PROPERTY CODES COMPLIANCE BOARD COMPLIANCE NOTES CN02I: REGULATED FLOOD SEARCHES

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1 PROPERTY CODES COMPLIANCE BOARD COMPLIANCE NOTES CN02I: REGULATED FLOOD SEARCHES The Code s requirements 1. The 7 principles of the Search Code apply to regulated flood searches just as they apply to regulated searches providing information about data held by local authorities and water companies and to all other property-specific searches. 2. In particular, attention is drawn to principle 2 of the Code which requires firms to Act with integrity and carry out work with due skill, care and diligence. There are eight specific requirements, and those of particular relevance to regulated flood searches are dealt with in Compliance Notes CN02A, CN02B, CN02C and CN02F. These and all other Compliance Notes are available to registered firms on the Resources section of the PCCB web site. 3. This Compliance Note: Complements, and should be read alongside, the other Compliance Notes. Supplements the Search Code and the other Compliance Notes by setting out minimum expectations of registered firms which compile and sell, or resell, flood search reports. Covers all regulated searches wholly or partly concerned with flood risk issues, including ground water, surface water, river and tidal flood risk. Applies to such searches in relation to all land and property. Will provide a basis, alongside the other Compliance Notes, for the PCCB s compliance work with all firms in relation to flood searches. 4. All registered firms which produce flood searches must ensure that their products, processes, procedures and documents comply fully with the requirements set out in this Compliance Note, and in other relevant Compliance Notes. Compliance Issues Scope of flood searches 5. The Search Code applies to all flood searches produced by registered firms. 6. The Code does not prescribe the content of flood searches (to avoid stifling innovation, or appearing to be anti-competitive). However, regulated searches concerned with flood risk issues must, as a minimum, satisfy the requirements of The Law Society Practice Note on Flood Risk. The Practice

2 Note can be found on the Law Society web site at: 7. Flood risk assessment information reported in flood searches (and hence the methodology used to obtain that information) must relate to a specific property, that is the property that is the subject of the search. 8. In all cases it is important that customers and their clients know what information is provided by the flood search report. PCCB Inspectors may check this with the customers themselves. 9. Where search providers supply flood search reports directly to conveyancers and/or other clients, it is incumbent on the search provider to ensure that the client is advised clearly about the content of that product, the terms under which it is provided and of any alternative product offered by the provider. 10. Where flood search reports are supplied through a reseller which is a subscriber to the Search Code it is incumbent upon the reseller to ensure that their client has access to details about what information is provided in the search product, and the terms under which the search is provided. 11. Clarity about the scope of the flood search report products offered by firms is essential, so as to satisfy the following Code requirements: Ensure that the terms and conditions and marketing materials relating to our services (whether printed or electronic form) are clear, fair, reasonable and not misleading. Tell you the charges (and payment terms) for any service before it is provided and at any time you ask. 12. The PCCB will accordingly enforce the following expectations through its compliance work: a) There must be a contract in place with the customer that clearly sets out the terms under which the report is supplied. PCCB Inspectors will expect to see clear evidence of this when carrying out inspections and other compliance activities. b) More generally, the PCCB will expect to see, for example in order forms, price lists, product cards, user guides and marketing materials, a clear description of the information provided by the product(s). Where more than one flood search product is being offered Inspectors will expect to see the difference between the products clearly described. Data sources 13. The Code requires firms to: Provide complete search results based on a search of all legitimate, commercially and readily available sources (i.e. a physical examination of public records; a response from an official entitled to provide the information; our own current records; or commercially available data) Make clear to customers in advance: what sources of information are commercially and readily available; what additional sources of information

3 may be obtained, identifying any additional cost or time delay involved; where required information is unobtainable. 14. These Code requirements and the associated Interpretive Notes on Compliance were written principally for regulated searches of local authority data. In relation to regulated flood searches the data sources used must be sufficient to facilitate a search report which satisfies the requirements of The Law Society s Practice Note. 15. The sources used for flood searches (and for any associated assessment in the search report regarding issues arising, any requirement for further investigations or assessments, and the degree of risk associated with the land), will vary depending on the nature and content of the flood search product. Firms are reminded that: The Law Society s Practice Note is not the sole standard of good practice. Providers of flood searches must, in addition, have regard to other established authoritative guidance for example, the Environment Agency guidance notes on flood risk assessment, and the National Planning Policy Framework (NPPF) and guidance on development and flood risk. A flood search report is essentially a screening report, and where the report includes recommendations for further investigations care should be taken to ensure that any firms or individuals recommended to carry out that work are suitably qualified professionals (for example, members of the Chartered Institution of Water and Environmental Management) and maintain adequate and appropriate insurance to protect consumers. 16. In order to fulfil the minimum requirements of the Law Society s Practice Note sufficient data must be evidenced to have been referred to in the flood search report to enable a best practice. 17. The NPPF and its guidance documents provide best assessment practice for carrying out flood risk assessments. The source-pathway-receptor model should be applied to planning for development in areas of flood risk. This approach is already used in the planning system to address issues of land contamination and environmental pollution. 18. Further information on the sources of flooding and the source-pathwayreceptor approach can be found in the Construction Industry Research and Information Association s Report C624 Development and flood risk guidance for the construction industry (2004) and R & D report FD2320 Flood Risk Assessment Guidance for New Development Phase 2 (Defra & Environment Agency, 2005). 19. Flooding can occur from a variety of sources and wherever possible, each key source of flood risk must be taken into consideration as part of the flood search. The key sources of flood risk are outlined in the NPPF and its guidance documents and include: (i) fluvial (rivers); (ii) tidal (sea; estuary etc.); (iii) surface water (pluvial); and (iv) groundwater. Datasets covering England & Wales are available to enable screening of flood risk as part of desktop flood searches for sources (i) to (iv). 20. Should a particular site or property register a significant level of risk in relation to any of the key sources of flood risk, these should be assessed in detail,

