Every home owner to pay the price after 2012 floods!

Thu 24th Jan 2013

After record levels of flooding in 2012 the old adage of buyer beware is becoming more relevant to homebuyers. Coodes Solicitors’ conveyancing expert, Jo Morgan, looks at the implications.

2012 has already become known as the year that the rain came! We had the wettest April in 100 years; the wettest June in 150 years; flash floods and high winds at the start of July; the most intense September low since 1981; and we were hit once more in November. The year was topped off with floods across Cornwall and Devon right before Christmas forcing many people out of their homes during the festive period.

When the Met Office released its annual statistics 2012 was the second wettest year in the UK since records began in 1910.

The British Geographical Survey also announced a five-fold increase in landslides in 2012, many of which damaged or destroyed properties.

What does all this rain mean to people who want to buy or sell houses at the moment? Well quite a lot.

Homeowners in areas prone to flooding have become used to cleaning up, but as a result of a row between insurance companies and the Government the people affected the most may now be hit in the pocket.

According to the AA they could be facing excess levels on their insurance of up to £20,000, which means that in all but the most extreme cases, or if you have expensive tastes, people will have to pay out for new carpets, furniture, electrical goods and other cherished possessions without the comfort of receiving a cheque through the post.

What the 2012 flooding did do though is expose areas not traditionally known for flooding and effect a new group of people and properties.

As well as having to clean up these people could now be faced with five figure excesses instead of the usual £250.

On top of the weather these increases can be attributed to an announcement made by Government Minister, Richard Benyon, who confirmed that an agreement between the Government and the insurance industry named the Statement of Principles would not be renewed this June.

As a result the Association of British Insurers warned that up to 200,000 homes could struggle to find adequate insurance cover for flooding this year.

The Statement of Principles is a five-year agreement that enables flood-hit homeowners of properties built before January 1, 2009 to renew insurance automatically against flooding as long as the Government pledges to continue to improve flood defences.

Unfortunately with the current economic climate the Government has decided to cut funding to flood defences.

Its decision has meant that insurance companies have reacted by becoming unwilling to renew the current agreement.

With the insurance companies also considering changes to the structure of premiums the knock on effect of these changes to homeowners is likely to be substantially increased premiums and in some extreme cases the inability to obtain insurance for flood risk for householders.

If building insurance is not available on a home it also means that it becomes unmortgageable and means, potentially, that no one can sell or buy the property.

What all this does highlight is the need for buyers to beware and to have the appropriate searches made on the property by a reputable conveyancer at the earliest convenient time to ensure it is not in a high, or any, risk flood area, and that the right level of building insurance without sky high excesses in available to the prospective purchaser.

It is also prudent for all buyers to be prepared for premium rises and to obtain quotes as early as possible in the purchase process to ensure affordability and alleviate any unforeseen premium shocks.

Purchasers should also ask about flooding; if the property has been affected; if it has, what has been done to rectify the issue; and if there has been any insurance increases.

All of this, including the searches, should be done before contracts are exchanged, to ensure you are not left mopping up and are left out of pocket.
Jo Morgan is a conveyancing solicitor at Coodes Solicitors, which has seven offices in Cornwall and Devon – coodes.co.uk.

Thu 24th Jan 2013

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