The Government’s Flood Re scheme promised to help homeowners whose properties were at risk of flooding – but excludes the PRS.
Two years on, in an article first published in the RLA’s Residential Property Investor magazine, we are looking at what the impact has been and ask, will it take another disaster to get the protection we need?
We are also looking for your experiences when it comes to getting cover for your rental homes.
It is now just over two years since the Government introduced its controversial Flood Re scheme.
The scheme, which offers households at high risk of flooding affordable cover, was brought in back in April 2016 after swathes of the UK were left devastated by widespread flooding, affecting 16,000 homes and racking up an estimated insurance bill of more than £1.3bn.
The scheme is paid for by adding a surcharge to insurance bills across the board, but excludes properties in the PRS, as buy-to-let homes are considered a commercial undertaking.
The RLA believes that up to 100,000 rented homes could be at risk and told the Government that landlords could struggle to get cover as a result of the changes or could be hit with large excesses and high premiums.
Ever since the scheme was first mooted the RLA has been lobbying the Government to extend it to bring in excluded groups, including private landlords, flat owners and small businesses.
The issue has largely fallen out of the public eye. While there has been some localised flooding since the introduction of the scheme, there has been little on the scale of what we saw a few years ago, and for many it is a case of out of sight out of mind.
While refusing to extend the scheme, the Government did, however make a commitment with the Association of British Insurers (ABI) to monitor cost and availability of flood insurance on excluded groups when Flood Re was introduced.
The RLA is now pressing for information on this.
The move is timely with a Flood Re review due to be carried out by the Government.
What is the impact for landlords?
The Government said Flood Re would not be extended to the PRS as there were already products on the market that would offer them cover – a claim which the RLA disputes.
Depending on the seriousness of the flood risk and the attitude of the insurer involved, some landlords may not be able to get cover at all.
Alternatively, they may have to pay higher premiums, be saddled with a large excess or find themselves in a situation in which the insurance company will only pay out half the claim – something called co-insurance.
There have been cases of flats in Leeds and York adjacent to rivers, where excesses of up to £100,000 have been applied to policies.
These have been mitigated to some extent where flood prevention works have been carried out, but there are still a lot of areas across England and Wales were landlords have been left vulnerable.
RLA members responded to a survey on the issue in 2016 with 42% said premiums and excesses had increased in the last two years, with 44% saying it was ‘difficult’ or ‘very difficult’ to get insurance for rental properties in high risk flood areas.
A total of 29% said they had been the victim of floods in the past few years, with 15% of respondents revealing they had no flooding cover at all.
What would the RLA like to see?
In addition to campaigning for an extension of the scheme to the excluded groups we have also suggested a separate version of Flood Re – Flood Re 2 – for private landlords and leaseholders.
However, at present there seems to be little appetite on the part of insurance companies, or the Government for this.
Nevertheless, we are keeping this item on the agenda, particularly because of the upcoming review – which is a great opportunity for the RLA and its allies to press for change.
The RLA attends a Flood Re group which meets every two to three months.
The group includes representatives from the British Property Federation (BPF) the Association of Residential Managing Agents, UK Finance, ARLA Propertymark and Leasehold Knowledge.
From the meetings there is anecdotal evidence that
- Flood Re is still not managing to cover all the properties it was envisaged it would
- some high streets feel threatened because of lack of cover and
- some landlords are unable to get a mortgage without the likelihood of cover
However, there is a lack of hard evidence.
Call for evidence
The RLA and other members of the group are now asking their members to come forward to share their experiences – in a bid to highlight common issues and campaign for change.
The RLA believes the issue must stay on the political agenda. We don’t want to wait until the worst happens before anything can change.
- If you are a PRS landlord and have struggled to get insurance against flooding, or have experienced any similar issues, please get in touch. Email firstname.lastname@example.org