Living in areas subject to flooding or on known floodplains can mean lower house values.
The increasing unpredictability of weather patterns in the UK is leaving more and more homes susceptible to flooding. While many affected homeowners took care to steer clear of floodplains when they originally bought their property, they now find that increasingly severe weather is putting their homes at a heightened risk of flooding. The Environment Agency publishes data on known floodplains in the UK. Buyers and insurance companies are using it to identify areas at risk – the ultimate result is downward pressure on house prices in areas affected by flooding.
Increasingly wet weather and poor flood management are affecting property prices.
According to official figures released by the Met Office, 2012 was the second wettest year with widespread flooding. A total of 52.4 inches fell during the entire year, but what made 2012 different was that much of this rain fell in highly concentrated periods. As a result, rivers couldn’t cope with the sudden downpours, and many of them broke their banks. Unusually, homes in more elevated urban areas were also affected by flooding, as storm sewers couldn’t handle the massive volume of rainwater.
Homeowners living in the UK’s increasingly more extensive floodplains or areas that have historically suffered from flooding are suffering on two fronts. Firstly, home insurance is either prohibitively expensive or simply not available. Perhaps more significantly, homeowners have to come to terms with plummeting house prices and almost non-existent demand in affected areas. Buyers can make increasingly informed purchasing decisions based on house-price data from sites like Zoopla.co.uk – as well as rainfall data from the Environment Agency – and they are staying well away from flood-prone neighbourhoods.
House values have suffered as homes have become uninsurable due to flooding.
According to a recent report from The Telegraph website, hundreds of thousands of homes have become uninsurable during the last two decades – precluding them from obtaining mortgages. The UK government struck a deal with insurers that guaranteed insurance for homeowners in affected areas in return for investment in flood defences. However, with investment nowhere near the required levels, it seems that some homeowners will have to come to terms with decreasing house values on floodplains.
What do the experts think about the link between floodplains and home prices?
According to Simon Douglas of AA Insurance, an astonishing 2.4 million homes are at risk of flooding from sea or rivers. Moreover, an estimated 200,000 properties are considered as ‘high risk.’ With government intervention now at an end and little in the way of further flood protection schemes in the pipeline, house sales in the most severely affected areas are expected to decrease rapidly.
The Association of British Insurers (ABI) have been in discussions with the government for many years on the increasing problem of floodplains in the UK. Unfortunately, it seems that a long-term solution to providing homeowners with affordable insurance is some way off. According to the AA, the average cost of repairing a flood-damaged property is around £20,000 – a cost that can add hundreds of pounds to a homeowner’s annual insurance premium. Unfortunately, the answer is to add a levy to every homeowner’s insurance premium in the UK, the one in six UK properties on floodplains may soon be entirely precluded from cover.
If buying on or near a floodplain, then get more detailed expert help. A paid professional will check whether or not a property has suffered from flooding or is on known floodplains before valuing a property. Because such properties are often uninsurable, the effect on house values can be devastating. People struggling to find a buyer for a property on a floodplain may need to consider lower-than-average offers. Those in a hurry may require the help of expert property companies that can find buyers in a hurry. One thing is almost sure; the effects of global warming are likely to leave more and more UK homes at risk of flooding, which will profoundly impact local property prices.