Homes on Somerset Levels and South West coast could be affected by Flood Re scheme27th February 2014

Michael Fawcett, Senior Surveyor, Project & Building Consultancy at DTZ in Bristol believes that the Government’s new Flood Re scheme could leave many property owners unable to afford insurance:

“The government recently announced new legislation, Flood Re, to ensure that homes at the greatest risk of flooding can continue to obtain policies at a reasonable cost. The scheme is due to be agreed with the Association of British Insurers (ABI) and will come into force in 2015.

“Although certain properties and enterprises will be excluded, they will still be expected to contribute towards the scheme through increased insurance premiums. The current proposal is that home owners in a council tax band of H will not be eligible for the cheaper insurance cover as they are deemed able to pay for insurance for themselves. Properties built since 2009 will also be exempt to discourage development on land prone to flooding. The cost to the consumer could be up to £540 per year to fund the scheme.

“There are also concerns that the scheme makes no provision for home based businesses, for example bed and breakfasts. Leasehold properties, such as flats will also be excluded, but all are expected to contribute towards the scheme.

“Homes on the Somerset Levels and South West coastline recently affected by the constant battering of Atlantic storms could be affected by this loophole. Thousands of properties will be included in the scheme while being banned from the scheme’s protection.

“It is more than likely that insurance companies will put up their premiums following the winter flooding across the UK to recoup their costs from flood damage to homes and businesses running into £1bn.

“It is hoped that the Flood Re proposal will help provide affordable flood insurance to those who need it. However, there is scepticism that the proposals will leave some parts of the property sector unable to access affordable flood insurance and potentially create a two-tier market.”