Landlords still excluded from Flood Re

The Government has made some changes to the Flood Re agreement – but rental properties are still not covered.

The latest changes to the agreement struck between the Government and insurance industry include covering expensive properties in council tax Band H. But landlords and flat owners will still be excluded by the scheme which aims to protect people living in areas at risk of flooding from high insurance premiums.

The draft regulations currently stand to exclude a number of groups of the property industry, including the majority of leasehold properties, the private rented sector and, up until last week, top end properties in council tax Band H.

The British Property Federation (BPF) has criticised the government for not widening the scope of the scheme further, questioning why homeowners in council tax Band H are given priority over those who live in a leasehold flats.

The BPF and other industry bodies have repeatedly sought an explanation from DEFRA on why it has billed the scheme as protection for ‘homeowners’, but proceeded to leave a large swathe of homeowners outside the scheme.

The BPF has continually voiced its concerns over the exclusions applied to the Flood Re regulations. It welcomed a concession made earlier in the year for owner-occupied leasehold units in blocks of three of fewer to be included in the scheme, but has been frustrated by Government’s reluctance to explain why this threshold was chose. The scheme also excludes properties built after 2009, even though those owners end up paying the Flood Re levy.

It is estimated that there are 800,000 leasehold properties at risk of flooding in the UK, with 70,000 of these at high flood risk. Anecdotal evidence has shown that some leaseholders exposed to the open market have seen their premiums increase by 500% and excesses increasing from £300 to £25,000 following a flood incident.

The Government has published its response to the consultation on Flood Re regulations that it ran earlier this year, which has diluted the views of 134 individuals and counted them as one response.

Ian Fletcher, director of policy at the British Property Federation, said: “While we are pleased for those homeowners in Band H, there is little festive cheer in this announcement for leaseholders, landlords and small businesses.”

“The Government and insurance industry continues to pick and choose who can participate in Flood Re, seemingly at whim, and this latest announcement will look odd to the millions of owners of flats, that they are not protected against escalating premiums, whilst the most expensive houses in the country are. Promises that the Government and insurance industry will monitor the situation of those excluded groups are worthless whilst they remain so airy-fairy on what would trigger them to act, and how they would do so.”