I am writing this in the middle of May and the drought orders have just been lifted with the glorious May rain that we have been having. In years past I can remember having barbecues for my daughter’s birthday – but not this year!
One of the idyllic images of England is to have a lovely house with the garden sloping down to the banks of a picturesque river. However, our brilliant British weather poses more than a threat to the summer’s cricket and tennis (and, this year, to the Jubilee Celebrations and the Olympics). For some years there has been an agreement between the Government and the Insurance Industry under which the Insurers have continued to insure properties in flood risk areas (not just properties on the edge of rivers) at standard premiums. This agreement expires in 2013 and, at the moment, it is unlikely that it will be renewed.
The Insurers agreeing to insure properties at risk was on the understanding that the Government (including local authorities, the Environment Agency, etc.) would take action to improve flood defences. The Insurers consider insufficient action has or is being taken. Unless things change soon many householders could be in for a shock.
If a property is in an area that the Environment Agency regards to be a flood risk area, even if, in reality, the property is half way up a hill, there could be problems insuring, either because you cannot get insurance at all or only at a much higher premium.
One estimate suggests that as many as 200,000 homes will be uninsurable immediately if the Insurers Agreement is not renewed. Additionally, it is estimated that about 5.2 million properties are stated to be at risk of flooding and those householders who are able to get insurance could face much higher premiums. The problem will only get worse if developers continue to build on flood plains although one would hope that if there is a deluge of uninsurable houses, developers will presumably have to stop building on flood plains or consult with the Insurance Industry and alter the designs of houses to deal with flooding issues.
If you cannot insure a property, it is unlikely that anyone will be able to get a mortgage on it and therefore the property will become unmarketable. If you can get a buyer at all, they will want a huge reduction in the price. We are already seeing situations where buyers are finding Insurers reticent to insure properties stated to be at risk of flooding. We can only assume that this will get worse. Even though the Insurance problem may arise in 2013, it is an issue buyers should be aware of now as they could be buying a headache for the future.
If you would like more information, please ring Mike Sheldon on 01423 566666. To contact Raworths, telephone 01423 566666 or visit our offices at Eton House, 89 Station Parade, Harrogate HG1 1HF.