Buying a house: Flood risks

[Kumagoro]

An opportunity for a bit of gazundering I think.

[acrobat]

think is tho.

Yeah it could be not too bad and just flood any low lying fields or something. I personally wouldn't want to take the risk though. It's one thing to already live somewhere like that, and decide to stick with it and hope for the best. But it's another thing to actually choose to live somewhere at risk like that. I know its not always easy to find the right house for you, but if you have a choice, I just wouldn't choose one at risk like that. Even if it's a small risk. It only takes one big flood and you're screwed. And our weather does seem pretty weird these days.

[MSIC]

Well this is interesting....
Basically thanks to everyone so far, and i will certainly be checking out the Catchment Flood Management Plan.
I actually live in a little town north of London, and the place we want to buy is nearly on the doorstep of a large DIY store (apologies if i sound evasive, but revealing personal info on a public forum is permanent!). The current property owners tell me that this DIY store (one one the largest national chains) have installed their own underground water pump to protect their own interests, and my desired property is in effect on that ground (not legally, but geographically).

So i am now going to check this out, as i want to know to what degree this can be verified.

I still don't know what i'm going to do, however it's a genuine pleasure to have all your help.

[scottyman]

just something to bear in mind - I was flooded in London in 2003 when flash floods overloaded the sewer, and the rain was so bad last year that my garage and street were flooded when the sewer system couldn't cope.
depending on house construction and age of the house, then the core shouldn't really have been affected - however new builds (using "modern" construction methods) built within the last 15-20 years would suffer alot more, and you would see evidence of previous flooding from staining of the concrete foundations, which the survey should have picked up.

[greenalien]

Do you really have to buy at present? House prices stopped rising last year and have been sliding for 7 months now. (Nationwide and Halifax figures). No less a body than the International Monetary Fund have warned that UK property prices could be 30% overvalued, and an increasing number of press and TV articles are warning of a significant downturn in house prices. Flood plain or not, if I were you, I'd forget about buying a place for the next couple of years, could save you a fortune and a lot of worry.

Also - see House prices lower than a year ago | Nationwide figures April | This is Money

'Average prices have dropped 1% since April 2007 to £178,555, according to the Nationwide. It is the first time one of the major national surveys has shown a year-on-year drop since the credit crunch began last summer and the clearest signal yet that the decade-long housing boom has been consigned to history.

It follows 133 consecutive months of annual house price growth since March 1996. The news came as a rate-setting member of the Bank of England's Monetary Policy Committee gave a stark warning. David Blanchflower - an advocate of early and aggressive rate cutting - said: 'A correction of approximately one-third in house prices does not seem implausible in the UK over a period of two or three years.''

[MSIC]

Thanks GA, however my wife is 4 1/2 months pregnant and buying a place is important to us - of course the current market & climate is a concern, which is why we have found this place and have an offer accepted at 10% under asking price.
In all honestly, whilst no-one ever wants to lose money, we are buying a home first and an asset second, so if it loses a further 5 % after we buy, well so be it because we'll have a home to live in.
If it loses 25% after we buy, then i'll be very upset indeed, but i honestly cant see 25% reductions in the market that i'm looking at (it's not the '4 bedroom detached house at half a million pounds' market).

[TheAnimus]

As long as you can afford the monthly repayments you'll be fine, it might be 'gutting' to think that you've effectivly lost 50k, but if you've accepted it to be a 20 year commitment, negative equity is irrelivent really, as your buying a commodity which fluctuates and you only care about its relativity to other homes.

Upshot of that is make sure that when your mortgage peroid fix term ends, make sure that your not on a rate that is a major penalty. That way if your LTV (Loan To Value, the ratio of debt to house value) falls, you will be ok. If you find that after 3 years your fixed rate product jumps with the broker saying you simply remortgage then (ie give him more commision) be weary that you might end up with an LTV so bad, no mortgage provider will touch you.

[greenalien]

I can see the attraction in buying, given your current circumstances, after all, security is a wonderful thing - and it looks like you're covering yourself as best you can. Nevertheless, with the current market conditions and the flood plain risk, I'd say stick to renting and plan on doing so for at least the next 2 years. Whatever you decide, good luck with the upcoming addition!

[Saracen]

....
In all honestly, whilst no-one ever wants to lose money, we are buying a home first and an asset second, .....

Which is a very good point.

.... If it loses 25% after we buy, then i'll be very upset indeed, but i honestly cant see 25% reductions in the market that i'm looking at (it's not the '4 bedroom detached house at half a million pounds' market).

It's certainly possible, though, and in my opinion, by no means a way-out possibility.

