Environment Agency Flood Zones Explained
Flood Zone 1 covers land with a less than 0.1% annual probability of flooding and accounts for the vast majority of land in England. Mortgage lenders treat Zone 1 properties as standard in most cases. Flood Zone 2 covers land with between 0.1% and 1% annual probability of flooding from rivers, or between 0.1% and 0.5% from the sea. Properties in Zone 2 may still be mortgageable with mainstream lenders but lenders will scrutinise insurance arrangements more carefully.
Flood Zone 3 is divided into 3a (land with 1% or greater annual probability of river flooding or 0.5% or greater from the sea) and 3b (functional floodplain, where water regularly flows during flooding events). Zone 3a properties are mortgageable with specialist lenders provided buildings insurance can be obtained. Zone 3b properties are the most challenging and mainstream lending is very unlikely. However, even here, some specialist lenders will consider applications where the property has substantial flood defences and a strong insurance arrangement.
It is important to note that Environment Agency flood maps are regularly updated and a property's flood zone designation can change. You can check the current designation of any property in England using the free flood risk search tool on the Government's website. Surface water flooding (from overwhelmed drainage systems) is not always reflected in standard flood zone maps, so a more detailed flood risk assessment may be warranted for some properties.
Flood Insurance and the Flood Re Scheme
One of the biggest challenges for homeowners in high-risk flood areas is obtaining affordable buildings insurance. Without adequate buildings insurance, no mortgage lender will offer finance. The Government-backed Flood Re scheme was introduced in 2016 to address this problem. Flood Re is a reinsurance scheme that allows participating insurers to pass the flood element of a home insurance policy to the scheme at a capped rate, enabling them to offer more affordable cover to high-risk properties.
To be eligible for Flood Re, the property must have been built before 1 January 2009 (properties built after this date were built knowing their flood risk and are excluded from the scheme), and the policyholder must live in the property as their main residence. Around 200,000 high-risk homes are currently covered under Flood Re. If your property does not qualify for Flood Re, the British Insurance Brokers' Association (BIBA) operates a specialist flood insurance finding service that can identify insurers willing to cover high-risk properties outside the scheme.
When remortgaging a flood risk property, you should arrange flood insurance before making any mortgage applications. Being able to demonstrate to a lender that you have secured buildings insurance at a manageable cost significantly improves your chances of approval. Keep records of your insurance quotes and any correspondence with the BIBA scheme for your broker to present to potential lenders.
