing transactions, when acting for a prospective buyer, tenant or lender, you should mention the issue of flood risk to your client and, if appropriate, make further investigations.'

There have been some concerns over what ‘appropriate’ means but the recent surface water and groundwater flooding demonstrates that risk is not exclusive to properties near a river or the sea. As the practice note concludes ‘it may not always be obvious that a property is at risk of flooding’.

A desktop flood report, with a risk assessment by accredited consultants, is inexpensive and could save thousands of pounds and untold heartache in the long term.  It will not only clarify your client’s level of risk but also help them identify measures they could take to protect their future exposure to flood, whilst at the same time satisfying the Practice Note.

Flood management is an extremely complex issue which is not going to be resolved in the short-term.  In the meantime we can all work together to ensure we are playing our part in mitigating the risks for all stakeholders, especially the homebuyer.