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Northern Britain has taken a battering from the weather this week, with storm force winds lashing many parts and others finding themselves submerged under flood water.
Yorkshire may not have suffered the same kind of deluge property mortgage insurance But how accurately can we predict which properties are at risk from flooding? Politics Show Yorkshire and Lincolnshire investigates.
In the autumn of 2004, the Casualty insurance property system The map identifies areas which the Agency believes are most at risk from flooding by rivers or the sea. The idea is that anyone - householders, prospective buyers or insurance companies - should be able to search by an area’s postcode to get an idea of how likely it is to suffer flooding. Controversial publication?
But the map is proving controversial, with some householders complaining that their properties are being unfairly stigmatised. Politics Show features the case of Jane Tredgett and her husband Dale Walsh, who are trying to sell their house in the village of Barmby-on-the-Marsh in East Yorkshire. They had a buyer lined up, but he pulled out on the day the flood maps were published, because he had seen that the area was classed as being in a danger zone. Mr and Mrs Walsh say their house has not flooded in living memory, and their local MP, David Davis, (Conservative, Haltemprice and Howden) has taken up their case. Inaccurate searches? Mr Davis says that the maps are not able to identify subtle differences in flood risk within an area because they can only be searched by postcode. “People familiar with our area know full well that there are many properties that are on the fringe of a flood area, but never actually flood,” said Mr Davis. “Unfortunately, these new flood maps still lack the sophistication to make that distinction. “This will cause great problems for people who own such properties. “Insurers will look at the maps and raise premiums. “Potential buyers will look at them and then buy elsewhere, as at least two of my constituents have already found.” The Environment Agency says flood mapping is a complex, detailed and extensive process which will never be completely accurate, but it will always provide the best information currently available. It says the maps give a good indication of the areas at risk of flooding, but cannot provide detail on individual properties. Politics Show
Yorkshire and Lincolnshire Politics Show - full programme
Let us know what you think. That is Politics Show Sunday, 16 January, 2005 at 12.30. Join presenter Cathy Killick for The Politics Show on BBC One on Sundays at Noon. Disclaimer: The BBC may edit your comments and cannot guarantee that all emails will be published.
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| Supermarket giant Tesco has entered the “do-it-yourself” home-selling market.
Visitors to its new property website are offered the chance to sell their home for a fee of less than 200. But the move has provoked furious criticism from online property listing sites and estate agents.
We heard from Peter Bolton King of the National Texas property insurance
Tesco moves into property sales
Will private property sales take off?
External links and helplines
Flood insurance
As thousands of people continue to try to repair flood damage, one MP is arguing that california fair plan property insurance need to be more accountable when building on flood plains. Alan Simpson - Labour MP for Nottingham South - has asked the prime minister to consider making developers liable for full flood insurance cover for 20 years for any houses they build on flood plains. Gordon Brown has promised to look into the proposals. We spoke to Alan Simpson about his proposal and also to John Slaughter of the Home Builders Federation.
Call for flood insurance change
Q&A Flooding and insurance
External links and helplines
Standard Life
It is decision time for Standard Life’s 1.7m eligible shareholders on the first adjuster claim insurance job property Bonus shares worth almost a quarter of a billion pounds are to be issued. Should shareholders sell them or keep them? We spoke to Paul McKenna of Standard Life and Tim Whitehead of stockbrokers Redmayne Bentley.
Standard Life issues shares bonus
External links and helplines
OTHER NEWS The speeding up of electronic payments is going to be delayed, Apacs has announced. Further information:
Apacs: UK banking industry update on faster payments project and changes to cheque clearing processes
The programme was repeated on Sunday, 15 July 2007 at 2102 BST. This is the last Money Box programme until September.
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Listen to this item
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We continue our tour through the baffling world of financial jargon.
Knock-out Option
Liquid Assets
Lloyd’s of London
Mortgage
Nasdaq
Offshore Investment
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We continue our tour through the baffling world of financial jargon.
Knock-out Option
Liquid Assets
Lloyd’s of London
Mortgage
Nasdaq
Offshore Investment
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In Consuming Issues, David United property insurance of London & Country Mortgages answers your questions on mortgages.
Let’s kick off with this question from Pauline in London, who would like to repay her mortgage. She been told that she needs to be careful because she will have to hold the deeds to her property and that if she pays off the mortgage she’d be liable for some kind of tax penalty. ‘help’ she writes - ‘what should I do?’
As with any debt, paying off a mortgage will generally make good sense as you are effectively earning the mortgage rate on your money, which will outstrip the interest you could earn in a savings account.
It is worth thinking about the storage of your deeds though and most lenders will offer some sort of facility. Rather than paying the whole thing off you can usually maintain a nominal balance, which will mean that the deeds are kept safely rather than you having to find somewhere to store them.
