What Are the Risks of Investing in Real Estate Near Expanding Flood Plains in England?

March 19, 2024

As you consider investing in real estate in England, it’s essential to be aware of the potential risks associated with properties in flood-prone areas. Over the past few years, the frequency and intensity of floods have increased, largely driven by climate change. This trend has raised questions about the safety and suitability of homes built near expanding flood plains. In this article, we will explore the implications of investing in real estate near these high-risk areas, focusing on insurance, the resilience of property development, and government policies.

The Impact of Climate Change on Flooding Risks

The first aspect that you need to consider is the role of climate change in increasing flood risks. Rising global temperatures are leading to more extreme weather events and higher sea levels, both of which contribute to flooding. In England, this is particularly true in areas adjacent to the sea or major water bodies.

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As climate change progresses, it’s predicted that areas currently at high risk of flooding will expand. This is a crucial factor to consider when investing in real estate near flood plains. It’s not enough to look at the flood history of the area. You also need to assess how it might change in the future.

Being aware of the local climate trends and predictions can help you make informed decisions and avoid investing in properties that could become high-risk assets in the future.

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The Cost and Availability of Flood Insurance

When buying a property in a flood risk area, one of the first challenges you’ll face is securing affordable insurance. In England, the government has established a scheme known as Flood Re to ensure that properties in high-risk areas can obtain affordable flood insurance.

However, this scheme doesn’t cover all properties. Homes built after 2009, properties in the highest council tax bands, and businesses are excluded. This means that if you’re considering an investment in a new development in a flood risk area, you may struggle to find affordable insurance.

Moreover, even if your property is eligible for Flood Re, the cost of insurance may still be higher than for properties in lower-risk areas. This could impact the profitability of your investment, particularly if you plan to rent out the property.

Resilience of Property Development in Flood Prone Areas

Developers are increasingly required to build resilience into new homes in flood-prone areas. This means that the properties are built to withstand floods and recover quickly if a flood does occur. They may feature raised electrical fixtures, flood-resistant materials, and barriers to prevent water entering the property.

However, these features can add to the cost of the property. Moreover, while they can reduce the damage caused by a flood, they can’t eliminate the risk entirely. Homes built near expanding flood plains will always be vulnerable to extreme weather events, no matter how resilient they are.

In addition, it’s important to be aware that not all developers take the risk of flooding seriously. Some continue to build homes in high-risk areas without adequate resilience measures. Therefore, if you’re considering investing in a new development near a flood plain, it’s crucial to do thorough research on the developer’s reputation and the resilience features of the property.

Government Policies and Local Planning Regulations

Finally, government policies and local planning regulations can have a significant impact on the risk and profitability of your investment. In England, the government has been tightening regulations on building in flood-prone areas in response to the increasing risks posed by climate change.

These changes can impact the value of your property and its attractiveness to potential buyers or renters. For example, stricter regulations could limit the potential for future development or expansion of the property. On the other hand, they could also enhance the property’s value by ensuring that it’s built to high resilience standards.

Therefore, before investing in a property near an expanding flood plain, it’s essential to understand the local planning regulations and future government policies that might affect the property.

In conclusion, investing in real estate near expanding flood plains in England comes with significant risks. But by understanding the impact of climate change, the cost and availability of flood insurance, the resilience of property development, and government policies, you can make informed decisions and manage these risks effectively. However, the decision must weigh the potential returns against these risks. It’s also essential to remember that while some risk factors can be managed, others, like the future impacts of climate change, are largely unpredictable.

The Role of the Environment Agency and Flood Defences

The Environment Agency plays a key role in managing flood risk. This government body is responsible for issuing flood warnings, maintaining and building flood defences, and advising on planning applications in flood risk areas. If you’re considering investing in real estate near expanding flood plains, it’s crucial to look at the Environment Agency’s flood risk map and its long-term plans for flood defences.

The agency categorises areas into high, medium, and low risk of flooding. High-risk areas have an annual chance of flooding of 1 in 30 (3.3%), while medium risk areas have an annual chance of flooding of 1 in 100 (1%). Low risk areas have an annual chance of flooding of 1 in 1,000 (0.1%). It’s important to note that even in low risk areas, the risk is never zero, and the impacts of climate change could cause the risk level to rise in the future.

Flood defences, such as flood barriers, walls, and embankments, can significantly reduce the risk of flooding. The Thames Barrier is a well-known example of a major flood defence system in England. However, not every area has adequate flood defences, and even those that do can still be overwhelmed by extreme weather events or rising sea levels.

Therefore, when assessing a potential real estate investment, it’s important to consider both the current flood risk level and the quality and capacity of the existing flood defences. In addition, you should check the Environment Agency’s long-term plans, as they may include improvements to the flood defences that could reduce the risk in the future.

Surface Water Flooding and Property Value

Another key risk to consider is surface water flooding. This occurs when rainwater cannot be absorbed into the ground or drained away and instead pools on the surface. It’s a common type of flooding in England and Wales and can happen even in areas that are not near a river or sea.

Homes built on impermeable surfaces, such as concrete or tarmac, are more susceptible to surface water flooding. This type of flooding is particularly difficult to predict and manage, as it can happen quickly and without warning. Furthermore, surface water flooding can cause significant damage to properties and is often not covered by standard flood insurance policies.

Moreover, properties that have been affected by flooding, whether from surface water or other sources, may be seen as less desirable by potential buyers or renters. This could reduce the property’s value and make it harder to sell or rent out. In a study by the Royal Institution of Chartered Surveyors, properties in high-risk flooding areas were found to be up to 20% less valuable than similar properties in lower-risk areas.

Consequently, when investing in real estate near expanding flood plains, it’s crucial to consider the potential impacts of surface water flooding on the property’s value, as well as to ensure that you have appropriate insurance coverage.


Investing in real estate near expanding flood plains in England is a complex decision that requires careful consideration of numerous factors. Understanding the impacts of climate change, securing affordable flood insurance, ensuring property flood resilience, and navigating government policies and local planning regulations are all essential steps.

Furthermore, it’s vital to consider the role of the Environment Agency and existing flood defences, as well as the risk of surface water flooding and its potential impact on property value. By doing so, you can make informed decisions that weigh potential returns against the risks.

However, it’s important to remember that while some risks can be managed, others, such as the future impacts of climate change and surface water flooding, are hard to predict. Therefore, a cautious and well-informed approach is crucial when investing in real estate near expanding flood plains in England.