The British Property Federation (BPF) has expressed concerns over the lack of flexibility in the regulations for Flood Re in its response to a government consultation on the affordable flood insurance scheme.
Flood Re, which is the deal struck between the insurance industry and the government to ensure affordable cover for those in high flood risk areas, has been billed as cover for all homeowners, but it will leave millions of landlords and owners of leasehold flats exposed to rocketing insurance premiums.
Along with leasehold properties in large blocks, properties in council tax band H and those built after 2009, Flood Re will exclude private rented homes.
The BPF has been campaigning to include leasehold properties within the scope of the scheme, pointing out that it is grossly unfair to discriminate between those who live in a house and those who live in a flat. With nearly 5 million leasehold properties in the UK and at least 800,000 of these estimated to be in flood risk areas, a huge amount of properties will be left exposed.
In an on-going campaign, the BPF has repeatedly asked government for proof that leaseholders will not be adversely affected by the exclusion. It has therefore welcomed in its consultation response the Government’s commitment to monitoring properties that have not been included in the scheme.
The fact that the regulations show no evidence of a mechanism that would allow Flood Re to be amended to include new categories of property at a later date, however, has led the BPF to be anxious that that the commitment to monitoring the effects on leaseholder properties is an empty one.
Other inconsistencies in the regulations have caused further concern. Common hold properties, whose insurance is held as a commercial policy, are included within the scope of the scheme which has created much confusion over who is in and who is out, on the basis that leasehold properties have been excluded as their policy is classed as commercial. The BPF has urged clarity from government as to why some commercial policies are included within the scheme and others are not.
In addition to this, the regulations do not give any indication as to why the threshold for leasehold blocks included was set at blocks of three units or fewer, therefore excluding any two-up two-down conversion.
Ian Fletcher, director of policy at the BFP, said: “There is a last chance for Parliament to amend the legislation on Flood Re, so that leaseholders, small businesses and other groups enjoy the safety net it provides. Having been campaigning for the inclusion of leasehold properties in Flood Re for a while, a repeated source of frustration has been the lack of explanation or evidence for many of the decisions made, and the regulations that have been set out so far do not do much to assuage these.
“The government’s intention to monitor the impact on various excluded groups is welcome, but a suck-it-and-see attitude to affordable flood cover is not ideal for either householders, or people trying to run a small business.”