An email from a Michael Smith. Some time ago you mentioned the Rent a Room Scheme in which parents can rent a room of their house to their child. You said that there was a specific amount which could be charged before the parents became liable for any kind of income tax on this money.
I have recently moved back to my parents home to return to university and would like to know how much I can pay them?
The Rent a Room scheme allows for homeowners to receive up to 4,250 per annum for board and lodgings, whether to their own son or daughter or a lodger, without any income tax liability.
If the income from the lodger is less than this amount then they will not even need to declare the income for tax purposes and is designed to avoid lots of paperwork and administration for what is a common scenario.
We’ve had a letter seeking some clarity on the sticky issue of leaseholds. Keith - who’s in East Sussex - gives the example of a three storey house converted into three flats some. He says there is a common front door and hallways and stairs. But the mortgage company of the person buying one of the flats says that, as only 59 years is left on the lease, a further 10,000 is required to extend the lease to 999 years. Keith asks that we explain the reasoning behind this. Who is the money payable to - in short can we explain what buying the leasehold is all about?
Leasehold title is usual for flats and can apply to houses as well. Essentially the property is split down into 3 flats, all of which are on a leasehold basis for a certain time period from the freeholder, at the end of which the title reverts to the freeholder. The freeholder could be an external individual or company and will be responsible for the upkeep of the common areas, for which they will collect a service charge from leaseholders.
A short lease is therefore unattractive for a purchaser and so it is an issue that a solicitor may advise upon. As far as a mortgage is concerned, lenders will generally require the lease to run for a minimum of 30 years after the mortgage term.
Home property insurance do have the right to have the lease extended in certain instances and flat owners have rights to buy the freehold, the advantage that they are then in charge of their own destiny.
For advice contact your solicitor although useful information can be found at the Leasehold Advisory Service - www.lease-advice.org.uk.
This query comes from one of our international viewers! Catherine writes I am British, but live and work in Frankfurt - and am looking to enter the property market. In the UK first time buyers seem to have no problem buying property, even with a very small amount of starting capital - let property insurance
this is NOT the case in Germany. House prices are high and a minimum of 30-40% starting capital is required before a bank will even think about giving you a mortgage. The mentality here is that you save until you are 45 and then buy a house - having rented in the mean time - this leaves you with 15-20 years to pay off the mortgages. My thinking is still the “British mentality” - i.e. it is better to buy early! I know that Working Lunch has covered Euro Mortgages before, but I’ve heard that these are mostly aimed at people looking to buy holiday properties in Spain or Portugal. What options are available to Catherine?
There aren’t any UK lenders who will look to lend on property in Europe due to the fact that they simply don’t have the infrastructure abroad for the administration of the mortgage account.
Those that can offer euro mortgages tend to be for those paid in euros but secured against a UK property. Lenders like Barclays are using their offshore functions to provide UK citizens with borrowing facilities on foreign property as a second home/holiday home. In addition there usually remains a requirement for a larger deposit than we have come to expect from deals available in the UK.
Here’s a quick question about mortgage fees. As a first time buyer I have saved some money to put towards a deposit, but how much of this will actually be needed to go towards solicitors fee, surveys, insurance and all the other charges? That one from Sarah-Jane in London.
It is really important to do your sums and budget carefully, particularly as a first time buyer. The costs of buying a home unfortunately do not end with the funding of a deposit and then the ongoing mortgage costs.
In addition there are legal fees, which could typically amount to 600 to 700 for a first time buyer. Survey fees will vary depending on the property value and on the level of survey taken - a basic valuation, homebuyers report or a full structural survey but bargain for at least a couple of hundred pounds at the very least. One of the biggest costs to contend with is of course stamp duty, which is chargeable at 1% of the purchase price on properties of 60,000 up to 250,000, then 3% above this and 4% above 500,000.
Whilst stamp duty can’t be avoided (unless the property is in a specified disadvantaged area), shopping around could cut the other costs particularly on associated insurances.
A rather unhappy viewer in Commercial property risk management and insurance who has just taken out a mortgage has written in. He says there was pressure from them to insure his house and contents with them, but his existing policy is at a better rate. However, he writes my lender told me that, because I wasn’t insuring my house with them, I would have a penalty deducted from my mortgage loan. This they have done to the tune of 26. Apparently other lenders do the same. To me, this smacks of blackmail and a scam. Any advice would be much appreciated.
This is a standard charge by lenders when the borrower does not take their Buildings insurance with the mortgage lender. As it will be a requirement of the mortgage for the property to be insured this fee is an administration charge to cover the fact that the lender needs to make sure that adequate provision has been made.
The typical charge is around 25 but this is usually outweighed by the fact that shopping around for insurance can yield big savings when compared with the lenders insurances.
