Risk Assessment Methodology and Limitations

Risk assessment methodology and limitations

The Siteguard report is intended for use by lenders and valuers to evaluate a property for secured lending. The report assesses the potential for environmental risk to impact the value of the property and its environmental acceptability for use as banking security. Aspects considered include potential for 

• material impact of business operations relating to environment related permit / registered exemption/ authorisation / licence that are related to business operations: e.g. non compliances, pollution incidents, legal actions etc
• designation as ‘Contaminated Land’ as defined under Part 2A of the Environmental Protection Act 1990 based on the industry standard source-pathway-receptor model. This is defined by DEFRA’s Contaminated Land Statutory Guidance as Category 3 or 4 Sites.
• abnormal development costs relating to land contamination. If the site is identified for change or use or development, then the National Planning Policy Framework (NPPF) will apply. An assessment is made whether the property might be ‘suitable for use’ and is determined by its proposed end use. 

Our methodology will vary from time to time to reflect market risk understanding and legislative changes.

Banking security

Consideration is given to the potential environmental risk of the property &/or land for lenders as acceptable financial security for the purposes of secured lending facilities. An assumption is made here that the subject property is being considered in isolation and that normal commercial lending loan to value ratios are being considered.

Environmental liability

This response sets out overall advice whether environmental liabilities are likely to materially impact upon a standard Royal Institution of Chartered Surveyors valuation of the property needing further assessment. Redevelopment is not considered within this assessment, unless Groundsure has been notified development is a lending consideration.

The potential sources are assessed based on the following datasets:

• Former industrial land use from historical maps (1:10,560 and 1:10,000 scale)
•   Former tanks, energy features, petrol stations and garages from historical maps (1:2,500 and 1:1,250 scale[2]  for selected areas)
•   Military land from various sources
• Former landfill (from Local Authority and historical mapping records)
• Waste sites no longer in use (from Environment Agency Records)
• Former landfill (from Environment Agency Records)
• Active or recent licensed waste sites and landfill (from Environment Agency Records)
• Waste exemptions (from Environment Agency Records)
• Recent industrial land uses from Ordnance Survey Points of Interest database
• Current or recent petrol stations from Experian
• Dangerous or explosive sites
• Hazardous substance storage/usage
• Sites designated as Contaminated Land
• Historical and current or recent licensed industrial activities from Local Authority and Environment Agency records
• Local Authority licensed pollutant release
• Pollutant release to surface waters and public sewer
• Dangerous industrial substances (D.S.I. List 1 and 2)
• Pollution incidents recorded by the Environment Agency

NOTE: The report does not include a Conceptual Site Model typically required in a planning application for the development of land. Should this be required we recommend that a Phase 1 report is purchased. To do this please contact us at projects@groundsure.com to request a quotation.

Risk levels

The level of risk associated with the property is divided into five categories:

• Low: There are unlikely to be significant environmental liabilities associated with the property.
• Low to Moderate: There are unlikely to be significant environmental liabilities associated with the property with regard to the proposed use. However, minor issues may require further consideration and assessment under certain circumstances e.g. redevelopment.
• Moderate: Some potential environmental liabilities are likely to reside with the property as a result of historical and / or current use. Whilst unlikely to represent an immediate significant issue, if left unchecked this position may change with time. A prudent purchaser may wish to make further enquiries of the vendor / undertake limited further due diligence / seek environmental improvements. Redevelopment of the site will likely require further, more detailed assessment.
• Moderate to High: Some potential significant environmental liability issues have been identified at the property requiring further assessment. Should further information be available it may be possible to re-assess the risk. In the absence of sufficient further information, further assessment might comprise consultation with the environmental regulators / review of existing environmental reports / commissioning new environmental reports / consideration of environmental insurance.
• High: Significant potential environmental liabilities have been identified at the property. Further detailed environmental due diligence will likely be required and may include review of existing environmental reports / commissioning new environmental reports including site investigations / consideration of environmental insurance / transaction restructuring.

Limitations of the Study

• The report is intended for use by lenders and valuers to evaluate a property for secured lending. The report is intended for use by professional advisers who are experienced and skilled in the use and interpretation of environmental data and/or risk assessment opinions and only those entities detailed in our standard terms and conditions may rely on this report.
• This report has been prepared based either on the answers provided by the Customer or, where not provided, on the assumption that the site is in commercial use and that no significant (re)development is planned.
• The report comprises aggregated Third Party Data as well as Groundsure’s proprietary data. However, Groundsure does not warrant the accuracy or completeness of Third Party Data or its own independently produced data.
• Siteguard reports do not include an inspection of the Site or consultations with regulators or other parties. Certain land uses or features and/or the condition of a site may be apparent only from a physical inspection.
• The assessment is based on data that is regularly updated and it is recommended that a Siteguard report be updated after a period of 6 months.

For full details we refer you to the Groundsure terms and conditions under which this report was supplied