Changes To Flood Insurance May Impact On Home Sales

Monday 6th of February 2012

On 30 June 2013, the ‘Statement of Principles’ agreement between Government and the insurance industry, which states that insurers will provide insurance for ‘at risk’ homes, comes to an end. This could make obtaining affordable flood insurance extremely difficult, if not impossible.

If customers cannot get insurance, they will be breaching the terms of their mortgage contract. It could also negatively impact on the valuation of the property, potential mortgageability and future saleability affecting both the homeowner and lending organisations.

And, based on the annual renewal of insurance policies, homeowners and the property industry have until June 2012 to address this issue.

Based on the 2008 RMS 1,000-year Inland Flood risk zones map, one in four homes in the UK are considered ‘at risk’ of flooding.

The ‘Know Your Flood Risk’ campaign is urging the mortgage industry to develop a flood risk strategy that responds to the planned changes so homeowners are fully aware of their obligations regarding flood insurance.

A number of homeowners are struggling to find affordable insurance and have seen the cost of their insurance increase by two thirds and the excess amounts rise to around £15,000 to £20,000.

There are many steps that homeowners can take to ensure they are prepared and will reduce the impact of flooding, such as receiving alerts from the Environment Agency and thereby giving them time to prepare their home, and using products that stop the water from entering the home.

Further useful information can be obtained from;

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comments

Posted By: Tina Pedlar | Wed 8th February 2012

As I am thinking of moving have been looking have been trying to look at which areas are at risk of flooding, is there a table showing high to low risk in a sensible way. A lot of areas look as if they are at risk, whereas they are probably not, therefore putting some purchasers of from buying properties that are in safer areas.

Posted By: Guy Sampson | Thu 16th February 2012

You are quite right to be thinking about flood risk as you are moving house, it is something that is often overlooked by purchasers and can have a big effect on value. As a very rough rule of thumb you can get an indication of the risk of river flooding in an area from the flood map on the Environment Agency website. This comes with a big health warning though, in that it is not accurate enough to show flood risk at individual property level and has no information about surface water flooding. Surface water flooding is caused when land drains or sewers cannot cope with the amount of rainfall which instead flows across the land surface (especially in built up areas) often causing flooding far away from a watercourse. In the 2008 flood about half of flooding insurance claims were from properties outside the EA flood risk zones (i.e. they had been affected by surface water). For a site specific check of both river and surface water flood risk, we are able to provide a report indicating risk at an individual property level. If you have any further questions please do get in touch on 01665 603231.

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George F White