Flood Risk Could Cost Landlords Billions

Wednesday, May 23, 2012

• 1.7m homes and 130,000 commercial properties, worth more than £200 billion, are at risk from river or coastal flooding in England
• Many more properties are also at risk from flash floods

Following the substantial rains across the UK in April 2012 - the wettest since records began in 1910 - thousands of properties have already experienced flooding. 

Many properties could become uninsurable and unmortgageable as early as June 2013, when the current insurance industry's agreement to provide affordable insurance expires. Insurers, the Government and groups, like the National Flood Forum, all want to see a sustainable and affordable long term market for flood insurance in the UK.

However, according to the Association of British Insurers, time is running out to ensure that people in high flood risk areas can continue to get affordable flood insurance when the 'Statement of Principles' expires in June 2013. It is widely recognised that the current industry agreement with the Government is unsustainable, has thwarted choice for consumers, and is well past its 'best by' date.

Insurers are determined to do everything possible to ensure that flood insurance remains as widely available to flood vulnerable communities, but this cannot be achieved without Government help, as happens in other countries.

Flood defence protection is a priority for all residents living near to waterways, lakes and rivers. Many landlords with properties in flood-prone areas now have the added worry that their properties may be difficult or even impossible to insure later this year.

This is a great worry for property owners, who face the potential threat of having their insurance withdrawn which will leave them in breach of mortgage contracts. Properties which face a high risk of flooding have had quotes for insurance cover with an excess of up to £20,000 a year.

Michael Portman, Managing Director of LetRisks, commented: "Flood risk is a particular problem for the UK.  The two primary causes are climate change, resulting in increased severity and intensity of rainfall, and new developments on floodplains, which are themselves at risk of flooding, and which increase the risk of flooding downstream.

"The effects of flooding and managing flood risk, cost the UK around £2.2 billion each year.  We currently spend around £800 million per annum on flood and coastal defences and even with the present flood defences in place, we experience an average of £1.4 million of damages.

"This is a very worrying time for landlords with properties at risk.  The Government has a responsibility to help protect properties by investing in flood defences and let's hope the Housing Minister makes the right decision later this year."

LetRisks reviews flood risks with its insurers on vulnerable properties on a case-by-case basis, when arranging cover for landlords and the firm works hard to find solutions based on the individual facts.

LetRisks has been formed from the merger of PropertyRisks and Let Insurance Services, to offer specialist risk management and insurance solutions to the residential let property market, including tenant referencing services and specialist insurance for landlords and tenants.  

To find out if you have property in a high risk area, visit the Environment Agency flood pages at www.environment-agency.gov.uk.

For further information on LetRisks, please visit www.letrisks.com.