Recent news stories have highlighted that flooding events are becoming more and more common throughout the world and, whether or not you believe that to be down to climate change and global warming, flood risk management is becoming increasingly relevant.

What is the cost of flood defences?

With the government having recently confirmed that the flood defence budget is to be scaled back by eight percent in England, the expectation must be that landowners and developers will be the parties hit with the responsibility of putting the necessary defences or drainage solutions in place for their site, or potentially face a site which cannot be developed.

No mention has been made yet of a similar budget cut for Scotland, although the Scottish Government consultation "The Flood Risk Management (Scotland) Act: Delivering Sustainable Flood Risk Management – A Consultation" (published January 2011 and seeking responses by 18 March 2011) hints at that, when it highlights that availability of funding for flood management may depend on "national priorities for investment" but that "constraints on public funds shouldn't prevent beneficial local projects being developed, partly or wholly funded by local beneficiaries". It is vital, therefore, that landowners and developers are aware of the potential issues, such as those that we consider below.

The flood management framework in Scotland

The Flood Risk Management (Scotland) Act 2009 (the "2009 Act") sets out a new framework for the assessment and management of flood risk in Scotland. Its target is the creation of flood risk management plans covering the whole of Scotland by 2015, to help develop a better understanding of potential spread and impact of flooding and develop effective actions. However, getting to that stage is to involve years of research and consultation.

The first and current stage of that aim is to identify areas most vulnerable to flooding (the "potentially vulnerable areas"). Guidance on the 2009 Act highlights that the predicted increase in flooding events will put such pressure on the existing protections and infrastructure, that new areas could become susceptible to flooding.

Under the Flood Risk Management (Flood Protection Schemes, Potentially Vulnerable Areas and Local Plan Districts) (Scotland) Regulations 2010 (which came into force on 24 December 2010), the Scottish Environment Protection Agency (SEPA) is obliged to submit documentation on potentially vulnerable areas to the Scottish Ministers by 22 September 2011. The information is to be publicly available by December, and will effectively be in the form of a broad-scale national flood risk assessment.

Identification of "potentially vulnerable areas": some implications for existing sites

  • Values are likely to be affected if the area identified was not previously considered at high risk of flooding – prudent buyers could use the inclusion of a site on the list of potentially vulnerable areas as a reason to drive down the price;
  • Insurance premiums are likely to rise, or insurers may take the decision not to insure potentially vulnerable areas at all;
  • Potentially vulnerable areas will be subject to the further stages of the flood risk process (briefly explained at the end of this article). This could have a positive effect if Local Authorities fund flood protection schemes improve the situation in their area, although it could also mean more pressure on landowners and developers in those areas to come up with the flood risk management solutions, particularly via the planning process;
  • Compulsory acquisition by the Local Authority of areas required for their flood protection schemes will naturally be more likely in and around those areas;
  • The prescription and listing of potentially vulnerable areas may end up producing a "danger list" referred to by purchasers to check whether or not a development site is worth the effort; and it has the potential of blighting a number of sites when there is no real need for them to be on the list.

Presumably it will not only be the areas identified as "potentially vulnerable" that will be affected by the proposals but also the areas surrounding them, where certain flood protection/drainage measures will need to be situated.

What steps can developers and purchasers take to protect their interests?

Perfect sites are, however, hard to come by and developers are already looking to areas which are less than ideal. What then becomes the important question is what can developers and purchasers do to try to protect themselves when acquiring land that may be at risk of flooding?

