Property: A dampener on any deal

A flooded house is a nightmare, especially if you are about to sell - or buy - it.

It is bad enough clearing up the mess left by receding flood waters, but if a house is just about to change hands, matters are a great deal worse. Some of those who are still drying out their homes may well have a buyer to keep sweet on top of all their other problems.

The owner of a little terrace cottage in the Shrewsbury area, which was badly affected by the recent floods, had to deal with a foot of water inside his house, and an unhappy purchaser. Bad luck saw the river Severn break its banks between exchange of contracts and completion. Roger Whittles, who is on the Shropshire branch committee of the National Association of Estate Agents, says the owner is to all intents and purposes being held over a barrel. "He has taken a reduction of about 5 per cent to keep the sale on course, otherwise the buyer would have been lost altogether. Fortunately, everybody was properly insured."

Legally, the purchaser becomes responsible for a building on exchange of contracts and will insure it from that date, although solicitors often agree that the responsibility should remain with the vendor. Certainly, solicitors and estate agents would be unlikely to advise a vendor to cancel their insurance in case the purchaser turned out, as one agent said, to be a man of straw.

It is quite usual for a property to be covered twice during the period before completion. In common law, though, if a house should suffer a disaster, the buyer is liable. While this may seem a far-fetched scenario, for Ronald and Juliet Plant it became a reality a few years ago when one of the most treasured features of the small estate in Cornwall they had agreed to buy collapsed in hurricane-force winds.

The 18th-century farmhouse in Stoke Climsland has two spectacular walled gardens of nearly an acre each. "On the day after we exchanged contracts, we received the news that a large tree had brought down some 150ft of the massive walls. Nothing prepared us for that," says Ronald Plant. "Without really thinking about it too much, I had fortunately asked my surveyor what sort of cover we would need. Emotionally, we didn't really feel that we had bought the property, or that we would really need to claim on the insurance. The vendor was very worried that the sale would be aborted and we both consulted our insurers. The bill for repair was calculated to be in the region of pounds 17,000." To their enormous relief, the Plants' insurers agreed to meet the costs. "The walls were listed and it couldn't be rebuilt in any old fashion," explains Ronald Plant

The loss of the walled gardens to a historic property of this kind would have been irreparable. The Plants, who have gradually restored the estate and are soon to put it on the market, say that it would not be the same without the walls, which now look as they did in their best days.

Around her home along the river Severn, Vikki Heath is pinning her hopes on a new wall. She and her husband have just returned to their 300-year- old cottage after 10 days in a hotel while the flood subsided. "The water was predicted to come but it was an absolute nightmare waiting for it to happen. We have a free-standing kitchen and tiled floors so we could rescue most of our things. It does make you think hard about selling. But it is very beautiful here and we wouldn't want to live anywhere else. Once everything is back to normal, you forget. We are going to build a wall now seeing that the river is only two fields away from the house."

Anyone who can throw a ball from their house into the river has a pretty good chance of being flooded, says Nick Tart, who runs estate agencies in Bridgnorth and Ironbridge. "But it is a price people are prepared to pay to live in such lovely places. One current purchaser was very anxious about floods, but although water did eventually come into the house, he wasn't deterred. Even in areas where ground movement and risk of flooding make it impossible to get mortgages or insurance, there are always people who will buy there because they are such idyllic spots."

In Shrewsbury, Jonathan Lovegrove-Fielden of Balfour Burd & Benson has seen acres of his clients' farmland, rather than homes, disappear under water. Insurance companies, he finds, have become much sharper in recent years.

"Clients can get as much as 30 per cent discount on their properties if they are confident about cutting out flood cover," he says. "But a bigger risk during the period between exchange and completion is from burst pipes. If a property is empty it can be days before the problem is found and the damage done to a house is far greater than from flood water."

But in the minds of purchasers, the drama of floods seems far more of a peril than domestic negligence. In Sussex, even though the river Lavant flooded a few years ago for the only time this century, buyers constantly refer to it.

A listed cottage in the village of Singleton, on the market with Henry Adams and Partners, was flooded then, which has undoubtedly put off a few purchasers, says Richard Williscroft. A new environmental awareness means that in some areas, new houses are being built on higher ground than five years ago. But bad weather is not always such a sales disaster. "Until Selsea was struck by a freak tornado, nobody much had heard of it. Now its notoriety has put it firmly on the map," adds Williscroft.