Whether you agree with it or not, fracking looks set to affect house prices and insurance. Sharon Dale reports.
Protesters are making desperate last-bid attempts to prevent Third Energy from fracking at a rural site in Kirby Misperton, near Malton.
The firm has drilled its well and is about to test the potential for shale gas production. If successful, it will open the gateway for many other sites along the vast geological band known as the Bowland Shale. It stretches across the middle of the north of England and covers great swathes of Yorkshire.
Whether you agree with fracking or not, there is little doubt that it will have an impact on both house prices and buildings insurance. Jon Charters-Reid, a Yorkshire surveyor, believes that homes in areas close to shale gas extraction sites could be devalued by between 15 and 20 per cent due to the risk of earthquake, water pollution and the number of lorries on the roads near fracking sites.
Over at Future Climate Info, an independent provider of environmental risk analytics for the property industry, experts say that “the imminent drop of property prices around fracking sites cannot be ignored”. They add that after fracking began in Lancashire in 2011, prices in the region fell from between 2.7 per cent and 4.1 per cent and point to a Department for Environment, Food and Rural Affairs report that says there could be a seven per cent decrease in value on property within a one-mile radius of an extraction sites.
There are also concerns about buildings insurance. Specialist rural broker McClarrons, of Malton, warns homeowners not to rely on their insurance cover to protect them against all losses that may arise from nearby fracking operations.
A spokeswoman said: “There are concerns among locals about damage to property and about potentially hazardous chemicals escaping and contaminating groundwater around the fracking site. Most insurers will not recognise fracking as an ‘insured peril’ under a general household policy, as opposed to traditional standard perils such as fire, theft or flood. However, damage caused by earthquake, subsidence, explosion and fire are generally covered under buildings insurance and if fracking led to these insured events, a claim would likely succeed.”
If not, McClarrons say that the fracking operator should have a liability policy in place that would provide cover for any claims. However, the broker adds that contamination to water and land is excluded from most home and commercial property insurance policies. This could leave policyholders high and dry in the event of a fracking-related accident.
Here, Future Climate Info answer fracking queries: *What is fracking? It’s the short name for hydraulic fracturing or underground natural gas retrieval. It involves drilling into the ground to around 8,000 feet where a mixture of water, chemicals and sand is injected at a very high pressure to crack rocks underground releasing natural gas or oil. This flows back up the well to the surface where it will be used for energy needs. *Will fracking affect air and water quality? Although there are potential effects, like methane emissions and dangerous chemicals contaminating water supplies, many of these issues have been documented in the US. Regulations there are relaxed compared to those in the UK. *Can fracking cause earthquakes? In 2011, there were two earthquakes near Blackpool that the British Geological Society say were most likely provoked by fracking. The largest reached a magnitude of 2.3. However, with an earthquake this size, you would expect no damage to buildings. Whilst it is not clear whether fracking was the sole cause, systems will be implemented to measure seismic activity.
*How will homeowners know if they could be affected by fracking? They should speak to local surveyors and solicitors. An environmental report will outline if there are any risks.
Daniel Atkinson, an analyst at Future Climate Info, says: “Fracking does have the potential to cause environmental issues, as we have seen in the US. But here in the UK regulation is significantly tighter and the risk is much lower.” www.futureclimateinfo.com