Flood Re will exclude ‘millions of properties’

Flood Re’s exclusions will leave “many millions” of homes without affordable flood insurance, according to the property industry.

An alliance of trade associations, including the British Property Federation and the Council of Mortgage Lenders (CML), has called for “urgent amendments” to the Water Bill, which will contain the legislation for Flood Re.

The Water Bill will be read in the House of Lords on 27 January.

Flood Re is a government-backed flood insurance pooling scheme for high-risk properties that is due to come into force in summer 2015.

It will replace the Statement of Principles, under which the insurance industry provides affordable flood cover to high-risk homes in return for government flood defence spending.

However, Flood Re will exclude leasehold properties, the private rented sector, SMEs, housing association homes, houses built after January 2009, council homes and properties in council tax band H.

‘Significant strain’

The property industry alliance cited estimates by the Leasehold Knowledge Partnership that there are 4.99 million leasehold homes in the UK, of which 3.14 million are privately owned.

It said: “This means that many millions of properties are likely to be excluded, rather than the widely cited estimate of 9,000 homes.”

It added: “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.”

‘Frankly unbelievable’

British Property Federation director of policy Ian Fletcher said: “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.”

CML director general Paul Smee 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.”