4 and wherever possible as part of a site survey / investigation. The detailed assessment should include examination of velocity, depth and duration, and firms are reminded that in carrying out the assessment it might be appropriate to examine more than one source of flood data. 21. When assessing flood risk, from whichever source, two components must be considered: probability and consequence. The likelihood of a particular flood happening is best expressed as a chance or probability over a period of one year. For example, if there is a 1 in 100 chance of flooding in any given year, this can also be described as having a 1 per cent chance of flood each year. However, if a flood occurs, it does not mean that another flood will not occur for 99 years. There are a number of key factors which influence the scale and severity of human and economic consequences of flooding. These are outlined in the NPPF and its guidance documents and include, for example, the depth and velocity of flooding for a given flood source. 22. As such, so as to provide a comprehensive flood search, in line with The Law Society Practice Note on Flood Risk, and which meets the current UK guidance and accepted best practice outlined in the NPPF and its guidance documents, the following generic data types, at a minimum, must be considered and clearly referenced in the source of producing the flood search report: o Computer modelled digital flood mapping data showing detailed flood zones for a variety of annual return probabilities (e.g. 1 in 100 year; 1 in 1000 year etc.). This mapping should be of sufficient spatial resolution to enable address/property-level flood risk rating o Consideration of all major sources / types of surface water flood risk for which datasets covering the entirety of England & Wales are available, i.e. river (fluvial) flood; tidal flood; surface water/ pluvial flood and groundwater. o The flood search result must provide an estimate of probability or likelihood that the selected address would be expected to flood in any given year (e.g. 1 in 100 year flood). 23. Accordingly, PCCB Inspectors carrying out compliance activities will expect providers of regulated flood search reports to demonstrate that the data sources used are sufficient to meet the requirements of The Law Society s Practice Note having regard to best practice as described in paragraphs above. 24. In addition to being provided with appropriate, up-to-date flood risk information, customers should also be made aware of the likely availability of affordable flood insurance cover for a particular property. Following protracted discussions between the Association of British Insurers (ABI) and the UK Government, Flood Re was agreed in June 2013 as a model to be developed for ensuring affordability of flood insurance cover for the majority of home-owners and as a replacement for the Statement of Principles which had been in place previously. Flood Re is essentially a not-for-profit fund to provide affordable flood cover for residential properties considered to be at high risk of flooding. Whilst Flood Re goes some way to ensuring that the vast majority of UK homeowners have access to affordable flood insurance cover, there are a number of exceptions which need to be considered. Homes in the highest Council Tax band H in England, and equivalent properties in

5 Scotland, Wales and Northern Ireland will not be covered by the scheme. Homes built after 1 January 2009 will not be covered (as applied under the Statement of Principles). Rented property and all commercial property are also excluded. Further, in the Memorandum of Understanding between the government and ABI, property in developments which have been consented in the face of an Environment Agency objection could also be excluded from Flood Re which also introduces uncertainty. Flood Re is not due for implementation until summer 2015, and still requires European Approval. In the interim, ABI members will voluntarily continue to adhere to the previous Statement of Principles. 25. Providers of registered flood searches are reminded that, in common with other providers of regulated search products, they must have Professional Indemnity insurance and that the amount of cover must not less than the value of the property. In most cases 2 million for any one claim should suffice, but firms should check whether they need to purchase further cover in relation to searches on more valuable properties. Further guidance 26. Queries on any aspects of this Compliance Note are welcome. Please direct these in the first instance to the PCCB Chief Inspector, David Woodward, at inspectordw@propertycodes.org.uk New Code Version 2: February 2014 This Compliance Note will be reviewed and up-dated periodically.