Is My Property in a Flood Risk Area? Property Investment and Flooding -What You need to Know: Part One

So, we are being flooded one again.
And yet it was not so long ago - in the autumn of 2000 in fact – that no less than 10,000 properties were flooded by storm and river flooding.
Incredibly, there are more than 2 million homes at risk from coastal or inland flooding, that’s around 10 per cent of all homes in the UK.
Around 400,000 of these homes are at a “very high risk of flooding” - that means people living there have greater than 1.3 per cent chance per annum or an annual probability of 1-in-75 of waking up to water.
In the long term, the number of houses at risk could worsen. Climate change is expected to increase winter rainfall, the frequency of heavy storm bursts and sea level and storm surge heights.
If there were no change in Government policies or spending, the Association of British Insurers (ABI) - whose members account for about 85 per cent of all household policies – has estimated that climate change could increase the number of UK properties at risk of flooding to 3.5 million.
In addition, continued pressure on land could mean even more new developments being situated in floodplains like the Thames Corridor.
The cost to the insurance industry of the autumn 2000 event was over £1 billion and led to the ABI “working” with the Government to agree terms through which the industry would continue to provide cover for “the vast majority of households” in the country.
Notice I said “vast majority” because the insurance industry has not guaranteed it would cover every risk. And of course, if you buy property in a flood risk area you can always expect to pay a higher insurance premium for the privilege. (Insurers never lose money for long as a quick look at their share prices will attest!)
After the storms of 2000, what probably happened behind the scenes was that the ABI - representing the insurers - and the government had something of a row because as the insurers see it, the government had for a long time not been spending enough on flood defences.
To put it bluntly, the insurers made it clear to the government that flood insurance would remain widely available only where the flood defences were being adequately managed (by the state).
The government were suitably worried and there followed an overhaul of flood management in the UK. The result was better planning guidance and a more accountable funding arrangement down to local level.
But properties that are in flood risk areas are still being built and the insurers at the ABI recently pointed out that an astonishing one in four planning applications where the Environment Agency has objected because of flood risk still go ahead.
Also the Environment Agency is still not a “statutory consultee” for applications in flood risk areas.
So the insurers are still not entirely happy and relations between the government and the insurers are probably still a bit cool when it comes to flooding.
And all the while too, the mainly Victorian drainage system gets ever older and the risk of urban flooding from flash storms rises by the day. As I said before, the insurers will still cover the “vast majority” albeit at a price!
The ABI has said, that for properties at very high risk of flooding –that is higher than a 1.3 per cent risk per annum, but where flood defences will be improved to at least this standard in the near future, insurers who are members of the ABI will continue to provide cover to existing policyholders.
Also, if an owner of such a property wants to sell then their current insurer will continue to provide cover, subject to satisfactory information about the new homeowners.
However, in areas where no improvements in defences are planned, the insurers have said that they cannot guarantee to provide cover in every case.
Here, the best that they can do in these cases is to use their “best efforts to work with policyholders to establish on a case-by-case basis, what action they, the Environment Agency and the Local Authority can take to enable cover to be continued.”
This sounds rather like, “You are on your own mate unless the government can somehow help you!”
Tomorrow, I'll look at how you can check the flood risk for your property.
Copyright: David Lawrenson 2007.
I’m David Lawrenson from property investment consultancy Letting Focus. I’m the author of “Successful Property Letting – How to Make Money in Buy to Let” the UK’s top selling buy to let book and which has also been Amazon.co.uk’s top selling property title for the last 6 months.I’m a speaker, I contribute to newspapers and a host of property websites, write a property investment blog and am a media commentator on the residential property market.
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