Flood proposals exclude rented property

Flood proposals exclude rented property

The Residential Landlords’ Association (RLA) has voiced concerns that exclusions recently identified in the types of property to be covered by the Government’s Flood Re proposals will leave rented homes without access to affordable flood insurance.

The RLA has joined voices with the British Property Federation (BPF) and the Council of Mortgage Lenders (CML) about properties excluded from access to Flood Re.

As currently defined, Flood Re will exclude most buildings cover for the following property types: 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; and 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 private rented sector, this means that the real number of properties excluded is likely to be millions, rather than the widely-cited estimates of 9,000 homes. The rationale cited for the exclusions is that buildings insurance on such properties is deemed by the insurance industry to be “non-domestic”, rather than domestic.

However, this is a distinction that only the insurance industry would perceive: the man-in-the street would undoubtedly regard leasehold flats as residential/domestic. Leasehold property such as flats, however, has to be insured on a block basis to ensure the whole building is insured. And while some residential rented property will be insured by big organisations, the vast majority in the private rented sector is owned by individual landlords with one or two properties. 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.

Speaking ahead of the second reading of the Water Bill in the House of Lords on 27 January, a partnership of housing sector organisations – including the RLA, the BPF, the CML, the Association of Residential Managing Agents (ARMA), and The Leasehold Knowledge Partnership – have come together, and are urging the government to reconsider its plans, which will negatively impact a huge proportion of households and the industry.

Richard Jones, policy director of the RLA, said, “We are very concerned about this discrimination against the private-rented sector. It will particularly hit smaller landlords, some of whom could well consider their future in the sector as a result. This comes at a time when private landlords are increasingly called on to provide the accommodation necessary to the nation’s housing needs. This will also hit very badly any tenants who are flooded and would pose problems for local authorities who might have to rehouse some residents affected by flooding and who could be faced with areas of property blight because landlords cannot obtain insurance cover.”

The Leasehold Knowledge Partnership, a consumer group championing the cause of residential leasehold owners, said, “Leasehold flats and retirement properties should not be excluded from the proposed affordable flood insurance cover being introduced under the new Water Bill. Leaseholders who pay for their buildings insurance through block cover are being excluded because they are being deemed commercial rather than residential properties. It will be the poor and the vulnerable who are put most at risk.”