The British Property Federation (BPF) has welcomed a change to Flood Re scheme which will see leasehold properties in blocks of three or fewer flats included, but has warned that this still does not offer security to a high number of homeowners.
An information note issued by DEFRA explains that buildings with three flats or fewer will now be in scope of the scheme, although a number of qualifying conditions have been put in place.
In order to obtain affordable flood insurance, the freeholder must live in one of the units or the insurance must be purchased by one of the leaseholders that has a share of freehold. The owner of the leasehold property (or its immediate family) must also live in the property and purchase the buildings insurance in their own name.
While the BPF regards this inclusion into the scheme as an encouraging first step, it is concerned that the qualifying conditions could still end up excluding a large number of leaseholders, who could see their flood insurance costs rise dramatically as a result. It suggests that increasing the number of flats within a block from three to four would be more sensible, and also questions why the private rented sector is still excluded from the scheme.
Ian Fletcher, Director of Policy at the British Property Federation, commented: “While we welcome the fact that this announcement shows that the ABI and DEFRA have been listening to our concerns about Flood Re, the decision to choose the number three as the cut-off point seems rather arbitrary and we would like to understand the reasoning behind this decision.
“We still have no evidence to suggest that larger leasehold blocks or private rented accommodation will have access to affordable market insurance, and the conditions which have been set are likely to disappoint a number of leaseholders in larger blocks.”