A quarter of the properties in the UK that are at risk of flooding – worth a total of £214 billion – could be left uninsured this year. This is extremely worrying, as the average flooding claim is £30,000.

Homeowners could find themselves unable to secure insurance against flooding when the 'Statement of principles' agreed between the government and the insurance industry in 2000 expires at the end of June next year, as insurers may be unwilling to offer policies which expire after the end of the principles agreement.

The agreement obliges insurance companies to offer flood cover as part of standard policies.

Unless government and insurers get their act together and come up with a sustainable model soon, property owners could find themselves unable to insure their properties from this summer as insurers become unwilling to offer policies which expire after the principles agreement, says property search firm SearchFlow.

This could create all sorts of problems. Uninsured properties could leave owners in breach of their mortgage contract, as well as making properties harder to sell or remortgage and reducing their overall value. According to Know Your Flood Risk UK, many UK insurers are already trying to rid themselves of properties at significant risk of flooding and some property owners have been unable to secure policies with excesses below £20,000.

The Association of British Insurers (ABI) has called for a sustainable subsidy model, which is paid for either by taxpayers, low-risk households or both. It has warned that if no solution is found, 200,000 high-risk households could be stuck with insurance they can't afford and homes they can't sell.

Contentious issue during conveyancing
Richard Hinton, business development director at SearchFlow said: "The end of the principles agreement between the ABI and the government could make flooding a hugely contentious issue during the conveyancing process when professional conveyancers have to consider the potential risks a property faces. Although buyers will be able to obtain flood insurance for the next few months, the long-term prospects of properties at risk of flooding are potentially bleak.

"Especially for buyers purchasing in high risk flood areas, the possibility of very high premiums, significant reductions in value, less access to mortgage finance – even action taken by the mortgage lender due to breach of the mortgage agreement – is high. Conveyancers looking after their clients' best interests must ensure they are aware of the risk of flooding and ensure their clients appreciate the danger posed by the end of the ABI agreement".

Widespread flooding is a significant liability for those purchasing property – the ABI estimates the floods of 2007 cost more than £3 billion and that the average bill for the repair of a flooded property is more than £30,000. Even though the Environment Agency spends £300 million every year on flood defences, it has admitted that that 43% of defences are in fair, poor or very poor condition.

Hinton adds: "The government's current spending on flood mitigation may seem substantial, but the truth is that much more is needed to address the seriousness of flood risk. Only a tenth of the total cost of the floods of 2007 is spent on flood defences each year. The potential costs of flood damage dwarf the annual spend on defences and this is the main reason why insurers are currently reluctant to expose themselves to flood risk.

"One of the main principles in the ABI's agreement was that the government improve flood defences in high-risk areas. The fact this has not been done means an extension to the agreement is unlikely. This is worrying news for those buying in areas with high flood risk. Given that one in four properties in the UK faces a significant risk of flooding, conveyancers everywhere must take notice of the potentially huge dangers a future dearth of flooding insurance may pose".