http://uk.finance.yahoo.com/news/these-homes-are-about-to-become-worthless.html
Some 200,000 homes in the UK are set to become worthless, becuase;
because policyholders in low-risk areas are paying higher premiums to subsidise those living on flood plains. The big insurers who signed this agreement are unhappy that they remain 'on the hook' for large numbers of high-risk homes. In other words, they no longer want to bear such a high proportion of flood claims
The low risk are covering the high risk, so they lose out. And the high risk live off of thier contributions.
Should the low risk remove thier subsidies?
If the Insurance companies pull out and the effected properties become uninsurable, is the following a desirable outcome?
Without insurance, no mortgage lender would be willing to lend against these properties, leaving only cash buyers in the frame. However, taking such a big risk would be sheer madness, forcing cash-rich homebuyers and buy-to-let landlords to reject these properties and look elsewhere
So you no one will buy them, you can't sell them, the next time you get flooded by "an act of God/Nature" you lose your entire investment.
Is this the way it should work?