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Flooding implications for residential surveyors Paul Cutbill FRICS and Ray Simmonds FRICS, Quality Manager, Countrywide Surveyors. Flooding and flood risk .
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Flooding implications for residential surveyorsPaul Cutbill FRICS and Ray Simmonds FRICS, Quality Manager, Countrywide Surveyors
Flooding and flood risk There is greater recognition amongst the public , the insurance industry, and the surveying sector of the potentially catastrophic effects which flooding can have on residential property. • Dramatic news coverage and increased frequency of flooding have heightened awareness of the problem particularly with the home buying public. • Underlines the fact that the risk of flooding is more widespread than previously assumed. Are surveying practitioners sufficiently aware?
The problem for surveyors and valuers How should surveyors assess the flood risk applicable to a residential property from the snapshot taken at the date of an inspection? How should we obtain the information, evaluate it and advise the homeowner, prospective purchaser and/or lender if acting as a valuer? Certainly the case that flooding warrants greater consideration by surveyors in the future.
Suggested industry approach • Assessment of the risk requires consideration of the physical attributes of the particular property. • An understanding of its proximity to potential flood sources • The frequency and depth of that potential flooding. All of the above in addition to other survey inspection requirements and tasks to be completed. Also needs to be set against existing survey and valuation terms and conditions of engagement.
Types of flooding – historical awareness Tidal - Both sea and river defences may be overtopped or breached by a combination of low pressure weather systems and peak high tides. Fluvial - Flooding occurs in the floodplains of rivers when the capacity of water courses is exceeded as a result of rainfall or snow and ice melts within catchment areas further upstream. Ground Water - Low lying areas sitting over aquifers may periodically flood as ground water levels rise.
Types of flooding – increasingly a problem Flooding from sewers - Flooding from sewers can occur where there are combined storm and foul sewers and their capacity is exceeded due to large amounts of surface water run-off in a short time. Pluvial - Surface water flooding is caused by rainwater run-off from urban and rural land with low absorbency. Flooding from man-made infrastructure - Canals, reservoirs, dams and other man-made structures can fail causing flooding to areas downstream.
Pluvial flooding – a new challenge Surface water flooding is caused by rainwater run-off from urban and rural land with low absorbency. • Pluvial flooding now associated with over half the flooding in an average year in the UK. • Therefore should be a matter of increasing focus for residential surveyor practitioners • Until relatively recently it was impossible to access data that would predict where surface water might collect including how often and to what depth.
Insurability It has always been important to the Government to ensure that insurance against flood risk is available to most residential properties . • A need to fund repairs and to ensure mortgageability.
Statement of Principles In place since 2000, between the ABI and the Government. • Secured the availability, from ABI members, of renewed flood insurance for most homes, so long as the Government managed flood risk effectively. • In practice, the premiums for properties affected by flood risk have been subsidised by premiums for those not at risk. Excluded - properties built in 2009 or later.
Flood RE On 27th June 2013, the ABI and the Government agreed a Memorandum of Understanding outlining proposals for a new model to secure wide availability of flood insurance for residential property at an affordable cost. • The Government recommended a not-for-profit mutual scheme which would last 20 years, called Flood RE.
Flood RE Flood RE will be run and financed by insurers as a not-for-profit fund which will offer flood cover for high risk homes. • Insurers will pass the flood risk element from those households deemed at high risk of flooding to the fund. • Premiums for this cover will be calculated based on council tax banding, with a maximum ceiling depending on that band. Equates to a levy of £10.50 on annual household premiums and represents the estimated level of cross-subsidy that already exists between lower and higher flood risk premiums.
Flood RE excluded properties Flood RE will not cover: • Homes built since 2009 • Commercial or mixed use properties • Homes in Council Tax Band H • Losses beyond the 1 in 200 year mark. There is no guarantee that the Government will make resources available to cover such losses • Genuinely uninsurable properties for other reasons
Role of the surveyor and valuer The role of the valuer/surveyor is to assess the impact of flooding risk in accordance with existing standards, ensuring that client requirements are set out clearly in the Terms of Engagement. Q - Are current T&C’s reflective of customer needs and expectations on flood risk?
Existing survey standards The surveyor needs to be familiar with the nature and complexity of the property type and the region in which it is situated. This is likely to include general environmental issues where information is freely available to the public, including information on flooding. • Pre-inspection research should be undertaken relevant to the survey advice and reference should be made to the specific product practice notes
Valuation standards Property professionals who are members of the RICS and Registered Valuers are required to carry out their valuations in accordance with The RICS Valuation – Professional Standards 2014 (Red Book). • VPS 2 states that “inspections and investigations must always be carried out to the extent necessary to produce a valuation that is professionally adequate for its purpose.”
Assessing flood risk – survey methodology • Consider flood risk as part of physical inspection • Review history and known issues • Consider occupier impact of any flooding or flood risk • Assess likely impact on value
Considering the risk of flooding in locality Features of the property and site: • “Follow the trail” principle to be applied. • Expertise, experience and local knowledge. Pre flight checks – an important aspect of the survey • know what you will be looking at and where. Keeping up to date with technology and policy eg Flood RE.
Flood history of property/locality Established sources of readily available data: • Environment Agency , Private sector, insurance companies, local knowledge, internet searching, local paper and community information • Role of the Conveyancer – Law Society practice note updated May 2013. Vendors information form TA6 includes questions on flooding history Future sources: • Lead Local Flood Authorities - ability to request information • Role of data gatherers egRightmove, Landmark Quest?
Impact of flooding on occupation For residential property the scale of flood events will vary. • A cellar may occasionally fill with water to a few cm, have no impact on occupation of the property and as long as occupants are aware to store items at high levels be acceptable for occupation. • There are increasingly sophisticated measures and this is an area where specialist advice may need consideration and Recommendations sought.
Potential risk impact on value • Where there is a risk of flooding and / or a perceived risk to an individual property there is likely to be an impact on value. • However, this may not be translated into the market in a proportionate way eg coast or river view may be considered worth the risk. • Caution should be exercised by surveyor if the agreed sale of a given property indicates that the purchaser may not have a full appreciation of the flood risk profile of the property.
