What does the new flood investment plan mean for commercial property owners?
The Government has recently laid out plans to tackle flooding at a cost of approximately £5.2 billion, to include 2,000 new flood and coastal defences to protect 336,000 properties in England by 2027 and provide support to households and businesses to get back on their feet quicker following a flood.
But what will this look like to the commercial property owner? On each occasion businesses are forced to shut the doors to protect their property and themselves, with no idea how long the doors will remain shut for. Particularly at this time of the year, we are quite used to suffering from major flooding incidents on an annual basis. This spells disaster for many businesses who never reopen due to the cost of repairs, replacement of goods and continued payment of outgoings, leaving commercial premises empty, and landlords without tenants.
Indeed, according to a report produced by Sir David King and his colleagues, which was then presented to government for review, the cost of flooding across the UK is around £2.2 billion each year, with only approximately £800 million spent on flood defences annually.
The plan laid out by the Government includes spending £200 million on innovative projects such as sustainable drainage systems and nature-based solutions and a further £170 million to accelerate work on shovel-ready flood defence schemes, which will help communities recover from the impact of the current pandemic. In doing so, the Government hope to ensure there will be more robust flood defences to protect homes and businesses, which could lead to a number of positive effects on commercial property owners.
The work to be carried out in respect of the £170 million earmarked for accelerating flood defence projects will be spread across 22 of the worst hit areas including the Severn Valley, the Suffolk Coast, Falmouth and Bude. The flood defences will help to protect 10,000 business across those 22 areas.
The management of these flood risk plans is not the sole responsibility of one body, but the collaborative task of many bodies, including local authorities, who will carry out and maintain Strategic Flood Risk Assessments. By accessing the relevant local authority website and searching for the Strategic Flood Risk Assessment, you will be able to read through the assessment and proposals for that area. Consultation periods have ended at this time; however, each local authority can still be contacted in respect of such assessments and proposals. The Government have further produced guidance providing that over time, there will be more support through leaflets and guidance and recommendations for protection against flooding for each of the local areas.
It is noted that prior to purchasing or taking a lease of business premises, an individual will undertake due diligence of the property to ensure it is in a good area, and is not affected by any environmental issues, including flooding. Any risk of flooding may cause the individual to look at other properties. The new plan for a more robust system of flood defences may provide assurances that the property is sufficiently protected. This could in turn see an increase in properties being purchased or leased, creating the potential for increased property prices and a better local economy within the area.
Further, lenders will be more amenable to lending to small businesses with the assurance that the property is better protected, ensuring they will get their money back. And finally, insurance providers will be more willing to insure a property in a flood area where the risk of flooding is mitigated by robust defences.
Moreover, the Government plans to assist those affected by flooding to help them get back on their feet quicker, which will ensure that landlords will retain their paying tenants, as business owners reclaim the cost of the loss occurred.
Therefore, the plan for spending £5.2 billion on flood defences and assisting those affected by flooding can only come as a benefit to commercial property owners.