A viewer in Essex writes I am 39 year old self-employed lorry driver earning around 45,000 to 50,000 a year. I’m a first time buyer and have 30,000 towards a deposit. I am thinking of an Off Set mortgage - but am not sure if this would be suitable for my needs. The IFA promotion hot line are sending me a list of local, unbiased, fee paying, IFAs in my area. Would I be better off to go with an IFA or go on the advice given to me from estate agents as to which mortgage to go for?
There are thousands of different mortgage products on the market at any one time so it certainly makes sense to enlist the help of a mortgage broker who can trawl through and find the product that best suits your needs.
When choosing which adviser to go with its important to understand what the differences can be, the main thing being whether they will search the whole market or a limited number of lenders.
The other thing to bear in mind is cost, as some brokers will charge a fee of up to 1% of the mortgage amount whereas others will not charge any broker fee.
A Richard Harrison thinks he may have found a mortgage bargain. He is looking to re-mortgage and is considering a deal with a British lender - the Leeds and Holbeck Building Society - linked to the U.S. 3 month LIBOR rate, rather than British interest rates. Short of having a crystal ball, could your expert say if this would be a mistake? And what are the forecasts for U.S. interest rates compared to British ones?
LIBOR US$ products allow the borrower to effectively link their mortgage deal to the currently lower US rates without having to take the mortgage in dollars. This eliminates the problem of exchange rate risk that comes with foreign currency loans.
However, the rates are variable and whilst US rates were cut hard and fast to a lower level than Bank of England Base rate, there is also the potential that they could rise more quickly. These deals can carry long tie-in periods so be sure that you are happy locking into this type of deal for the medium term.
Tim in Southampton says when I took out a mortgage in 1990, my solicitor showed me the original Victorian deed document and since then I have looked forward to having it framed and displayed.
I have just cleared my mortgage but my current building society do not have the original deed and say that it was never forwarded to them by my previous lender . My previous lender have deleted everything from their archive. I have contacted both lenders and the Land Registry but each places the responsibility on the other and no one will tell me if it is true that these documents do get destroyed.” He asks if we can shed some light on this situation - and whether it’s worth continuing to pursue this through his solicitor?
More and more documentation is being held electronically these days, which does help with lost documents and also speeds the sale and purchase of property. It could well be the case therefore that the document was no longer required by your mortgage lender.
When you remortgaged, any documentation not required by the new lender or by the registry would usually be forwarded to you or perhaps the solicitor that acted for you on the remortgage, who would usually forward it to you in turn. It could be worth asking your solicitor if they have held on to it. If it’s not with any of these parties then it looks like it could be a case of the unfortunate loss of the document.
Tracey Wyatt would like to know more about offset mortgages. Her fixed rate mortgage is finishing in January and she’d also like to make overpayments on any remortgage we take out. Could you explain the offset mortgage system as she thinks it make be suitable for her?
Overpaying on your mortgage to repay it sooner is a good idea if you can afford it. Offset deals are really an extension of flexible mortgages and carry a savings account alongside the mortgage, with interest only being charged on the difference between the outstanding mortgage.
This means that you slightly overpay each month and pay off the mortgage sooner and save in interest paid.
The downside is that the rates are often higher than standard deals so you really need a fair proportion of your mortgage in savings to make up the difference in rate.
Having said that there are lots of deals that allow overpayment without penalty (typically up to 10% p.a. of the mortgage balance) without allied property and casualty insurance company
on the rate. Just make sure that daily interest applies so that you get the benefit of the overpayment straight away rather than at the end of the year.
The opinions expressed are David’s, not the programme’s. The answers are not intended to be definitive and should be used for guidance only. Always seek professional advice for your own particular situation.
| Norwich Union is to raise domestic property insurance premiums by an average of 10% from next week, the BBC has learned.
The firm, the UK's largest cheap insurance property rented insurer, said that the hike was not linked to the recent floods and that the timing was coincidental. On Thursday the firm warned that the summer floods could cost it about 340m in payouts to customers. Lloyds TSB denied a Times report that it was also raising premiums by 10%. “It is too early to say yet whether there will be any increases and what they will be if there are any,” said Lloyd's spokeswoman Mary Walsh. Repair cost rise Norwich Union insures about one in five homes in the UK. A spokesman said the firm had been assessing the levels of its premiums for some time. Norwich Union's parent company Aviva has told universal property insurance Earlier it estimated that floods in the north of the country would lead to a bill of 175m. The company said that flood risk was just one element of why they had raised premiums. More home improvement, increasing numbers of bathrooms in homes, and expensive flooring had raised the cost of repair work, the company said. But the spokesperson added that those property insurance association of louisiana in flood risk areas would see higher increases than others. BBC economics editor Evan Davis said that people should expect to absorb some of the costs of the floods through their insurance premiums and in increased prices for property insurance |
| A shake-up in the way we are advised when we buy financial products is being planned by the financial regulator.
