News coverage of floods in various parts of the country recently will have prompted landlords to check up on their flood cover. To make things worse, a dispute has broken out about paying for flood defences and this may make it very difficult to secure cover on homes in areas that might flood.
An agreement between the government and the insurance industry means that insurance is available in risky areas but this is due to end in June 2013. The insurers are saying that they will stop issuing policies a year earlier than this unless the government agrees to fund flood defences in the areas at risk. This means that some people could find themselves being unable to buy cover from July 2012 onwards because the insures do not want policies in place that could run on until after the agreement ends.
The Council of Mortgage Lenders says that millions of people could find themselves in difficulties with their mortgage lenders because it is a condition of a mortgage that insurance is in place. Concerns about the availability of cover could deter prospective purchasers so householders could find themselves trapped in houses and struggling to find insurance and finance.
Landlord insurance clients might look for opportunities to pick up bargains in the hope of achieving a high rental yield because the purchase price was low. This could be a false economy if the house is uninsurable and therefore unmortgageable. A tempting yield is only one part of the picture for buy to let landlords. Considerations such as insurance, finance and the eventual resale value must all be taken into account.