PRS homes still excluded from Flood Re scheme despite reforms

New reforms for flood-stricken homes will help, but uncertainty over eligibility remains, claims an industry body.

The government has announced an overhaul of the Flood Re scheme, including cheaper contents insurance for some households.

However, Propertymark warns significant gaps in eligibility remain, with rental properties continuing to be excluded from the Flood Re scheme.

Further detail needed

The Flood Re scheme is a joint initiative between the UK insurance industry and the government to make flood insurance more affordable and accessible for households in high-risk areas. The scheme does not provide insurance directly to consumers.

From April 2027, Flood Re will reduce the premium it charges insurers for contents-only policies covering properties in Council Tax Bands A and B, with the annual charge falling from £52 to £25.

From 2028, a cap will be introduced on the value of individual claims insurers can pass on to Flood Re, with insurers responsible for costs above the agreed limit.

Propertymark said on its website: “The cap and wider premium reforms will be developed with insurers before implementation.

“The government has said the limits must be set at an affordable level, but further detail is needed to determine whether the changes could affect the cost, excess or availability of cover for owners of higher-value homes.”

Two-tier market

However, Propertymark warns the reforms do not resolve exclusions from the scheme and create a two-tier system.

The industry body writes: “In our response to proposed amendments to the scheme in 2021, Propertymark supported discounted premiums for households that had installed appropriate resilience measures and backed the introduction of Build Back Better. We also warned that excluding leasehold and buy-to-let properties created a two-tier market.

“We called for the scheme to be extended so that private landlords, leaseholders and small businesses could access insurance at reasonable rates. For landlords, unaffordable cover can affect mortgage availability and, in the most serious cases, contribute to properties leaving the rented sector.

“The commitment to review support for leaseholders is welcome, but it must lead to practical solutions. Flats, rented homes, and mixed-use buildings also need affordable insurance and investment in resilience if the UK is to make a fair transition to a risk-reflective insurance market before Flood Re ends in 2039”.