Mortgage lenders join call for clarity on flood insurance
3 May 2012 |By Newsdesk
Affordable insurance ‘key to stable housing market’ says lenders’ association
The Council of Mortgage Lenders (CML) has added its voice to the call for greater clarity on future availability of flood insurance in risky areas.
This week, the trade association has written to under-secretary of state for the environment Richard Benyon stressing that the future availability of flood insurance is a key factor to ensuring a stable housing market in areas with a high risk of flooding.
Flood cover for many homes in high-risk areas is currently assured by the Statement of Principles, an agreement between insurers and the UK government. However, this agreement is due to expire in June 2013, casting future availability of affordable flood cover for an estimated 200,000 homes into doubt.
Properties without insurance cannot be mortgaged, which the CML argues could put further pressure on a housing market that is already suffering from reduced transaction volumes. The association said that in each of the last four years,. the number of transactions has totalled around 900,000, compared with the longer-term average of 1.5 million.
The CML said in its most recent newsletter: “Without a clear lead from the government, it may be difficult to ensure that flooding insurance is widely available, at a reasonable cost. Uncertainty could begin to affect lenders and borrowers in the coming weeks .We are therefore keen to begin discussions with the minister and insurers to explore what can be achieved.”
It added: “We hope that a dialogue can begin as soon as possible, so that lenders, insurers, consumers and the government can plan and act effectively, and ensure there is a smooth transition to new arrangements for providing adequate insurance to cover flooding.”