Selling a property after a fire or flood
A repaired property is not the same as an undamaged one in the eyes of a lender or a buyer, however good the work.
A property that has been damaged and repaired carries a history that follows it. Insurers record the claim, lenders ask about it, and buyers are entitled to know. The history affects both the insurance premium and the mortgageability.
How much it affects the price depends on the nature of the damage and the quality of the repair. A well-repaired flood or fire with a documented insurance claim and a guarantee is a different proposition from a property repaired informally by the owner.
What buyers and lenders will ask
These questions will be raised, and the answers determine whether the sale proceeds smoothly or stalls.
- Whether the damage was covered by an insurance claim, and whether the claim was settled
- Who carried out the repair, and whether they were a specialist contractor
- Whether the work was signed off by building control where required
- Whether there are guarantees or warranties on the repair, and whether they are transferable
- Whether the property remains insurable at standard rates, and what the premium is
- Whether the lender's valuer will accept the property as security
Documenting the repair
The single most valuable thing you can hold is a complete record: the claim reference, the scope of works, the contractor's details, the building control certificates, the guarantees, and photographs of the damage and the repair.
This converts the buyer's uncertainty into information. A buyer who can see what was done, by whom and with what warranty has far less reason to discount than one who is told the property had a flood and nothing more.
The insurance problem
A property with a flood or subsidence history can be difficult and expensive to insure, and the buyer will discover this when they obtain a quote. That can derail a sale late, so it is worth establishing the position yourself and disclosing it.
Where the property is genuinely difficult to insure at standard rates, the buyer pool narrows to those who can obtain cover, and the price reflects that. Providing evidence that cover is available, with a quotation, removes the uncertainty.
Common questions
- Do I have to disclose a fire or flood to buyers?
- You must answer the property information form honestly, and it asks about flooding and about insurance claims. Beyond that, a material fact that a buyer could not discover for themselves should be disclosed. Concealing it gives the buyer a remedy after completion, which costs far more than the discount you avoided.
- Will a flood history affect my property's value?
- It can. The effect comes through insurance — if cover is expensive or difficult, the buyer pool narrows and the price falls. A well-documented repair with guarantees, and evidence that cover is available, reduces the impact considerably. The effect depends on the nature of the flood and the flood risk of the location.