How Conveyancers Can Save A Deal After Environmental Further Actions Come To The Fore

As far as conveyancers are concerned, there is little more damning to a property transaction than receiving a ‘further action’ assessment in an environmental report. Ground instability, contaminated land or a high-risk flood area – many may see it as an insurmountable hurdle for a client who is already near breaking point.

But it needn’t be that way. Instead of regarding a warning on an environmental report as an immediate stop being put to a deal, it can and should be sold as a scalable challenge for the client and it’s the job of the conveyancer to understand what can be done to overcome and move forward. In the future, as risk assessments become even more precise thanks to developing technology, and as the effects of climate change are felt more prominently, some further actions may become more commonplace.

Mitigating the effects of a changing climate

Alerts of flood risk and ground subsidence are becoming more and more common, so it is important to be familiar with the variances of insurance that can be offered. Until recently, too many conveyancers rarely considered flood risk unless the property sat in a historical flood plain but with the help of an FCI environmental report, potential risks can be identified early on in the transaction process.  As we have all seen, climate change-fuelled weather events are becoming more common – periods of intense rain or drought – so the land on which our homes sit upon is changing. As many as one in six UK homes are now at risk of flooding, and reports suggest cases of subsidence could increase five-fold in Europe in this century.

As such, conveyancers should not treat one of these further actions as a red light. Rather, it’s an opportunity to discuss the growing issue with your client and assess the options available to them. On the other hand, treading too lightly with all flood or ground instability further action notices could leave conveyancers with a lot less business in the long run.

Understanding contaminated land

Our systems and partners are constantly updating and improving their historical maps to give homeowners a better picture of what was once under their feet. An old gas works, a long-gone petrol station – these things can potentially require environmental clean-up.

The key to understanding and dealing with contaminated land is to assess to what extent local authorities are involved in dealing with the problem. It needn’t be a deal killer, but it has to be addressed if a successful sale can happen.

Legally, the cost of clean-up falls on those who contaminated the land. But, in many cases those businesses or individuals have long since gone. So then we must look to the local authority. The council will serve a ‘remediation notice’ on the original polluter or other appropriate person (the land owner), setting out the details as to how and when the land must be cleaned up by. There are options before and after this point, including insurance policies and government assistance through tax relief or allowances. It also always serves to be aware when properties were built, as a date after planning laws were tightened is less likely to lead to a further action notice.

Discussing an energy/infrastructure risk assessment

If an environmental report arrives with a Pass with Advisory for energy or infrastructure, it is important to be aware that these are often perceived risks instead of real risks and require conveyancers to understand what their clients perceive as a deal-breaker. It could be a nearby wind farm, power lines or a new railway line. These all throw up negatives (noise, unsightliness) and positives (proximity to transport links) depending on the client and their outlook.

There is also the question of whether a risk is proven to be a risk. Some clients would baulk at the idea of living close to an electrical substation due to electromagnetic fields (EMFs), but there is no scientific evidence this poses any sort of risk, and indeed plenty of clients wouldn’t have a problem.

Again, these further actions may become more common in the future with a greater volume of infrastructure projects to serve the UK’s growing population and increasing green energy projects to replace our coal, gas and nuclear power stations.

The key to overcoming a Pass with Advisory for energy/infrastructure is to talk to clients, assess their appetite for whatever risk the report may have identified and move on from there.

Preparation and conversation is key

Ultimately a further action notice should never be regarded as the end of a transaction, but as the beginning of a conversation.

Despite the variety of environmental risks that can prompt a further action notice, the one thing they all have in common is that their importance to the client may vary, and can often be managed with a well-informed conversation on next steps. Whether this will result in additional insurance or a reassessment of responsibilities – it is a process that can be mitigated if the conveyancer is aware of the options available to the client. What is most important to us as environmental risk analysts, however, is that every report and conversation is approached from a solutions focused perspective, and an outcome that doesn’t leave the client to deal with unresolved risks.

While a further action notice might not be the easiest part of a property transaction, the right preparation and some general knowledge of environmental risk assessment play a crucial role in giving the situation a positive outcome for all parties involved.

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