My View on Flood Risk, Mortgages & Insurance
Mary Long-Dhonau OBE
Property Flood Resilience Advocate at Mary Dhonau Associates. Also known as 'Flood Mary'. Flood Awareness. Property Flood Resilience Advocate. Flood Recovery. Supporter of #BuildBackBetter
"Following news reports that Nationwide Building Society, the UK's second largest mortgage provider, has stopped lending on some properties deemed to be at a high risk of flooding, is a cause for concern.
This development is not entirely unexpected: as a property flood resilience champion, I have long warned that the ramifications of flood risk would extend beyond the immediate impact of inundation. What we are witnessing here today is the tip of the iceberg.
Only last week, I was made aware of homeowners being hit with mortgage rate hikes when renewing, due to the perceived flood risk of their home. In one case, the lowest rate they could find was 10.5% (compared to a previous rate of 4.7%).? And, now we are seeing lenders opting to move away from some vulnerable properties.
It’s like kicking people when they are down: many homeowners who flooded over winter are still not back in their homes while insurance claims and repairs are completed, and the cost of living continues to bite.
Data from the Office for National Statistics (ONS) confirms that 28% of homes in England are mortgaged. If you then consider that approximately 5.7 million homes are at risk of flooding, the scale of potential displacement and financial strain could be wide reaching.
The existence of Flood Re is crucial in ensuring homeowners can continue to access appropriate flood insurances. It is enshrined in law that Flood Re, as it stands, has to exit the market in 2039 – just 15 years away.
It is a lifeline for those in flood-prone areas, providing access to affordable flood insurance. Its continuation is essential to prevent properties from becoming uninsurable and, consequently, unmortgageable.
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It is important that we plan for a ‘Flood Re v2’ as the effects of climate change are hitting us far sooner than many expected. As an industry, we must also expedite the development and implementation of Flood Performance Certificates to empower individuals to manage their flood risk, using Property Flood Resilience measures, which a ‘Flood Re v2’ could potentially factor in to its eligibility criteria.
The decision by Nationwide has far-reaching implications. It not only exacerbates the financial burden on homeowners already grappling with the aftermath of floods but also threatens to disrupt the housing market at large. If this trend persists, mortgages for those at flood risk could become unaffordable, stifling homeownership opportunities and further exacerbating inequality.
We must act decisively to address this issue. An increase in flood defence budgets is drastically needed by Government for both new and to maintain existing infrastructure.
It's time for the industry to rally together to consider all options to help make our communities more flood resilient. We cannot allow those facing ever-increasing risk to be left stranded, in deep water without a paddle.”
Mary Long-Dhonau OBE
#floodrisk #mortgagesUK #floodinsurance #floodresilience
Nature Finance
6 个月Hot on the heels of the recent Office for Environmental Protection report, is this another signal that NBS's time has come? Note that NBS isn't Nationwide Building Society, but rather Nature-based Solutions!
CEO at Wilbourn & Co Ltd
6 个月Whilst I agree with everything you say I knew from the beginning that focusing just on insurance was a sticking plaster over a chasm of a problem. For any financial institution its risk and reward that drives the business decision making. Lenders will price in the uncertainty that flood risk brings. FloodRe is sitting on a block of ice where it is time limited and too narrow. The government have, despite the PR of spending several billions on flood defences, in reality still behind the Capex curve. With the state of public finances so dire there simply isn’t the room to increase spending on flood defences. What is more important -spending on social care,or -spending on flood defences meeting the Treasury model and underpinning private asset values? George Osborne is alleged to have said “ there are no votes in flood defences” before the Capex of the Environment Agency was slashed. The current spending curve is still behind where it really should be!!!
Founder and Inventor of the Flood Adaptive Platform and The Hadley Flood Safe Home
6 个月Mary, with over 10,000 new builds in flood zones every year this problem is only going to grow, you say all options need to be considered, we have a fully tested, tested more than any other flood product in the UK, above the FEMA accreditation level, certified and a digital twin to ensure it can meet any Uk flood hazard, but instead of being considered, we are ignored, so until all options are really considered we will still be handing out sand bags. Can I invite you to come along to to Stoneleigh trade show the end of June, and see if we can be added to all options.
Founder & Director at Calm Engineering Ltd
6 个月I met some communities yesterday that also can't get access to the PFR funding because they are not insured. Aren't these exactly the communities the funding is for?!?