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Millions could be left without affordable flood insurance

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Published by Max Salsbury for 24dash.com in Housing and also in Central Government, Communities, Regulation

floods warning floods warning

Millions of Brits could be left without affordable access to affordable flood insurance because of exclusions in the types of property to be covered by the government’s flood re proposals, an alliance of property industry leaders and the Council of Mortgage Lenders have warned.

The alliance has called for urgent amendments to the Water Bill, after it emerged that a significant number of properties that had been expected to be included within flood re will actually be excluded.

As currently defined, flood re will exclude most cover for:

  • Leasehold properties
  • The entire private rented sector
  • Small and medium-sized enterprises (SMEs)
  • Housing association homes
  • New-build homes constructed after January 2009
  • Council homes
  • Properties in council tax band H

With almost five million leasehold properties thought to be in England and Wales, and over four million homes in the PRS, this means that many millions of properties are likely to be excluded.

The alliance has warned that while some residential rented property will be insured by big organisations, the vast majority in the PRS is owned by individual landlords with one or two properties, thus preventing landlords from being able to access affordable flood insurance will put significant strain on tenants whose homes are flooded and cause wider social harm to communities.

Ian Fletcher, director of policy at the British Property Federation, said: “Every property that is occupied is somebody’s home. Flood doesn’t discriminate between freehold and leasehold, owner-occupation and renting, and it will be small comfort for tenants who have contents cover if their home itself is left uninhabitable. If a property is at risk, regardless of its status, it needs to be able to insure itself affordably against disaster, not least because that is a condition of most mortgages.

“Universality of flood cover is something that the citizens of the UK cherish and should not be given away so easily in this deal. Increased surface water flooding means you don’t need to live next to the sea or a river to be impacted by flood these days, it can happen to most of us. Depriving leasehold property owners, including millions of owner-occupiers, access to Flood Re is frankly unbelievable. There are many small leasehold blocks run by leaseholders who simply won’t be able to fight their corner in the insurance market and need to have access to Flood Re.  Also at a time when Government is taking so many positive steps to encourage investment in the private rented sector and promote responsibility in the sector, it seems extremely contradictory to exclude these properties from possible essential flood cover.”

Paul Smee, director general of the CML, added: "We find it difficult to believe that the original policy intention was to exclude a whole swathe of residential property from the stated aim of ensuring that affordable flood insurance continued to be available across the market. Given that this appears to be an unintended consequence, we strongly urge legislators and the insurance industry to reconsider the proposals and ensure flood cover remains available on homes as people would expect."

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