Mike Norbury, Research Hydrologist for Water-Value, based in the firm’s Northumberland office at Alnwick, comments on the government’s new insurance scheme and its impact on flood risk and/or previously flooded property.

Monday’s United Nations Climate Change II report shows that nobody will remain untouched by the effects of global warming, with a greater probability of more volatile weather knowing your flood risk has never been more salient. Recently David Cameron himself stepped in when council tax band H properties in significant flood risk were not going to be covered by the new insurance scheme – Flood RE – set to be implemented in 2015.

Tensions remain high, and as yet there is no government obligation on insurers to provide universal flood insurance irrespective of risk. For the moment, however, owners of the most expensive homes will be relieved to find out that their properties come under the new reinsure scheme which will cap flood insurance at £540.

There are 9,000 significant flood risk properties in the UK and while statistics on overall flood risk vary wildly, the Committee on Climate Change provides the best overall evidence, stating:

 “The UK has assets worth £82 billion at risk from river flooding and there is increasing development in the significant risk floodplain.”

There is an irony here since development on a floodplain is known to increase property prices overall. Yet this week saw Hugh Fell, a leading national surveyor, state that “Valuers are way behind the curve on flooding”

 Despite the fact that flooding can halve the total value of a property, many high-street estate agents seldom conduct flood risk assessments when pricing property.

 Post-Somerset polling shows that 79% of people believe development on a floodplain should be ceased. Yet cash-strapped local authorities are still consenting development. In lieu of any potential misconduct it is important to realise where the new insurance scheme is not “water-tight”:

• The scheme currently only applies to high flood-risk property, not medium and low risk, from river and coastal sources:
• It does not apply to the 5,000 (plus) homes built on floodplains post 2009 - “right to buy” purchasers in the medium and low risk floodplain beware!
• Small businesses are still not to be covered under the scheme, including some lease hold properties.
• Those areas most susceptible to surface water flooding (pluvial) are not mentioned in the scheme.
• The 28th June 2012 “Toon Monsson” (Newcastle-upon-Tyne) flooding was testament to pluvial flood damages and estimated claims were in the order of millions.
• Flood RE cannot be implemented until the MoU (Memorandum of Understanding) between government and the insurance industry can be established, circa 2015. In advance of future flooding, the new scheme may break EU law.
•  There is a paucity of detail on how the new scheme will operate.

To sum up, property that floods is worth less than property that does not. The quantum of reduction is a product of the frequency, duration and magnitude of flood, and any mitigation – upstream thinking is paramount. Whilst the watershed is not connected to the policy-shed (politics) or the problem-shed (economy), buyers can take steps to preserve their property asset value –starting with a flood risk assessment.