There are environmental factors outside of your home that could affect it such as the risk of flooding, subsidence and land contamination. When buying a property it makes sense to be aware of external influences including new train lines, wind farms and fracking areas. Chris Loaring explains
When it comes to applying for a new mortgage, whether you’re a first-time buyer or planning to move up the property ladder, the application process requires a range of information to be presented to the lender to ensure the mortgage is both affordable and suits your personal circumstances.
In April 2014, new rules came into force that mean mortgage lenders are now required to undertake more detailed analysis to ensure the mortgage that has been applied for is appropriate and repayments can be made without cause for concern. This is assessed by reviewing monthly income versus outgoing expenditure, as well as questioning how a rise in interest rates might impact on the ability to maintain the monthly payments.
This new layer of risk management not only helps to protect you in ensuring any home loan is appropriate but it also means the lender is complying with responsible lending rules and that any loan agreed is suitable.
Valuation
Once a lender has assessed your application, the next step is to turn the attention to the property in question. A mortgage valuation is instructed by the lender, which involves a chartered surveyor assessing the property to determine the current market value to ensure it is worth the money that has been agreed as the purchase price, plus the subsequent value of the loan. This is purely for the benefit of the lender however, and shouldn’t be confused with a Homebuyers survey.
While the mortgage valuer will highlight any serious concerns that may affect the value of the property, the valuation is not designed to provide any detailed insight regarding the condition of the home or any other factors that could impact on its future value. For example, any potential environmental factors that may pose a risk, such as subsidence or flooding.
In fact, a new YouGov survey*, which was commissioned by the Know Your Flood Risk campaign, found that almost seven out of 10 people have never checked the flood risk level of their home, despite increased incidents of flooding in recent years. On top of this, only 20 per cent of people check flood risks before moving into a new home.
The onus here, however, is on the homebuyer to research this level of information… but what should you consider and where can you access such information?
Do your research and
know your risks
Flooding – The National Audit Office has calculated that flood damage costs in England are around £1.1 billion each year. While the Environment Agency has reported that around one in six properties in England are considered at risk of flooding. Of these, over 2.4 million are at risk of flooding from rivers or the sea, of which nearly half a million are considered to be at ‘significant risk’.
A common misconception related to flooding is that if you’re not located by a river or the sea, flooding isn’t an issue: this is not the case. With more and more unseasonal or extreme weather conditions occurring, surface water flooding is also an issue that should not be ignored and data is today available that provides an insight into the potential risk of flash flooding in your local area.
Types of flood risk to consider:
Surface water flooding – When exceptionally heavy downpours happen, the ground can become saturated and the drains and sewers may not be able to cope with the deluge, leading to surface water flooding. Although this is more likely in low-lying areas, it can happen to other properties which are not specifically designated as being at risk of flooding on the Environment Agency’s flood risk maps.This can also be triggered in urban areas where the ground consists of mostly hard surfaces, such as paving stones, concrete or tarmac as it creates a flow for rainwater, rather than letting it soak into the ground. It has been estimated that nearly four million properties are at risk of surface water flooding in the UK.
Goundwater flooding – Rising groundwater levels resulting from heavy rainfall can present problems. This type of flooding generally occurs during long and intense periods of rain when infiltration into the ground raises the level of the water table until it exceeds ground levels. It is most common in low-lying areas overlain by porous soils and rocks, or in areas with a naturally high water table.Rising groundwater levels pose an increased threat to buildings with basements, for example. Such flooding may occur separately or in conjunction with flooding from other sources such as surface water flooding.
River flooding – River flooding occurs when rivers and streams are unable to carry away floodwaters within their usual drainage channels, and subsequently those low-lying properties located close to the river are liable to flood waters.
As we have seen on TV and news reports, when river flooding occurs it can create widespread damage due to the sheer volume of water, plus it may be longer-lasting and more difficult to drain away. Fast-flowing floodwaters can also pose a threat to the safety of people, as well as structurally damaging buildings.
Coastal flooding – High sea tides which overwhelm coastal defences are a major contributor to coastal flooding. This may affect not only property close to the shore line itself but also buildings located in tidal river basins away from the coast. This is due to floodwater being forced up the tidal reaches of rivers and estuaries by raised sea levels and gales. It is anticipated that such flooding may become more frequent in future years due to rising sea levels.
