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Water Bill could leave flood risk homes without insurance

Millions of homeowners will be excluded from a government scheme to cap flood insurance premiums in for properties in high risk areas, insurers and mortgage lenders warned this week.

The warning comes from an alliance which includes the British Property Federation (BPF) and the Council of Mortgage Lenders.

It has called for urgent changes to the proposals contained in the Water Bill, currently going through Parliament. The bill is due for its second reading in the House of Lords this week.

The alliance claims that a significant number of properties that had been expected to be included instead be excluded.

It says that, as currently defined, the proposed Flood Re scheme will exclude most buildings cover for leasehold properties, private rented homes, council and housing association homes, small and medium-sized enterprises, new-build homes constructed after January 2009 and council tax band H properties.

The alliance says there are almost 5M leasehold properties in England and Wales, and over 4M homes in the private rented sector.

“Flood doesn’t discriminate between freehold and leasehold, owner-occupation and renting,” said BPF policy director Ian Fletcher.

“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.”

“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,” he added. “Depriving leasehold property owners, including millions of owner-occupiers, access to Flood Re is frankly unbelievable.”

Flood Re is intended to replace the “Statement of Principles”, under which insurers offered affordable flood coverage to the majority of households in return for government maintaining its spending on flood defences. This agreement runs out this summer.

Readers' comments (1)

  • The government policy is to allow housing developers greater power to overcome local objection. It should therefore impose full bonded liability for flooding of the new build and surrounding property on the developers which would discourage development of inappropriate sites. The bonds should be for 20 years after completion of the last house.

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