Flood-risk issues take time to assess and can scupper transactions due to time delays and unforeseen costs
The Sky Sports documentary ’Football’s Toughest Opponent’ recently highlighted the challenge that climate change is posing to the beautiful game, especially the stadiums and pitches that host matches.
It hinged on research showing that a quarter of the UK’s football league stadiums were at risk from severe annual flooding by 2050. This included Chelsea’s Stamford Bridge and West Ham United’s London Stadium.
For some, the response to hearing about submerged pitches will be: “It’s only a game.” But this issue is much more serious than that.
As the documentary shows, buildings that have previously had no flood risk are not immune.
For many assets, the last time a detailed flood-risk assessment was carried out would have been the last time any major development work was undertaken, meaning the assessment could be decades old or not exist at all.
The reality, therefore, is that the risk assessment is out of date and does not take into account the impact of climate change witnessed over the past few years.
Not understanding the impacts of flood risk on the real estate assets of a business can have significant financial implications. It is possible that assets might be under-insured, there could be a claim for loss of earnings as a result of flooding and landlords could leave themselves open to expensive remedial costs.
There is also a chance that increased flood risks could lead to an inability to undertake future development work on a site, which will in turn affect asset values.
Flood-risk issues can take time to assess fully and often scupper transactions due to time delays and unforeseen costs. There are a number of different sources of flood risk, the most obvious being flooding from rivers or the sea. Just because a property is not near an obvious body of water does not mean it is not at risk from flooding.
Increasing temperatures and extended periods of rainfall caused by the changing climate mean there has been a rise in flooding caused by flash floods and surface water, as well as from rising groundwater levels.
Once you know your risk, mitigation measures can be put in place to minimise and manage those risks. Knowing your risks also allows you to incorporate additional physical adaptations and mitigation measures.
Modelling for future climate scenarios will lead to informed decision-making on more resilient refurbishments.
Between 2015 and 2021, the UK government spent £2.6bn on river and coastal flood-defence systems, which it estimated protected more than 314,000 homes and businesses from flooding.
In the current economic climate, developers are unlikely to be able to rely on such strategic capital spending. Therefore, understanding flood risk and early engagement in the design and planning stage with experts, local planning authorities and the Environment Agency is crucial for considering and implementing flood-risk prevention schemes, resulting in future-proofed assets.
With the impacts of climate change becoming more significant, and the risk of flooding ever present, it has never been more important to consider the likely impacts of flooding when looking to acquire an asset.
Undertaking a flood-risk assessment at the point of sale ensures a comprehensive understanding of your potential asset, reducing the risk of unexpected capital expenditure and the inability to undertake future developments.
Vikki Aitkenhead is head of environmental services at real estate consultancy Hollis