A climate change sub-committee found that there are currently 4.2 million properties deemed to be at risk of surface water flooding. The average insurance claim for flood damaged domestic properties is £20,000-£30,000. Short term implications of flooding to properties can include structural damage in more severe cases and will typically involve contamination of linings and furnishings. In the longer term insurance premiums may be affected. There is also a potential loss in resale value.
Obtaining affordable buildings insurance is a serious concern for households in flood risk areas. Flood Re was started in April 2016 and was set up to provide affordable cover for households in flood risk areas. Flood Re is a reinsurance company, which means it enables insurance companies to insure themselves against losses because of flooding. It has been good news for many home owners but is meant to act as a transitional scheme extending over 23 years. Homeowners should be aware that on expiry of the scheme, premiums should be fully risk-reflective and if Flood Re runs out of money and is not able to cover a major flood event, there is no Government guarantee.
Many properties are excluded from Flood Re including all those built after 1 Jan 2009, all buy-to-let residential properties and purpose built blocks of flats or those insured under a block policy. Lenders will insist on full flood insurance, without this a property may be rendered un-mortgageable and sellable only to cash buyers.
Finding out the risk of flooding
A flood search will assess the four main types of flooding and provide an overall professional assessment. They can highlight where surface water flooding has occurred in the past. They cost £25-£100 plus VAT and are usually instructed by the solicitor. If the flood search presents worrying information the purchaser can discuss possible flood defence measures with a surveyor and renegotiate on price.
It is important to find out about the flood risk for a property before exchanging contracts. A good flood search is recommended to establish this. Once armed with this information you can get advice on private flood defences and check what your insurers’ reaction will be and identify any help in the form of government grants.