The Residential Landlords Association (RLA) has submitted an official response to a Government consultation on the Flood Re insurance scheme.
Many were devastated by widespread flooding at the end of last year and the beginning of this year. The Department for Environment, Food and Rural Affairs is now consulting on how to tackle the issue.
The Government’s new Flood Re scheme will offer affordable cover for households at high risk of flooding. It is set to come into force next month.
However, the scheme, which will be funded by adding a surcharge to insurance bills, excludes homes in the private rental sector, as buy-to-let properties are considered commercial assets.
The RLA believes that up to 100,000 homes in the private rental sector could be at risk of flooding, and expresses concerns that once the existing Statement of Principles – currently regulating flood cover – is abolished in favour of Flood Re, its members could struggle to get Landlords Insurance.
The RLA’s Richard Jones responds to the consultation: “As floods happen more and more often, the situation is worsening. We are firmly convinced that once we move into the new era of Flood Re, more and more private landlords, and those in other excluded groups, will find it impossible, very difficult or costly to obtain the necessary flood coverage.”
The team behind Flood Re insists that there are already existing policies available for homes within the private rental sector, which has been disputed by the RLA, which says that landlords will either by unable to obtain insurance or be hit by large excesses and high premiums.
“The Government’s rationale is that these groups who are excluded can still obtain cover in the open market,” Jones explains. “We dispute this, but in any event, the ability of private landlords and other affected groups to obtain cover in the market on reasonable terms, or even cover at all, will diminish, in our view, once Flood Re is introduced.”
After surveying its members, the RLA found that 42% landlords said premiums and excesses had increased in the last two years, while 44% said it was difficult or very difficult to get insurance for rental properties in high-risk flood areas.
Meanwhile, 29% had been the victim of flooding in the past two years and 15% had no flood cover at all.
The RLA has been lobbying against the issue for some time. However, the only assurance it has been given by ministers so far is that they will monitor the situation.
It is now calling on the Government to launch Flood Re 2 – an extension to the scheme that will include the excluded groups, including private landlords, flat owners and small businesses. Long-term, it hopes for large-scale investment in flood defences and ongoing maintenance costs.
Jones states: “We would advocate the creation of Flood Re 2 to embrace the excluded groups. A great deal of experience will have been gained in the process of setting up Flood Re. Therefore, it should not take as much time, trouble and effort to create a second version.
“In the interim, Government should secure the agreement of the insurance industry to the Statement of Principles continuing fully in force for these affected groups as a stop gap measure.”1
Landlords can be confident that the Just Landlords 5-star rated Landlord Property Insurance will cover against damage caused by flooding.