I still think it won't happen, though a reduction (and 10% wouldn't surprise me at all) is on the cards, but it wouldn't take a great deal to kick off a significant collapse. Most of the necessary conditions (very wobbly consumer confidence, economic uncertainty, credit squeeze, etc) are in place, and the trigger for a collapse could well be external .... that is to say, from outside the control of this country.

All I'm saying is that if you buy right now, do so with the knowledge that house prices might collapse, and it might be a lot more than 25%. It was last time. Of course, economic circumstances are very different to last time, too, so direct comparisons don't really tell us much .... other than that it can happen. If you're prepared to risk buying a "home" now given the very real chance that in a year or two it might be worth half of what you paid for it, and the potential problems and risk that that negative equity position exposes you to, then fine.

But what if the worst happened? Suppose you buy, then in six months some external factor (like the US economy being even more dire than we thought it was) clobbers the UK. House prices collapse, that triggers a recession because nobody is spending a penny they don't have to, the economy shrinks, companies go bust and others lay off staff, and you end up a casualty. You're now stuck with a £250,000 (or whatever) mortgage on a house worth £130,000 (if you can sell it at all), no job, mortgage payments you can't afford and unlike renters, minimal state aid with that problem.

Doesn't bode well for a sense of family security, does it?

I'm painting a very bleak picture here, and unlike a few on these forums I'm not expecting it (or hoping for it), but it would NOT surprise me too much if it happened.

If I were in your shoes, I'd certainly be thinking quite hard about just how big the risk of that collapse is, and the consequences to me and my family if it happened. And what the alternatives might be. While prices are relatively static at best, and more likely, dropping, greenalien is right, IMHO. Do you need to do this now? Is it worth the risk? Maybe the answer is that it is. But it bears serious thought.

[Betty_Swallocks]

Personally I believe strongly that developers should not be allowed to build on flood plains.
As I understand it (and please correct me if I'm wrong) flood plains are designed to flood in order to protect other areas. If my understanding is correct then not only would you be at significant risk of flooding but the presence of the houses on the flood plain increase the risk of previously safe areas being flooded.

I wouldn't even consider buying it. But that's just me. You may feel it's an acceptable risk.

The other thing to consider as mentioned before is that a lot of people would have the same questions when you come to sell. It can't help the selling process.

[MSIC]

Just wanted to 'top & tail' this thread, and to thank everyone who contributed.

We have walked away from buying it as we had site surverys done, the solicitor got environmental reports, and there were lots of risks highlighted.

Of course, everything in the house buying market is steeped in legal speak and self-protectionism, but usually at some point along the 'refer to another specialist' chain someone is able to say that so-and-so is ok.
Not with the place we looked at.

At the end of the day (i hate that phrase), there may or may not be a geniune flood risk. But so long as there is the perception of one, and that perception cannot be proven false, then future buyers would also be put off potentially.

So we're looking to buy again, and this time something elevated higher!
Landfill site anyone? LOL.

[directhex]

i'm amazed it dragged on so long. a 1/100 risk is nothing these days, given recent rains. i had enough trouble securing my mortgage/buildings insurance due to relative proximity to a 1/1000 plain.

[greenalien]

MSIC - My previous advice still stands - buy now and you run a serious risk of losing money. The housing market is falling and looks likely to continue to do so at least until 2010. Renting is still the best option, may be inconvenient but much less risky and gives you much more flexibility in terms of relocating if necessary. There's a chance of a major recession, could see a big rise in unemployment, how secure is your job?

[MSIC]

Greenalien - my job is pretty secure - if my company goes up the spout the whole country is doomed, but i take your point. I think in general terms it is good advice. You are of course right that prices are likely to continue to fall, but if one can negotiate that into the price of buying now ("well i'm offering 8% under because i think it'll continue to fall anyway....") then you can still get a fair deal.

None-the-less i am buying because i want stability and a place to call my own or i'll do my nut in. And if house prices do go down, they'll come back up again after. Of course if i'm wrong about that and house prices fall and fall for the next 30 years, i'll just have to live with it!
As i said, for me i'm primarily not buying an asset but a home for my family. My objectives are different to other peoples, although i clearly can't ignore the financial aspects.

I do want to make sure i've learnt a lesson though in being able to walk away from somewhere if there really is a fault with the place, rather than wearing rose tinted glasses and only seeing the aspects that you like about it.

[greenalien]

the whole country is doomed

Predicting the future is, of course, impossible - but articles like this http://www.thisismoney.co.uk/news/ar...page_id=2&ct=5 cause me the sort of concern that would prevent me from taking any unnecessary financial risks in the near future. The last thing you need is negative equity if there's even a remote chance that your job isn't secure. Bear in mind that a change of government in 2010 may also see the loss of a lot of public sector jobs...