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  • Property-a-holics

    Flooding to cripple property prices?

    I am watching the pictures of flooding in Cumbria and elsewhere with deep sorrow for the people affected.

    Flooding devastates lives and communities and costs our economy a great deal of money. The accountancy firm PricewaterhouseCoopers said that an initial analysis showed that flood damages could run as high as £1.3bn.

    I believe it will have an increasing impact on property prices as well.

    The “hidden cost” of flooding in the North of England has been uncovered by the UK’s leading third party mortgage administration provider, HML.

    In a comparison of the category of risk of flooding assigned to each postcode by the Environment Agency and average house price sales in each area, HML found that the value of many homes in the North of England has been crippled by a high risk of flooding.

    Its analysis found that properties classified as at high risk from flooding in the North West and Yorkshire and Humber regions of England increased in value half as fast between 2005 and 2014 than those at no flagged risk (17.04% compared to 8.58%).

    Andrew Jones, Chief Executive Officer at HML, said: “A flood can devastate a community, but there is a huge hidden cost to those at high risk in much of the North of England.

    “The high risk of flooding for some areas accentuates the regional disparity of property price changes, meaning other, safer areas, particularly Greater London, are seeing far greater increases than areas at risk.

    “As well as the threat of damage and of course injury from floods, households at risk also therefore face a greater chance of falling into negative equity and reduced chances of sale.”

    In Yorkshire and Humber, the difference was starkest, with the value of properties in high risk postcodes growing at 5.91% compared to 16.29% for no flagged risk.

    In the North West region, the value of properties in high risk postcodes increased at 6.20% compared to 15.33% for no flagged risk.

    By far the greatest rate of increase for property values was in Greater London, where the value of properties at no flagged risk of flooding have increased 90.71% during the same period – more than 10 times faster than the combined average for high risk properties across Yorkshire and Humber and the North West.

    With pressure to build new homes, they are increasingly being built on flood plains, yet Government spending on flood defences has been in decline.

    [Image: CXKBI3-W8AAqklx.jpg]

    It is a vital part of any due diligence on a potential investment property to enquire whether the property is in an area that is at risk of flooding.

    See - 21 questions to ask at an investment property viewing

    There are some further useful resources on the FloodRisk website.

    Any property in a flood-risk area will have an increased insurance premium.

    There are concerns that Britain is not prepared for climate change.

    Just before Christmas, the government published figures on flood spending levels over the past five years. They tumbled nearly 30% after 2010-11, and have only now picked up thanks to “exceptional” funding as a result of the 2013-14 floods. By 2014-15, capital investment on flood defences had fallen to £228m, supplemented by a further £125m.

    Innes Thomson, a former flood chief at the Environment Agency who heads the Association of Drainage Authorities, whose job is to manage water levels and keep water flowing, called for more money to be spent on maintenance rather than on big new defence projects.

    “If we were to spend more just maintaining and managing water levels, it would be money well spent,” he said. “If we spent a slug of money now cleaning up rivers, it would help. All sorts of work needs to be done. We have £22bn of flood risk assets, but [we need to ask] have we got the right standard? Are they in good condition? Should we upgrade our pumps? Do we need to ensure all our embankments are sound? Are our watercourses clear of obstacles?

    I think we are talking about tens of millions of pounds. Now is an opportunity to reconsider where we spend our money.”

    Source material

    The North/South divide was highlighted further this Christmas. While people were battling floods in the North, in the South, we had one of the warmest Christmas's on record, where temperatures reached 15 degrees and people were out on the beach! Such a stark contrast.

    I would like to invite Property Tribes members to join me in donating to the Cumbrian Flood Fund.

    The appeal has already raised £3million, but have now revised their target to £6million as a result of the continuing bad weather.

    Thanks in advance for your support.

    [Image: house.png]Related content:

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    Lots about flooding and property prices in the media!

    From The Telegraph:

    New houses are being built in England’s highest-risk flood areas at almost twice the rate of housing outside flood plains, according to figures which a Government adviser warned showed the country was “storing up problems for the future”.

    Housing stock in areas where flooding is likely at least once every 30 years has grown at a rate of 1.2 per cent per year since 2011, according to analysis by the Committee on Climate Change (CCC).

    By contrast, housing outside of flood plains – in areas with less than a 1-in-1,000 year chance of flooding - increased by an average 0.7 per cent a year over the same period.

    Lord Krebs, head of the CCC's adaptation sub-committee, said: “We are building faster in the flood plain than anywhere else.

    “If the planning system is going to allow people to carry on building in the flood plain, we have to be aware we are storing up problems for the future because flooding is going to get more frequent.

    “So you are locked into cycle of building and having to defend, and then having to build bigger defences because the flood risk has increased.”

    Full/souce story

    From the Times:

    House prices in flood-hit northern towns will slump and some homes will be unsellable for at least a year, estate agents have warned.

    Prices in flood-prone parts of Cockermouth, Cumbria, have collapsed by more than a quarter after the town was flooded three times in the past ten years, including in early December, Land Registry figures show.

    Full/source story
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