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Hi guys.There is a lovely cottage up for sale near me that needs a light renovation and should sell fast due to the sought after location.Problem is, it is in a high flood risk area I am a cash buyer so i don't need a lender but i expect whoever i sell it to is likely to require a mortgage. Does anybody have experience attaining a mortgage in a "High" flood risk area?
Hi Michael,Buying this property will severely limit your sales market.Floods in the UK have decimated house price values and increased insurance premiums.Some lenders will lend on these properties if they have not flooded in recent times, but the insurance premium will be significantly higher.Personally, I would not buy such a property, even if you pay cash, unless there are plans for improvements to flood defences in the area.It might sound appealing now, but what happens if it floods during your ownership? The value could drop further, below what you paid for it and your exit would be compromised further.
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
only buy if a boat comes in the deal.
I would only ever invest in a property that Aviva is prepared to insure.
They have the largest insurance database for flood risk which they started years ago when they were NU.
If Aviva will insure at reasonable rates then fine.
If not AVOID.
Also remember than in any flood area any rented property is not covered by the Flood Re scheme.
So you could for example have two semi-detached houses
One is owner-occupied
The other is rented.
The rented one would not be covered by the Flood Re scheme .
Quite frankly if I owned any property that I let out that comes into a flood risk area I would offload ASAP.
To make a rental property worth owning it has to be always readily saleable; mortgageable and affordably insurable. This would be impossibe in a flood risk area.
So don't even go there.
Flood risk areas should be left as ghettos for homeowners.
LL should avoid such areas.
Insurance will be a problem
If its priced accordingly though and the figures work then its the same as any other property
Factor in depreciation if you believe the planet is warming and you want to hold for 50 years
Treat it in that case a bit like a leasehold on a short lease
I got offered a holiday cottage right on the beach and i mean right on the beach
The location couldn`t be beaten
A freak high tide flooded it once every 10 years but it was cleaned up .
The wall could be strengthened and flood defences factored in
Maybe once every 10 years would become once every 5 in time
I took a view that in 25 years it would be maybe worth 25% less and did my DD based on that
Everything can be priced up
A lovely cottage is a lovely cottage after all
Jonathan Clarke. http://www.buytoletmk.com
I would walk away. There are plenty of lovely cottages needing light renovation that should sell fast which are NOT in high flood risk areas.