Hometrack urges insurers to consider future flood risk

Hometrack, a UK-based provider of property data, recently conducted an analysis that raised concerns about the potential overvaluation of properties. This overvaluation is up to £20 billion due to increased flood risk. The study utilises Hometrack’s advanced climate change insights engine to predict the impact of extreme weather conditions on property values.

The analysis shows that a high risk of flooding currently exists for 400,000 properties across the UK, but these properties have not yet experienced a flood event. East Anglia emerges as the most affected region, with towns like Grimsby, Skegness, and Salford facing significant challenges. The figures indicate that, based on current flood risk, these high-risk properties could experience a value loss of 7.5%.

Looking ahead, the study suggests that an additional 150,000 properties could be considered high risk by 2050 as climate change intensifies. The uneven distribution of these properties is evident. East Anglia will potentially see 1% of its total property value impacted by flood risk.

One critical factor contributing to the financial impact is the anticipated end of the Flood Re scheme in 2039. The scheme, which provides flood insurance coverage for properties at significant risk, plays a crucial role in property valuation. The study warns that the termination of the scheme could triple the overall impact to £60 billion by 2050. This raises concerns for homeowners, insurers, and lenders.

Hedda Haugland, climate change product lead at Hometrack, commented.

“It is crucial that insurers and lenders price in the potential impact of flood risk, and ensure that homeowners understand future policy implications such as the end of Flood Re in 2039. Additionally, the government needs to commit to further investment in flood defences and property-specific flood protection grants.”

The Hometrack analysis sheds light on a concerning trend in the UK property market, emphasising the importance of addressing flood risk to safeguard property values and the well-being of homeowners. It calls for a collaborative effort from homeowners, insurers, lenders, and the government to navigate the challenges posed by climate change and its impact on the housing market.

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Emma Cockings Emma is a content editor for Claims Media. Emma is a experienced writer with a background in client-centric personal injury for a major firm. She has attended and reported on multiple brokerage events throughout her career.