According to research by property search firm SearchFlow, the UK’s property owners could find themselves unable to secure insurance against flooding when the ‘statement of principles’ agreed between the government and the insurance industry expires on 30th June 2013.
This could mean property owners are unable to insure their properties from summer 2012 as insurers become unwilling to offer policies which expire after the principles agreement.
Uninsured properties could leave owners in breach of their mortgage contract, as well as making properties harder to sell or remortgage and reducing their overall value.
According to Know Your Flood Risk UK, many UK insurers are already trying to rid themselves of properties at significant risk of flooding and some property owners have been unable to secure policies with excesses below £20,000.
Commenting, Richard Hinton, business development director at SearchFlow said: “The end of the principles agreement between the ABI and the government could make flooding a hugely contentious issue during the conveyancing process when professional conveyancers have to consider the potential risks a property faces.
“Although buyers will be able to obtain flood insurance for the next few months, the long-term prospects of properties at risk of flooding are potentially bleak.
“Especially for buyers purchasing in high risk flood areas, the possibility of very high premiums, significant reductions in value, less access to mortgage finance – even action taken by the mortgage lender due to breach of the mortgage agreement – is high.
“Conveyancers looking after their clients’ best interests must ensure they are aware of the risk of flooding and ensure their clients appreciate the danger posed by the end of the ABI agreement.”
