Why lenders should include flood risk in their due diligence

Practical Law Property recently published new guidance note outlining the need for lenders to understand and promote flood resilience as a part of their “due diligence” process for any loan application. With the commercial availability of datasets, it is now very easy for these lenders to check the flood risk at the area of the application. This should be an integral part of this exercise due to the impact that flood risk can have on property value.

By initially outlining the issue of flooding, and how this can have an impact on property value, this guidance note explains why these issues are directly relevant to the lender. The article also outlines how this may also benefit the borrower too – through a mutual understanding of flood risk. With the changing landscape of risk in the insurance industry, this may offer both lenders and borrowers an increased security and understanding of the exact risks to both parties around flooding and how it may impact them.

To read the full guidance note, please visit: uk.practicallaw.thomsonreuters.com/2-507-0708