The UK’s property owners face potential liabilities of more than £11.5bn as they could be held liable for cleaning up contaminated land.
According to research by property search experts and Legal Futures Associate SearchFlow, 3% of all properties in the UK are affected by land contamination. Given that there are 25.6 million separate dwellings in the UK, this means 768,000 properties could be affected.
The average cost of cleaning up contaminated land is £250,000 per acre, meaning making right the average contaminated plot in the UK would cost £15,000.
Part IIA s78F of the Environmental Protection Act 1990 states that while the first person to bear responsibility for cleaning up of contaminated land is the person who caused it, where that person cannot be identified by a local authority, the person who currently owns or occupies the land will be held responsible for removing the contamination.
The government currently adopts a ‘suitable for use’ approach in dealing with contaminated land and local authorities may require property owners to clean up where the risks posed by contamination are considered ‘unacceptable’.
David Kempster, director of SearchFlow said: “For those affected, land contamination is a financial hand grenade, which is often not picked up by conveyancers. Many homebuyers – especially those making their first purchases – have limited equity in their properties and so cannot borrow to cover the cost of clean-up work. Being hit with £15,000 of additional costs for a new house could be financially catastrophic and for those with plots larger than the UK average of 243 square metres, the expense could become even more unmanageable.
“As green belt land has been fiercely protected by local authorities in the last 50 years, a large proportion of UK homes have been built on brownfield sites, which often contain multiple types of contaminant. This means the number of residential occupiers potentially at risk of major liabilities for land contamination is growing rapidly.
“According to the Environmental Protection Act, homeowners living on contaminated land could be required to pay for decontamination if the person who caused the contamination cannot be identified. In many cases, the contamination dates back many years and identifying past owners and proving that they caused the contamination could be very difficult indeed. In these situations, buyers of large plots could find themselves facing huge costs.”
There are multiple options available to UK homeowners concerned about buying on potentially contaminated land. A number of insurance policies are available to residential property owners that pay out should any historical contamination be discovered on the site. Once purchased, these policies are passed down through owners of the home. Their value is fixed and unrelated to the value of the property.
However, insurance policies cannot protect homeowners from blight and the possibility of health consequences arising from unidentified property blight.
David Kempster comments: “Homeowners should bear in mind why cleaning up contamination is necessary. Contaminants in land can potentially have a harmful effect on the health of the people living on it, as well as expensive costs of decontamination. If contaminants leech out into neighbouring land, owners could find they are liable for the cost of cleaning up that contamination too.
“As far as buyers are concerned, it’s far better to avoid the problem of land contamination altogether than to face its discovery down the line. Making sure your conveyancer looks carefully into the possibility of contamination will pay large dividends in the long run. ”
It is also possible to obtain land contamination reports, which allow property buyers – through their solicitor – to find out whether land is affected by contamination at the conveyancing stage of a purchase. While the highest proportion of contaminated land is in former industrial parts of northern England, less than a third of these searches are undertaken in the north.
Mr Kempster says: “In the regions where there is the highest risk of purchasing contaminated land, due diligence searches are less popular than in south-east England. It’s vital that homebuyers realise saving money on search fees during the conveyancing process can have disastrous financial consequences if they could have revealed that a property is on contaminated land.”