Property Clinic: Selling now, and buying in a flood-risk zone
June 4th, 2009 by Barry Cashin
Q: We are thinking about placing our home on the market but are unsure whether now is the right time. We have certainly seen our property’s value drop heavily in the past year but want to know whether to cut our losses and sell now. Do you have any advice?
Advice, yes, but not a crystal ball, I’m afraid! Selling one’s home should be determined by need. So the key question is: do you have to move? If not, then I would hold on until prices have stabilised.
This said, one bit of advice I was always given when I was an estate agent was that the only right time to sell is now – and this holds true, even in a poor market, for although the value of your home will have dropped, the value of the property you intend purchasing will have dropped too.
The signs are that the rate of decline in property values has slowed right down, with some areas actually showing a slight increase.
So, if you need to sell, do so – and if you don’t have to, then perhaps wait six months to see how the market is then.
I certainly believe that once more mortgage funds are freed up by lenders and more first-time buyers come into the market, the knock-on effects will eventually be felt right up the property chain.
Q. Given the excessive level of rainfall in recent years, you might think I am mad asking this. I viewed a property which was beautiful, completely perfect and something I had been searching for, for years.
The only trouble is that it falls within a ‘1 in 100 year’ flood risk zone. The elderly couple who own it and have lived in the property since it was built in 1925 say that they haven’t had a single flood.
Statistically, this suggests that it may be due to flood sooner rather than later. I am really reticent to proceed. What’s your advice?
A. Firstly, floods do not happen at predictable and regular intervals. If they did, weathermen would be more highly regarded than they are!
Secondly, if the property didn’t flood during the unseasonal summer rains of 2007, although it is not impossible to rule out altogether, it seems highly unlikely that it will flood in the foreseeable future – as that year’s rainfall was unprecedented.
The only issue you may encounter in a flood-risk area is obtaining insurance cover. So my first action, before making any formal offer, would be to contact several insurance companies to see what the issues are, if any.
If the property is uninsurable, think very carefully about the financial ramifications and rebuilding costs should it later suffer flood damage. There’s more on the issue on the Environment Agency’s website.