  • Be aware of the potential for flooding of any site being acquired and ask appropriate questions during the negotiation and due diligence process, including whether or not (i) the seller is aware of the site having been affected by flooding in the past (and get a warranty in the purchase contract to cover that if possible) and (ii) insurance cover has previously been refused, or only offered at very high cost, in respect of the property because of a perceived risk of flooding. In terms of background research that can be done, SEPA's website has searchable indicative river and coastal flood risk maps, which can be used as a rough guide to identify some flood risk areas, but they are fairly generic and do not cover rising groundwater, surface water or flooding from drainage systems. If there is a concern on flooding, a Flood Risk Assessment should be requested from the seller, covering all potential sources of flooding. As we get closer to 2015, information on flooding should become more in-depth, searchable and helpful, and more important to have seen.
  • Be alive to the practical and legal implications of requiring more land than the development alone requires, and involve any necessary third parties as soon as possible. Whether to comply with conditions attached to planning decisions for a development, or simply to protect an existing property, third party land may be required for drainage solutions or for flood defences. This may require a transfer of ownership of parts of, or the acquisition of servitude rights of drainage (including the right to construct the drainage solution) over, the third party land. This will obviously involve putting in place additional legal documentation with those third parties, and suspensive conditions relating to securing those rights over third party land should be included in the contract for the purchase of the main site if those rights are essential for development.
  • Servitude rights should be drafted to allow for any anticipated subsequent development of the property benefiting from the servitude rights, so that the third party owner does not later have a claim of an unacceptable increase in the burden on his property if the run-off from the development turns out to be a lot higher in volume than originally anticipated. Depending on the flood protection measure or the drainage solution involved, allowance should potentially also be made for reasonable changes to be made to the servitude rights as necessary as the development progresses. For example, the servitude could be constituted over a wider area than will ultimately be required, to allow for any necessary route or location within that wider area, and so that essential drainage solutions, that perhaps become more advanced during development, are not constrained by servitude rights that are too narrow. That wider servitude could subsequently be restricted to the route or location as ultimately constructed. Any lesser rights than ownership or servitude rights are not advisable if the measures to be taken are imperative for the development.
  • Third parties should be approached as soon as possible; reaching the stage of advanced negotiations with the seller of the main development site, and perhaps even a binding contract to purchase, before approaching third parties whose co-operation is essential runs the risk of that third party holding the developer to ransom. Worst case scenarios where the issue of rights over other land has not been investigated are (i) that the purchaser ends up bound to purchase a site that cannot be developed as intended, or at all, without paying a large sum of money to a third party or (ii) there is no suitable land available for the flooding protection or drainage solutions required.
  • The Scottish Government is due to publish guidance on sustainable flood management in May. The push is towards Sustainable Urban Drainage Systems (SUDS), which protect natural resources and are designed to slow the flow of water, and can reduce flood risk by absorbing some of the initial rainfall and releasing it gradually. Instead of the more traditional concrete solutions of embankments and dams, etc, the emphasis is on, for example, enhancing woodland areas to allow for better water storage and capturing run-off, removing culverts or other constraints on channels, reconnecting floodplains, creating ponds, reservoirs and surface water attenuation ponds to help store flood waters, and creating surface water flow routes that divert floods to areas where impacts will be minimised. For such solutions, there is a good chance that a fairly large area of third party land could well be necessary.
  • Ensure an evaluation and costing of any necessary flood defences or drainage solutions for the development is carried out as soon as possible. SUDS, whilst clearly the way forward to preserve our natural resources and therefore to be heartily encouraged, admittedly may take more work to ensure sufficient impact on flood risk than the more traditional constructed alternatives because of the uncertainties involved (see the Consultation referred to at the first paragraph above); but these uncertainties are expected to decrease as more is understood towards 2015.
  • Finally, be aware of the ever-increasing risk of doing nothing to check if the site could be affected by flooding. Albeit if the area is within a known flood risk area a developer is unlikely to avoid a condition in their planning permission requiring defences/drainage solutions to be put in place where necessary, if no planning permission is necessary for what is intended for the property following a purchase, or if the property is an existing constructed property, the purchaser, or existing landowner, should still consider the risks of failing to put in place flood defences or drainage solutions to protect existing interests. This is particularly important when property insurance may be hard to come by in potentially vulnerable areas and those areas could well include areas not previously thought at risk.

The next steps in the flood management framework

The second stage of the process under the 2009 Act is to produce flood hazard and flood risk maps showing the likely extent and impact of different flood events, to be publicly available by 22 December 2013. The third and final stage is the preparation of flood risk management plans, which will be based on all of the information collated in the previous stages by December 2015. The intention is to allow for investment to be targeted on the areas at most risk and to co-ordinate actions between local areas, so that flood prevention in one local area does not just move the problem elsewhere.

To view the Scottish Government consultation "Delivering Sustainable Flood Risk Management" click here.