Many thousands of of homeowners could find themselves unable to insure or sell their properties from 2013, as a stand-off between insurance companies and the government continues.
Insurance companies have failed to reach an agreement with the government over the renewal of a commitment safeguarding homes in flood-risk areas.
Under the current Statement of Principles insurers have promised to provide cover for homes at risk from flooding as long as plans exist to reduce the risk of flooding within the next five years and the property was built before 2009.
Under the current agreement insurance for properties in high risk areas is subsidised by a combination of the policies of properties in low risk areas and government sources.
If a bargain is not struck up to 200,000 homes across the UK could be at risk of losing insurance cover, as premiums skyrocket and become increasingly difficult or impossible to afford.
In addition to loss of protection, many homeowners could find themselves unable to sell their properties, with home cover a basic requirement for mortgage lending.
Richard Hinton, business development director at SearchFlow said:
"The end of the principles agreement between the Association of British Insurers 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,' he explained."