All-Party Parliamentary Group on Flood Prevention Sparks Mortgage Debate

22 Mar, 2012

If an individual cannot obtain flood insurance then their current mortgage could be withdrawn


  • On 6th March 2012 at a meeting of the All-Party Parliamentary Group on Flood Prevention, it was highlighted that homeowners may find that existing mortgage offers are withdrawn if homeowners are unable insure for their property
  • On 30 June 2013, the ‘Statement of Principles’ between the Association of British Insurers and the Government which commits insurers to providing flood insurance, runs out and will not be renewed
  • Lack of Government and insurance industry support may lead to at least 200,000 ‘at risk’ homes throughout the UK being unable to afford flood insurance
  • Landmark Information Group urges legal professional to stress to clients the importance of obtaining a comprehensive flood report


David Mole, Director of Landmark Environment Due Diligence, said: “The debate served to further highlight the potentially huge issues that homeowners and potential homeowners will face as a result of the ending of the Statement of Principles. 


“As homeowners are required to insure their homes as part of a mortgage agreement, it is likely that the ending of the agreement will not only affect those looking to secure a new mortgage in order purchase a property but also that those with existing mortgages could be at serious risk of being in breach of their mortgage agreement if they are unable to insure their property. With so many properties potentially affected, it is not only vital that the government intervenes, but also that homeowners and potential homeowners investigate their flood risk and put protective measures in place; it could mean the difference between obtaining flood insurance and meeting the terms of their mortgage or not.


“Legal professionals must urge their clients to obtain a comprehensive flood report, either for their existing home or a property they are considering purchasing.  As a result of changing weather patterns which has made surface water flooding far more prevalent in recent years, even if a home is not near the coast or river and does not have a history of flooding, does not mean that it is not at risk of flooding in future. Current and potential homeowners must be made aware of any flood risk to their home so that they may take necessary action, such as putting protective and preventative measures in place, in order to be able to obtain flood insurance and thereby meet the terms of their mortgage agreement.


“Landmark’s Homecheck Professional Flood Report is the most comprehensive report of its kind and is a quick and cost-effective solution for property professionals to identify potential threat of flood and flag any threat to their clients. The report assesses all major types of flood risk with data sources including the Environment Agency, actual insurance claims data, an indication of insurability and geological indicators.


“The report also includes the 100 and 1,000 year return periods supplied by the EA as well as a 75-year dataset. This is key for homeowners as the UK insurance industry (through the ABI) has committed to providing flood cover as part of standard buildings insurance in any location with a lower than 1 in 75 year flood risk. The report also contains ground-breaking data covering surface water (pluvial) flooding.”


David continues: “With just a few months until annual insurance policies start to overlap the expiry of the agreement, an urgent solution needs to be announced so homeowners are not left in the predicament that they face having their mortgage withdrawn because they either are not able to secure cover or insurance premiums are so high that they are unaffordable. This issue is not going to go away and simply must be addressed and a solution found.


“A lack of subsidy agreement between the Government and insurance industry could lead to insurance being unobtainable and unaffordable for many, many homeowners. This in turn could have a significant knock-on effect to the property market as a whole.”


The Ministerial announcement in December 2011 revealed that the Government will not be subsidising flood insurance premiums and may result in at least 200,000 homes throughout the UK being unable to obtain affordable flood insurance.


On 30th June 2013 however, the ‘Statement of Principles’ agreement between the Government and insurance industry which states that insurers will provide insurance for ‘at risk’ homes, comes to an end, leaving the future of flood insurance looking very uncertain. A lack of affordable flood insurance is highly likely to impact on properties’ future valuations, mortgage applications and saleability. Based on annual insurance policies, homeowners, the Government and the insurance industry have until June 2012 to address this issue.


For more information and practical guidance on the increasing risk of flood, and details of how to order a Homecheck Flood Report, visit

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