A number of the economic commentators have stated that a significant contributing factor to inflation has been the large increase in insurance premiums over the last few years. Some meteorologists have reported that weather patterns are changing. This has led to flooding in areas where flooding has not previously occurred. In other areas, flooding has occurred several times in a short period of time and on occasions has been more severe than previously.
It is not unusual for the purchaser of a property to check on the amount of the council rates, water rates and whether the property being purchased shall be liable for land tax. However, it is also advisable to make enquiries as to the cost of insuring the property for its full replacement value. If the property is within a flood zone, the cost of insurance is likely to increase significantly. How much will depend on the risk. All contracts for the sale of residential property must have attached a planning certificate issued by the local municipal council. The planning certificate shall disclose if the property is within a flood zone. If so, it is wise to ascertain the cost of the insurance. This information may have a bearing on whether or not to proceed with negotiations to purchase the property.
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