Landlords Facing Flood Insurance Issues

Over the past few months it has been impossible to open a newspaper or watch a news programme without hearing how widespread flooding throughout…

Over the past few months it has been impossible to open a newspaper or watch a news programme without hearing how widespread flooding throughout the UK has destroyed thousands of properties and caused millions of pounds worth of damage. Now, to make matters worse, home and landlord insurance providers are claiming they may no longer be able to protect their customers from flood damage, especially if their properties are based in high risk areas.

There are some parts of the UK which have been affected by heavy flooding year after year, which means for home and landlord insurance providers it is simply too risky to insure properties based in these areas. This is why the government has recently announced they are setting up a not-for-profit fund with a number of UK insurers called Flood Re, which will help those worst affected by high insurance premiums due to flooding.

However, it’s not all good news. In fact, the government has announced that landlords and small business owners will not be eligible for the Flood Re scheme, meaning many could end up having to pay large amounts for, or be unable to find, landlord insurance. According to the government, buy to let properties are considered ‘non-domestic’, meaning that they cannot be covered under the scheme.

A number of groups, such as the British Property Federation and the Council of Mortgage Lenders, have already protested this decision and called upon the government to reverse it. Discussing the issue, Director General of the Council of Mortgage Lenders, Paul Smee, said: “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.” Meanwhile, Ian Fletcher, director of policy at the British Property Federation, said: “Every property that is occupied is somebody’s home. Flood doesn’t discriminate between freehold and leasehold, owner-occupation and renting, and it will be small comfort for tenants who have contents cover if their home itself is left uninhabitable.

“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.” To make matters worse, just this morning the Environment Agency issued further severe flood warnings throughout the south of the UK, especially near the River Thames and in Somerset. The statement said: “We have issued 14 severe flood warnings along the River Thames from Datchet to Shepperton Green, including Ham Court and Chertsey, as river levels in the area are extremely high and are forecast to continue to rise.

“A further two severe flood warnings remain in force at Saltmoor and Northmoor, including Moorland, and for the A361, East Lyng to Burrowbridge, as flooding continues on the Somerset Levels. Our teams continue to be out in force across England day and night, deploying demountable defences, repairing damaged coastal defences, deploying sandbags along riverbanks, clearing river blockages, monitoring water levels and sending out flood warnings. Additional Environment Agency staff from across the country have been deployed to provide extra support in affected areas.”

Unfortunately, even with the emergency services and Environment Agency working to protect households throughout the UK, many people are still finding themselves homeless, with some being unable to return to their properties since before Christmas. Some of the worst affected have even started to approach local MPs and the Prime Minister David Cameron and asking them what they are planning to do in order to solve the situation.

Those that live in private rented properties will therefore be extremely angry to find that the government will not be putting measures into place to protect them in the future, leaving them vulnerable to constant issues from flooding. As the government has often vocalised their opinion on the private rented sector, and how it needs to improve due to the increasing dependency on it, it’s surprising to see they are excluding it from a scheme that could not only protect people’s homes but also save thousands of lives.