That Sinking Feeling: Residential Properties And Flood Plain Insurance
It was distressing to see the residents of Tewkesbury and Gloucester waging a losing battle against the rising floodwaters this summer. No amount of sandbags could keep back the surges, and the scarcity of potable water demonstrated how quickly the infrastructure was adversely affected. The Totnes show was cancelled, but the British spirit still prevailed in the soggy Yealmpton Show, to name only two.
Changing global climate conditions suggest that more extreme weather is likely in the South West. Our Met Office in Exeter predicts near Mediterranean weather in the next century, which is certainly great news for sun lovers and suncream manufacturers. However, we must assume that these changes will also bring more wet weather, and the once in a lifetime flooding occurrences may be more frequent.
So it is surprising then, in the context of potentially greater flood risk, that the government has not ruled out building on flood plains in an attempt to solve the affordable housing squeeze. Other European countries tend to build up rather than out, and the use of brownfield sites to save our green belts is a hot topic for organisations such as the Campaign for the Protection of Rural England.
The position on flooding taken by the Association of British Insurers is that the cost and, ultimately, availability of insurance depends on the level of risk affecting people’s homes. Properties with a probability of flood risk of more than 1 in 75 are considered to be in a high risk area and potentially uninsurable.
For homeowners living in floodplains wanting to sell their property this has serious consequences. The buyer may not be able to obtain insurance and if a lender is involved, the position becomes even more difficult. Potentially, such a property is unmortgageable. Lenders generally require (as a condition of their loan) a policy of insurance to be put in place at the time contracts are exchanged. Without one contracts cannot be exchanged. In that situation, only cash purchasers can proceed, and even then, only if they are willing to risk having no insurance.
The searches which a buyer carries out before purchase often include an environmental search which would indicate if a property is in a flood risk area. This search has limited use as land contours are not generally shown on the plan results. However, recent technological developments produce searches that are more illustrative of the actual flood risk assessment. This information such as insurance claim rating, groundwater flooding data, river defences and British Geological Society statistics gives buyers a welcome indication as to whether flood risk is acceptable or not.
Buyer’s should take extra care when considering purchasing to take account of the wider geographical setting of the property. The oft repeated “buyer beware” presumption still stands, and it is very important the sufficient preliminary enquiries are made to deal with any risk of flooding.
Friday, 05 October 2007
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