Ministers’ plan to ensure flood insurance is widely available, will not extend to private rented accommodation, leaving landlords and tenants in flood-affected areas vulnerable to massive financial burdens, one of the country’s leading landlord organisations is warning.
Just days after much of the east coast of England faced some of the most serious flooding in over half a century, the residential landlords association (RLA) is seeking urgent clarification from the government over its flood insurance proposals currently going through parliament.
The ‘Flood Re’ scheme aims to ensure that flood insurance remains affordable and available to homeowners at high risk of flooding. The scheme, designed in conjunction with association of British Insurers, would provide a fund to offer those at high flood risk who might struggle to get affordable flood insurance with cover at a set price. Insurers would put into the fund those high flood risk homes they feel unable to insure themselves, with the premium to cover the flood risk part of the household cover capped.
Having been led to believe that landlords in the private rented sector would be covered, the Government’s response to the consultation on the scheme concludes that properties would be excluded where the owner does not reside in it. This would effectively exclude rented properties. This would mean landlords and tenants may not be able to obtain affordable insurance cover and would have to meet the full cost of any damage.
The Government document explains: “For properties to be eligible for Flood Re, they would need to be insured in the name of an individual; they would need to have been allocated a Council Tax band; be used for residential purposes; have an individual premium; and be occupied by the policyholder, or their immediate family.”
Outlining the RLAS’s concern, its Policy Director, Richard Jones, has now written to the Environment Secretary, Owen Paterson MP, seeking urgent clarification on the matter. In his letter he writes:
“This is an extremely disturbing development and poses significant threats to the ongoing viability of those areas where there is a significant risk of flooding. Insurance may not be obtainable at all or only obtainable on prohibitive terms. It could place landlords in breach of the terms of their mortgages. The Government is looking to support private rented housing but his will have the opposite effect.”
A lettings agent in the Boston area had first-hand experience of the recent flooding and believes flood insurance is vital for landlords and tenants.
“We had several rental homes that were flooded in the Boston area and one was a terraced property that was divided into two flats” – “The tenants were a husband and wife and their 12 month old baby. The husband worked nights and during the early evening the river in Boston burst its banks and water flooded through the house, so the lady had to climb out of the kitchen window with her baby and be rescued by boat! Her distraught husband came into our office the next day because he didn’t know where she was we had to ring around all the refuges to find out where she had been taken. Luckily we managed to reunite them and find them new accommodation in a three bedroom furnished house.
The landlord of the flooded property had contents insurance and after a lot of liaison with the provider, we managed to reassure him that his policy not only covered the cost of the damage but also covered the cost of new accommodation for his tenants, otherwise he would have been paying the rent on that too.
I have no idea how our office premises managed to escape being flooded, but I am very grateful to my lettings administrator and her husband, who live locally and voluntarily came back into the office that night and unplugged all the computers and moved the equipment up onto the desks. We had no internet connection the next day and were inundated with phone calls and people coming into the office that had been affected by the floods, We had to resort to our manual filing system to get the numbers of landlords and find out which properties had been affected. It was a very busy time.
We now desperately need new properties as some insurance companies are insisting that tenants move out whilst repairs are carried out. We have even had other agents ringing us to see if we can help.
Specialist insurance is vitally important and I hope more people will consider taking this out to get peace of mind and ensure that their families are taken care of in the case an emergency.”
Extract taken from Landlords & Buy to Let magazine issue 44.
