Home insurers and the UK’s coalition Government are still arguing over paying for flood protection, meaning Millions of homeowners and Buy-To-Let Landlords are facing uncertainty over house prices, mortgage availability and the validity of their insurance policies.
If the UK Government fails to meet the demands of insurers to reinstate flood protection cuts then insurance cover for millions of homes, including buy to let rental properties, could be withdrawn from June this year.
Although insurers pledged to offer insurance premiums for properties at risk of flooding, it was on the proviso that the UK government would invest money in flood defence protection.
The agreement is set to run out on July 1st 2013, but Millions of pounds have already been cut from flood defence budgets earmarked for improving sea walls and river banks.
Insurance policies starting at the end of June 2012 could be withdrawn for properties in high flood risk areas if an agreement isn’t reached, as the policies would be in force after the date the current agreement ends.
Flood defence protection is a priority for all residents living near to waterways, lakes and rivers, many people in flood-prone areas now have the added worry that their properties may be difficult or even impossible to insure later this year.
Some insurers are already warning that property owners in high flood risk areas, might not be able to renew their cover after the end of June this year, because their new insurance policy will extend beyond the 1st July 2013 agreement cut off date.
Not being able to obtain insurance cover will blight property values in many areas, as mortgage lenders may not offer funding and in many cases the properties will be very difficult to sell on.
Many home owners and buy-to-let landlords could also risk breaching stringent mortgage conditions that require them to have buildings insurance in place for the life of their mortgage loan.
Business Development Director for SearchFlow, Richard Hinton, said “Buyers will be able to obtain flood insurance for the next few months, but the long-term prospects of properties at risk of flooding are potentially bleak. Buyers purchasing in high-risk flood areas face the possibility of very high premiums, significant reductions in value, less access to mortgage finance and even action taken by the mortgage lender due to breach of the mortgage agreements.”
Check if you have a property at risk by going to the Environment Agency flood pages
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