The Financial Services Authority (FSA) says property insurance rate
And it wants to prevent advisers from calling property and casualty insurance terms
We spoke to Clive Briault, managing director of retail markets at the FSA, and we discount property insurance
Further information:
Advisers’ commissions under fire
16 June: Commission ’caused mis-selling’
External links and helplines
Pre-pay energy
Pre-payment energy meter customers are missing out on average savings of 100 a year by not switching supplier, the regulator Ofgem has said. But how easy is it to switch? And what kind of deal do those who have to pay for their energy upfront get compared to customers who settle their bills by other methods? We spoke to Alistair Buchanan, chief executive of Ofgem, and Jonathan Stearn from independent consumer group Energywatch.
Further information:
Pre-payment energy users lose out
Quick guide: Switching energy supplier
External links and helplines
The programme was repeated on Sunday, 1 July 2007 at 2102 BST.
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| A US federal court has ruled that insurers do not have to pay for the flood damage in New Orleans following Hurricane Katrina in 2005.
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After recent storms left thousands of people homeless and many more with damaged property, Malcolm Tarling of the Association of British Insurers answers some important insurance questions. Q: Many people have been forced into temporary accommodation after their homes were flooded. Will insurance companies foot the bill?
“Most policies now will cover the cost of personal property insurance inventory form Q: But people have complained of busy helplines. Can they just go and get accommodation and then ask the insurance company for the money? “The first thing people should do is to check on the policy to make sure they have got the cover for alternative accommodation. “If they have, they should go ahead, and insurance companies will do everything they can to pay those costs. “But if you cannot get through to your insurance company you should keep trying because companies have been drafting in extra staff to man emergency helplines.
“Allied property and casualty insurance company “Insurers are pulling out all the stops to make sure that people get money as soon as possible.” Q: If your home was flooded, do you have to move everything out to protect it from further damage, or indeed theft? “Insurance companies ideally like you to keep as much damaged property as you possibly can so that it can be inspected. “But they do not expect you to keep property that is a health hazard such as food. You need to dispose of that as quickly as possible.
“Loss adjusters and claims united property casualty insurance company Q: But you may not be able to remove all the contents the upper floors of your house. What if it is stolen?
“Well, insurers are going to be pragmatic here. Citizen property insurance Q: And when these problems have been sorted out, will insurance companies be prepared to insure all these houses again? “There is no reason why you will not be able to get insurance if you suffered a flood claim. One event in itself should not affect premiums for people paying across the board. “The vast majority of properties that are vulnerable to flooding in this country can be insured. “The only properties insurers have to look at on a case-by-case basis are going to be those where there are little or no flood defences in place.” Q: Is the industry generally worried about the growing number of these severe weather events? “The insurance industry is concerned that that there is going to be a 50% increase in the number of winter depressions across the UK. “Those depressions commonly bring with them bad weather, heavy rain and strong winds. And they all impact on insurance costs of course. “What we want to see is good management of the impact of climate change. “If we have that, then there is no reason why insurance cannot continue to be freely available at a price that as many people as possible can afford.” BBC Radio 4’s Money Box was broadcast on Saturday, 15 January, 2005, at 1204 GMT. The programme was repeated on Sunday, 16 January, 2005, at 2102 GMT.
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So you have found your ideal property? You’ve arranged to get a mortgage, started looking for your next sofa and then you discover it’s going to be difficult to get insurance for your new place.
Insurance companies will look at an area and assess its risk.
If it deems the area too risky, then it will refuse to cover the property or will charge a property owner insurance
high premium.
The area might be perfectly safe when it comes to crime, but if you are in an area that is regularly hit by floods, the insurers will take no chances and, property and casualty insurance marketing
, will refuse to offer any cover.
Implications of not having cover
Without insurance, your mortgage lender will not feel louisiana citizen property insurance
giving you the money to buy the property and without insurance, if anything happens, you could be sitting on a huge bill to cover all costs.
Many insurers will cover existing customers who live in a high flood risk area, but will refuse to take on new business. Many say the risk is too great for them.
You may still be able to get cover in a flood-prone area. Insurers are increasingly looking to the government to make sure they offer protection to homes in affected areas.
If they can see improvements made to strengthen flood defences, then they may consider offering cover.
Take advice
To make sure the property can be insured it is worth speaking to insurers before you make any offer for a property.
You can go online and fill in forms on several brokers’ websites to discover if you are likely to be declined or how much the premiums are likely to be.
Of course if you know the cost of insuring a property in an area is likely to be high, then you can always use this as a form of haggling when it comes to the price of the home.
You will know something to your allstate property and casualty insurance company
that a seller may not freely wish to talk about and you could be able to secure a cut in the price.