Flood hit home prices stay afloat

If you are a buy to let property investor and want to put your hard-earned cash in to a property that gives a good return and a chance of capital appreciation, would you buy somewhere that is prone to flooding?

It’s a no-brainer really – no is the only reasonable answer, but why are property prices in cities that submerge quicker than Stingray’s Marineville in an emergency keeping pace with the national average?

Obviously someone is buying them… but who?

Everyone can find out if a home is liable to flood – the Environment Agency has extensive maps of flood-risk areas online

Besides the risk of flooding, property investors with homes liable to water damage in bad weather may also find landlord insurance hard to source as the government and insurers row over offering cover.

Insurers want the government to pay more towards flood defences in return for offering landlords and homeowners cover, but the government is arguing the companies have a social obligation to insure homes, whatever the drain on their resources.

If landlords lose their property insurance, they may also face problems with their mortgages as many lenders demand a home must have buildings cover as a term of the mortgage.

Despite these issues, research by the BBC shows property values in prime flood areas remain unaffected. They offer Tewkesbury, Gloucestershire, as an example where average house prices more or less track the national average.

In June 2007, the average property price in Tewkesbury was £241,821. Values dropped slightly to £238,200 in July, when floods hit – compared with a national average property price of £258,855.

However, the price hovered around £240,000 for the rest of 2011, according to property portal Zoopla.

Prices have fallen since, but at a similar rate to those in the rest of England. The average home costs around £215,322, with the average national price standing at £236,134.

Best advice to landlords – if you want your investments to stay above water, avoid homes in flood plains.

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