Risky business: No flood defence is watertight

Of all affected areas where flooding has devastated lives,
the Somerset Levels perhaps best illustrated the economic and human costs of extreme flooding events during our wet winter

The first of what came to be described as a 'conveyor belt'
of storms battered the UK at Christmas in 2013. The rain was relentless, and by the end of January, Somerset was under siege. Properties were evacuated. The army had been called in and farmers had been forced to move livestock from areas inundated with water.A political storm complemented angry skies. Residents berated the environment secretary during
a visit to Somerset. Government colleagues turned up the heat
on the Environment Agency, criticising its failure to dredge the Rivers Tone and Parrett. It wasn't until 13 March that water receded sufficiently for
all roads to reopen, by which
time the economic cost of the clean-up operation across the UK had risen to nearly £1bn.

Estimates vary, but the Public Accounts Committee says more than five million - or one in six - residential and commercial properties are at some risk of tidal, fluvial (rivers), groundwater, or flash flooding. Yet, according
to a report by the College of Estate Management, a quarter of those living on flood plains are unaware of their potentially precarious location and the consequential risks.

Slashed defence budgets

Flooding and managing flood risk costs the country about £2.2bn a year, so says the Royal Institute of British Architects, compared with less than £1bn spent on protection and management. And flood protection budgets across the UK have been slashed, a casualty of the recession. Nevertheless, £2.3bn has been allocated as part of the government's national infrastructure plan funding flood defence projects in the next six years. These include better protection for the Thames Estuary and acceleration of the Boston barrage scheme protecting against tidal surges.

But while reassuring, no flood defence is watertight. Projects are modelled against risk analyses, with protection afforded against one in 100 or one in 200-year events.

The issue is likely to become more complex. The Committee on Climate Change has warned of the growing shortfall in flood defence investment to keep pace with our changing climate. In the face of rising waters, flood protection schemes are often little more than a sticking plaster solution. Pressure to develop on areas at risk of flooding compounds the problem and raises the question of what can be done to protect those living with flood risk and whose lives can be devastated by its effects.

Schemes like FloodRe may go some way to alleviating economic costs. Jointly developed by insurers and the Department for Environment, Food and Rural Affairs and due to go live next year, the scheme intends to make flood insurance available for up to 25 years at predictable prices for many residential properties which are perceived to be at higher risk of flooding.

But while covering those in some of the most affluent riverside locations, the scheme excludes businesses, buy-to-let properties, all properties built since the start of 2009, most flats in purpose-built blocks, and conversion flats in larger houses or where the freeholder does not live on site. Those falling outside the scheme may face extra costs or non-availability of insurance.

Given the exclusions in FloodRe, the search industry feels it’s more important than ever for all those involved to understand the risks to which they may be exposed. This includes lenders: a valuation that fails to account for the discount due to flood risk may expose lenders to a shortfall between the outstanding loan and the proceeds of a forced sale.

FloodRe is certainly not a panacea, and, while flood protection infrastructure projects may reassure and protect some property owners, ensuring flood risk is on the radar at the outset is the first step to fully inform any decision to lend, or to buy. Many residential buyers will be willing to take that risk to live in desirable riverside locations across the country.

The Law Society practice note requires solicitors to mention the issue of flood risk to every client, to consider advising them to check out the flood insurance position, and to do further investigations where this is appropriate. The fact that a quarter of those already living on a flood plain are not aware of that fact perhaps underlines the work that lenders, solicitors, and conveyancers need to do to improve awareness of flood
risk for all their clients. SJ

John Pickford is managing director at SearchFlow