To evaluate whether your property is at potential risk of flooding, there are a number of tools and options available to you. Firstly, ask your legal professional to access the appropriate flood searches as part of the conveyancing process, such as the Homecheck Flood report. These reports provide a breakdown of potential risks and are backed by leading environmental consultants to help remove any uncertainty on the interpretation of the report results. The Environment Agency also provides a flood advice line and online warnings, or you can download the Flood Risk mobile app from Know Your Flood Risk to check an area’s risk, at any time.
Land contamination
Another risk that may not necessarily be visible but could be an issue is land contamination. Both councils and commercial entities hold data on historic land use; planning history; pollution incidents; details of closed landfill sites; site-specific reports on investigation and remediation, and other related matters.
In addition, reports are available that help to uncover the history of a site to determine whether any potential risks may still be present. While many checks should have already been undertaken prior to the homes being built – and the appropriate remediation completed – this is not always the case, and there are checks that can be made for complete peace of mind. Reports such as Envirosearch Residential are available during the conveyancing process and provide information on locations of historic oil and gas tanks, mining and radon data, historical land use data, along with a degree of flood risk analysis and screening for nearby energy and infrastructure projects.
Energy and infrastructure developments
Do you know whether the property you are purchasing is located near to any proposed infrastructure or energy developments? For example, is the property going to be close to the HS2 high speed rail line or Crossrail, or is a new wind farm or turbine going to be erected in view of your new home?
If in doubt, ask your solicitor to access an Argyll Energy & Infrastructure Report that provides an indication as to whether a residential site is likely to be impacted by the proposed new high speed rail network, on-shore energy exploration and production – including areas licensed for ‘fracking’. The report also shows the location of existing and proposed wind farms and wind turbines. Where issues are highlighted, the report provides details about next steps, including any compensation schemes that may be available.
Ground stability
When the weather dries and the sun starts shining, the topic of subsidence starts to appear. Different soils react differently to weather conditions, and if your soil is clay-based, for example, it could present a ground stability issue in hotter conditions, as the land dries, shrinks and cracks.
It is important to have a clear picture of any ground stability issues that may affect a property – a range of reports are available that not only provide a precise picture of the land’s geology, historical subsidence or heave but even potential seismic activity, as well as detailing local subsidence insurance claims data.
It is also worth noting that such risks can occur from past coal mining activities and as such, Coal Authority mining searches are available that identify any potential risks within a given location.
Summary
In summary, when it comes to purchasing a new property it pays to do your research in advance of the transaction completing – not only into the condition of the home, but into other environmental factors that could impact on your enjoyment, or even the future value or saleability of your home.
Being forewarned regarding any risks puts you in a stronger position. That way, you can put measures in place to protect yourself, ensure you have appropriate insurances or taken steps to help protect you and your family’s investment for the future.
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Case study: flooded house caused £30,000 worth of damage
In June 2007, many areas in England experienced unprecedented, devastating floods. Tens of thousands of people were driven from their homes, forced into temporary accommodation. Carol Laws from Hull was one unfortunate flood victim – forced out of her home and into a caravan. This was the first time her house had been flooded.
More than 250mm (10 inches) of water fell in Hull in June 2007, with up to 105mm in areas of the city on one
day alone. At one period, 6mm an hour was falling on saturated land.
Carol commented: “When the flood came it was completely out of the blue and it engulfed the ground floor (2 feet throughout) including the garage. My daughter’s car was on the drive and it was a complete write-off.”
Hull is almost uniquely vulnerable to flooding in Britain because 90 per cent of the city lies below high tide level, and the city depends on pumps to prevent floods.
Carol continued: “It was horrendous when the flood arrived. Nobody knew what to do. We had no warning and were desperately trying to get everything upstairs. There was sewage running through the house which caused an awful smell. Luckily we weren’t ill but there were reports of people coming down with a virus. It was devastating. All in all we suffered around £30,000 worth of damage.”
Carol and her family were unaware of being in a flood risk area, nor were they aware there was a report available to tell them so. “I will definitely get a flood report in the future and would urge other homeowners to be made more aware of all environmental risks.”
In fact, the majority of flood victims we visited were unaware of the information available on flood and have instead relied on local knowledge to make a decision on risk. Make sure you have considered the due diligence implications of flood risk information and protect yourself from future risks.
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Chris Loaring is commercial manager at Argyll Environmental, a Landmark Information Group company.
1. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,169 adults. Fieldwork was undertaken between 19 and 20 February 2015. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
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