Think location,location

COULD you obtain a mortgage on a flat with a 50-year lease? Possibly not. Would you get a mortgage on a property that may be under water within 50 years? Probably yes.

Such is the state of the lending market - at the moment.

It would be the height of madness to make such a big financial investment knowing it might be reduced to a worthless damp pile in your lifetime. But do buyers have all the necessary information to make a fair judgment?

The climate is changing. We can no longer be confident that the recent past will provide us with an adequate description of the climate of the future.

Scientific estimates for the year 2050 show that sea levels will rise by 12 centimetres in a "low-risk" scenario, with 67 centimetres as the highest risk.

Sir John Harman, chairman of the Environment Agency, says: " Flood risk is now a daily fact of life in England and Wales.

"Looking at history, reports of flooding are now, on average, nearly twice as frequent as they were 100 years ago. We could see up to a tenfold increase in flood risk over the next century."

So the appeal of living near water may diminish. The words "river frontage", "lake" or "sea view" have heightened selling potential in the past. But that could be about to change.

Says Sir John: "Flood risk will not automatically be included in the property search when you are buying a new home. You must request it from your solicitor or do your own homework."

About 4% of the total building stock, with an estimated value of 35 billion, is at risk. London has a significant exposure of between 70,000 and 100,000 properties. So can a house purchaser make an informed judgment about potential risks?

There are three kinds of survey available to the intending house buyer.

Cheapest is a basic valuation that gives minimal information about the property but will satisfy the lender that the property is adequate security for loan purposes.

A homebuyer's survey offers a report and valuation, which is less detailed than a full-scale survey but is more than a valuation.

A full structural survey can give you certainty that there are no major structural faults that may prove expensive to repair. But questions on the potential for flooding due to climatic change are bound to feature in the near future.

The majority of surveys carried out today are simple valuations.

People do not wish to pay for more-detailed work. But this will not last much longer. Christopher Legrande, of the Royal Institution of Chartered Surveyors (RICS), says: "There are changes coming in the way houses are bought and sold. Legislation will be in force by 2003 which involves the concept of a seller's pack."

A trial is currently under way in Bristol to look at ways of improving and speeding up the house-buying process. The seller's pack puts the onus on the vendor to produce significant information on the property before it even comes to market.

The seller must produce a mandatory home condition report. It will not contain a valuation. But, most importantly, it will include an environment section with information on flooding and energy efficiency.

But the information on flooding will be a historical view. It will flag up issues for the buyer to examine more closely before he puts in an offer.

If this highlights any possible problems, the purchaser can insist on a full building survey. The RICS says the likelihood is that there will be more full structural surveys and even more bespoke ones.

A buyer will thus have the opportunity to gain more information about the long-term viability of a property in the face of climate change. The implications of global warming may affect British homeowners who live miles from a flood plain but who are only just above sea-level. The perceptive purchaser might wish to have a view about the future potential for flooding.

It would be prudent to obtain a report which may indicate whether your property will be valueless at some time in the future.If the process is gradual the owner may know the answer within 20 or 30 years, anyway.

The Environment Agency is also looking at improving the search information gathered through solicitors. They are in discussion with the Law Society concerning the construction of an in-depth search report involving 20 key environmental issues, of which flooding will be one.

Most properties are insured on annual renewable insurance policies and presumably can be declined at any time. Flood maps are available at the moment. On the strength of this, premiums may be increased, or policies refused. As the effects of global warming become more apparent these maps will be refined to the detriment of those most affected by rising water levels.

The position will become more apparent when insurance companies cease to offer protection at all. As we progress through the next 50 years it is clear that, if predictions are correct, more properties will become blighted.

The new surveys will be a quantum leap forward and should give the public more confidence. But the next time you look to buy a property, think ahead 20 years. Do you really want to live in a home blighted by maps constructed in 2020, and showing projected areas of flooding in 2050?

It certainly makes you think.

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