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Flood risk threatens housing market recovery

A lack of insurance availability for new homes built in flood risk areas could restrict the recovery of the housing market, experts will warn today.

With global warming increasing the possibility of Britain suffering from heavier rainfall and more ferocious tidal surges, insurers are becoming more cautious about extending cover to properties at increased risk of flooding.

Most mortgages require the availability of flood insurance, so if insurance is not available it is unlikely that a property will be mortgageable. This could have significant consequences for the housing market recovery.

Following an agreement between the Association of British Insurers and the government last year, from 2013 insurance companies do not have to provide automatic flood insurance cover for homes within a 1 in 75 risk of flooding. This could create uninsurable homes, as homeowners cannot find insurance or afford the premiums. It could also mean less development, as developers either struggle to find land without a flood risk, or have to pay for increased flood protection measures to reduce the risks to insurable levels.

Today at a British Property Federation (BPF) and City Property Association (CPA) breakfast seminar experts from the insurance and property industries will consider these concerns as they look at the real risk of flooding in London and the Thames Estuary over the next 100 years.

Dr Richard Dawson from Newcastle University, a leading academic expert on flood risk, will introduce what he believes to be the ‘real’ risk of flooding in the Thames. And Rachael Hill, lead of the Environment Agency’s Thames Estuary 2100 (TE2100) project, will set out the government’s latest work in dealing with flood risk. The TE2100 Strategy, is the government’s proposed strategy for mitigating flood risk in the Thames Estuary over the next 100 years.

The seminar will be held at Norton Rose LLP, Terrace Suite, 3 More London Riverside, London SE1 from 8.00 to 10.15am. The speakers will include:

- Dr Richard Dawson, Tyndall Centre for Climate Change Research, Newcastle University
- Rachael Hill, Technical Strategy Manager, Thames Estuary 2100, Environment Agency
- Swenja Surminski, Policy Adviser, Association of British Insurers
- Henry Clarke, Chairman, Revetment Ltd
- Bill Gloyn, Chairman, AON

Liz Peace, chief executive of the British Property Federation, said:

“As we saw in the summer of 2007, wide scale flooding can have significant implications for property owners. We all need to wake up to the increased risks of flooding. The government needs to act on its word to provide greater assurances over flood protection for developers to ensure that new homes and new regeneration sites are insurable and protected, and to ensure there is sufficient land released for development that is off flood plains.

“Most of the property at risk of flooding is already built, however, and property owners – commercial and households – need to be aware of the risks and to investigate the measures they can take to protect their properties.”

Bill Gloyn, chairman of AON, said:

“London is facing many challenges to its position as the world's leading financial centre. The risk of a devastating flood is one that is often overlooked. This seminar is designed to put the REAL facts to delegates, rather than the scaremongering that accompanies disaster movies.

“In the light of the 2007 National Audit Office report which stated that over 40% of the UK's flood defences were inadequate, the seminar will examine what government plans to do about improving London's defences - basically dependent on the Thames Barrier, built over 25 years ago.

“Ways in which property owners, both residential and commercial, can put in place their own protective measures will also be examined and finally a clear picture will be given of what problems the insurance industry is facing - not only from flood but the whole threat posed by climate change.”


Henry Clarke, chairman of Revetment Ltd, said:

"This conference comes at a timely moment after even more recent flooding in the Essex area of Thames Gateway.

“Just as it takes a home owner to experience a house theft or a domestic kitchen fire to appreciate the wisdom of investing in a burglar alarm or a smoke detector, what will it take for the property owner or occupier to appreciate the wisdom of planning for the perhaps not so unexpected flood?

“The recent floods and the resulting £3bn damage has been a wake up call for property owners, investors and occupiers alike. Protection doesn't have to be that expensive and neither the insurance industry nor government can necessarily be relied upon to have all the answers.

“Taking personal responsibility for protecting property and assets has now become an imperative...but I wonder even with high profile conferences such as this, will lessons really be learnt?”

Dr. Richard Dawson, a leading academic expert on flood risk at Newcastle University, said:

“If we recall the disruption to business from a few inches of snow earlier this year, and that it can take a year for properties to become habitable after a serious flood - we do not have to try hard to imagine how disastrous a large scale flood in London could be to inhabitants and business with the effects having a much wider impact on the UK economy.

“Whilst the Thames Barrier provides excellent protection against storm surges the risk of flooding in London and the Thames Estuary from intense rainfall events and extreme flows in many of the Thames Estuary tributaries remains largely unquantified.

“Addressing flood risk, and predicted changes to rainfall intensity and sea level rise in the Thames Estuary will require a portfolio approach to flood risk management. This might include raising existing defences, constructing new defences, sensible planning, sustainable drainage systems, flood resilient construction and provision of education and warning systems.

“The Floods and Water Bill must address Sir Michael Pitt's recommendations if we are to address the different sources of flooding [extreme river flows; internse rainfall; storm surges; groundwater] in a more integrated and strategic manner. Collaboration and sharing of data (e.g. on the location of underground drainage systems) between water companies, the Environment Agency, researchers etc. is vital to this process.”

Ends.