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Written by rosalind renshaw

New warnings have been issued about properties at risk of flooding which could be both uninsurable and un-mortgageable within months.

It follows a damning report from a group of MPs into the state of Britain’s flood defences.

The Public Accounts Committee accused DEFRA (the Department for Environment, Food and Rural Affairs) of neglecting its duties, saying it did “not accept ultimate responsibility for managing the risk of floods”.

One-quarter of properties in the UK are at risk of flooding and yesterday the Association of British Insurers warned that up to 200,000 homes will face insurance problems.

It said that Boston, Skegness and the Vale of Clwyd were most at risk, followed by Folkestone and Hythe, Windsor and Runnymede, and Weybridge.

The ABI repeated warnings that a pact with DEFRA will end next year – which will hit home owners trying to renew insurance policies from the end of this June.

Insurers agreed to carry on insuring flood-prone properties on the basis that the Government would improve flood defences – which, says the ABI, has simply not happened.

The Public Affairs Committee accused DEFRA of not even being able to say how much it would cost to bolster Britain’s flood defences.
 
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 the campaign Know Your Flood Risk UK, which is attempting to get both home owners and estate agents to take the issue seriously, many UK insurers are already trying to rid themselves of properties at significant risk, and some property owners have been unable to secure policies with excesses below £20,000.
 
Richard Hinton, business development director at property information firm SearchFlow, said: “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.”

Comments

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    Let's take back properties from people who are paying their mortgage but can't get flood insurance and then try to sell them to folk who won't get a mortgage because of the flood risk and who won't get insurance either.

    A smart mortgage company would set up their own insrance policy. Another opportunity for Mr Branson one suspects

    • 01 February 2012 14:59 PM
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    I have for a long time been trying to get some brave MP [not much hope there then I here you cry], to kick a campaign to force developers who build on a flood plain [or area at risk], to provide mandatory insurance for the properties.
    Without this permission to build / develop the site, will not be given.

    I realise this will not affect the current situation, but would prevent this from recurring.

    For now, if a mortgage is granted on an at risk property, the onus should be on the mortgage company to provide insurance for the building, after all they own it. If they are not prepared to insure, then do not provide a mortgage.

    • 01 February 2012 11:11 AM
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    I was speaking to the BBC last evening, there is consideration being given to the possibility that some mortgage lenders may invoke their contract right to take into possession if borrowers can't insure. That could really put the cat amongst the pigeons. Pinch and a punch, Big T

    • 01 February 2012 09:41 AM
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