Burning Issue

This month's hot topic:

HAVE WE REALLY LEARNT THE LESSONS FROM LAST YEAR’S FLOODS?

Flooding costs associated with extreme weather, both financial and emotional, have increased considerably over the last decade, and experts have predicted this trend is set to continue.

Paul Livett, Chairman of GroundSure looks into how increasing the use of flood risk information in property transactions can help to ensure both residential and commercial transactions are conducted on a truly informed basis, with buyers being made aware of environmental risks prior to purchase.

Over 2.2 million homes and small businesses in the UK are located in areas considered at risk of flooding, and the Association of British Insurers (ABI) has said that 570,000 of these face a high risk of flooding. The floods in June and July last year left approximately 48,000 households and 7,300 businesses flooded and were estimated by the ABI to have caused in excess of £3 billion worth of damage. Furthermore the Government estimates that annual flood damages currently average £2.3 billion per year, even when extreme weather does not hit the country.

These are startling figures, yet consensus has it that the Government continues to consistently underestimate the level of investment needed in flood defences, indeed the Environment Agency has suggested that 43 per cent of existing flood defences are in a ‘fair, poor or very poor state of repair’. At the same time the Government continues to build in areas considered at risk of flooding – the ABI has warned that a third of the three million homes the Government has pledged to build by 2020 will be built on floodplains.

The fact remains that environmental issues are now situated high on the public agenda. In recent research conducted by GroundSure, results from the 2,000 people surveyed showed that 95 per cent of respondents felt that environmental reports and flood information contained within was important, with 87 per cent stating they thought the reports should be compulsory in all property transactions. Despite this overwhelming public call for greater information to be provided up front on property transactions, only one in ten people said they had been offered environmental reports by their solicitors.

In the context of the recent ‘Brownfield Boom’, with 70 per cent of new build properties being constructed on or close to Brownfield Land considered to be more likely at risk of contamination and flooding, our research shows that over 80 per cent of the public is unaware of this worrying trend.

While flooding becomes increasingly common, it is acknowledged that financial and land constraints mean flooding will never be entirely preventable, and focus needs to move towards managing the associated risks.

Flood risk is now undeniably a fact of life, and the implications for home and business owners range from severe impacts upon the value of their property to affecting its insurability. Norwich Union, which has developed the largest and most accurate digital map covering all of Great Britain, specifically produced for insurance purposes, now classifies some properties as uninsurable and others as in need of significantly higher insurance premiums.

It needs to become widely accepted that managing the risk of flooding entails both proactively preparing against the risk of it occurring in the first instance, and minimising its subsequent potential impact.

The Final Pitt Review ‘Learning lessons from the 2007 floods’, published on the 25 June 2008 following a ten month consultation period, concluded that given the cost implications associated with flooding, flood searches are increasingly important and should be mandatory in all property transactions. Specifically, the review called for an increase in investment in flood defences; the need for a centralised flood forecasting and warning centre; increased autonomy to local authorities to deal with the eventualities of flooding; and the importance of promoting greater public awareness of the threats posed by floods and the need to be properly prepared.

These recommendations are a valid start but the Government now needs to specify what data and specifically which sources are considered absolute, trustworthy, and authoritative. It is all very well mandating an increase in the volume and transparency of information, but until there is a unilateral agreement as to precisely what information can be trusted as a reliable source we are in no better a situation.

Confusion stems from the numerous sources there currently are providing flooding data. The success of any flood model ultimately depends upon the quality of the data used.

We live in an age where high quality environmental and flooding data is readily available at a relatively low cost – for flooding alone there is Norwich Union’s property specific flood data; The British Geological Survey’s groundwater flooding data; the Environment Agency’s flood map data; digitised maps showing the locations of flood defences and flood storage areas; advanced algorithms facilitating rapid risk assessment of multiple, and potentially huge, areas.

In our research flooding has been cited as the number one concern among members of the public, with 40 per cent of respondents naming it as the most threatening environmental risk. Interestingly, proximity to contaminated land is also named as an environmental concern, which goes to show awareness of environmental risks is rising among the public.

It would seem that last year’s floods have led to environmental concerns rising further up the public agenda, but we have still not entirely learnt the lessons. Information is readily available and affordable, yet people are either shy of incurring small incremental costs, or simply not being guided by the legal profession to conduct environmental due diligence on all property transactions. In the long run environmental due diligence could save their home or business, while also providing them with peace of mind.

The Government has reviewed the current situation and concluded that flood searches are increasingly important and should be mandatory in all property transactions, but has not specified and educated the public on which sources of data should be used as benchmarks to review flood risks.

Clear guidance outlining exactly what data should be used to highlight flood risk is now essential. The Government needs to set a prescribed benchmark quality standard, and rate different sources of flooding data accordingly. The challenge up to now has been the variation in the data available from different sources, making it difficult for industry and consumers to know which is most accurate.

GroundSure has been driving forward innovation, collating and managing leading edge environmental data and information while also providing a comprehensive environmental consultancy capability. Our data incorporates all of the data sheets mentioned earlier, meaning we can quickly and accurately assess any individual property’s likelihood of being susceptible to flood risk, in a highly cost effective manner. While more work and investment is needed to tackle flood prevention, given the advances that the industry has made in the provision of fast, accurate and detailed risk assessment there is no excuse for property purchases to be made that are ignorant of the threats of flooding and other environmental matters.

Knowledge is often said to be power, but knowledge can only empower people if they are guided to the correct source of information.

Paul Livett is Chairman and Co-founder of GroundSure, one of the UK’s leading providers of environmental risk management reports. GroundSure delivers environmental due diligence solutions to meet the challenges of the ever-changing UK property, conveyancing and financial markets.

Responses to info@groundsure.com

Paul Livett
Chairman of GroundSure