Florida breathed a sigh of relief in early March when the U.S House of Representatives passed a bill allowing sellers to pass their below market insurance rates on to new buyers. This development has relieved the real estate market in Florida, a market that was threatened by unaffordable insurance for current and new homeowners in flood-prone regions.
In the summer of 2012, Congress passed the bipartisan Biggert-Waters Flood Insurance Reform Act aimed at restoring the National Flood Insurance Program to solid financial health. As a result of this act, buyers and sellers in Florida ran in to problems as flood insurance premiums increased by up to 1,000 percent. These skyrocketing premiums have given Florida real estate a bad reputation and have created a level of uncertainty for people considering moving to Florida.
This reform will remove any uncertainty surrounding real estate in Florida allowing the market to continue to recover. Details of the new changes include:
- The bill will permanently abolish any sharp increases in insurance rates for people who buy homes in flood-prone regions in Florida.
- The bill will preserve below market rates for people whose homes meet the federal flood map standards.
- The bill will also give some relief to homeowners who bought a home in Florida after the 2012 act. Homeowners in this category will see rate increases capped at an average of 15% with a maximum of 18% per year.
Those homeowners with a second home in a flood zone, or homeowners who have experienced several floods will continue to see their premiums rise by 25% per year until they reach a level consistent with their risk of flooding.
The Federal Emergency Management Agency can increase the premiums each year but they will never compare to the steep increases mandated under the bill passed in 2012.
This latest development puts the Florida real estate market in a much stronger position and will relieve homeowners who faced financial ruin as a result of the act. Another good reason to consider Florida real estate as your next investment opportunity. Take a look at the properties on offer in Florida here.
Source: Herald Tribune