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Figures suggest that the UK has seen the wettest winter in over 250 years, with many town’s and villages victim of flooding, particularly in the South and South West of England. At the end of 2013, the Environment Agency issued a ‘Flood Peril’ map, showing homes most at risk of flooding throughout the UK. This map indicated that one in six homes are at risk of flooding, sparking concern over the future of not only property prices in high risk areas but also maintenance of homes at risk, and ways in which severe damage from flooding can be prevented.

Unfortunately it is likely that homes which have been a victim of flooding this winter will see a drop in value of their property, yet a rise in home insurance premiums, and even properties in the area which have avoided the unfortunate fate of flooding are still likely to see a rise in insurance due to the severe damage to homes sharing the same postcode.

The Government appear to be doing all they can to rectify the huge damage caused from flooding, but it is likely that they will put extra pressure on future developments to put anti-flooding measures in place, which is likely to have an effect on the price of homes. And it is predicted that homes with higher insurance as well as higher value due to anti-flooding protection will be less popular as the property market continues to strengthen in other areas. Unfortunately if homes are deemed as high risk to flooding, lenders may refuse to lend or remortgage partly due to the inability to gain insurance on the property.

There are also many causes of flooding in certain areas, and one of the most recent is the development of new homes on flood plains, often due to the shortage of land in other areas. This puts excess pressure on draining systems which obviously makes flooding much worse in other areas. Samples of flood water have also discovered the presence of excrement, meaning the flood water is heavily contaminated in some areas. This also puts off potential buyers, and in turn adds to the increase in insurance premiums for current and prospective homeowners.

The level of insurance premium charged by companies is determined by the amount of risk the home is to flooding, but other homes affected in the same area can contribute to a heavy increase in property for homes which do not pose a problem. This has posed quite a controversial matter which is being currently addressed, but the likelihood is that homes within a certain radius of flooding risk will be subject to higher premiums regardless of their previous history of avoiding flooding.

The Statement of Principle which ensured homes at risk of flooding were to be covered by insurance companies for flooding, expired in June 2013, leaving the future of homes at risk of flooding uncertain. As a result of this, it leaves homeowners vulnerable to loss from flooding and possibly unable to sell or remortgage their home in the future, or most certainly making it increasingly difficult.

The Government are currently considering an arrangement where all insurance premiums throughout the UK contain a small element to cover funding for flooding disasters, however this has yet to be decided, and many people who are not at risk are likely to oppose this decision as it is likely to incur additional charges for homeowners throughout the country.

by Cormac Henderson

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