Contents cover costs will fall for lower-band properties
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. The annual amount will fall from £52 to £25.
The change is intended to help lower-income households and renters, who may be less able to absorb the financial impact of flooding. Insurers are expected to pass the saving on to customers, although this does not guarantee that every eligible policyholder will see their retail premium fall by the full amount.
Flood Re says that, in three of the past four years, it spent more repairing properties in Bands G and H than homes in Bands A and B. The two highest bands account for less than 4% of UK homes, while Bands A and B represent around 45%.
The wider premium model will also be reviewed so that support can be targeted more fairly across different Council Tax bands, regions and locations.
What is Flood Re?
The Flood Re Scheme is a joint initiative between the UK insurance industry and the UK Government to make flood insurance more affordable and accessible for households in high-risk areas. The scheme does not provide insurance directly to consumers. Instead, insurers can transfer the flood risk element of eligible home insurance policies to Flood Re for a set premium based on the property’s Council Tax band. The Scheme is temporary and will exit the market in 2039.
Cap planned for claims
From 2028, a cap will limit the value of individual claims that insurers can pass to Flood Re. Insurance providers will be responsible for costs above the agreed limit.
The cap and wider premium reforms will be developed with insurers before implementation. The UK Government has said the limits must be set at an affordable level, but further detail will be needed to show whether the change could affect the cost, excess or availability of cover for owners of higher-value homes.
Flood Performance Certificates (FPCs) could influence premiums
Similar in principle to Energy Performance Certificates, FPCs are intended to provide a trusted assessment of a property’s exposure to flooding and its ability to withstand or recover from an incident. This could help owners, buyers, renters, lenders, and insurers understand the risk and identify improvements that would reduce potential damage.
Flood Re will work with insurers, mortgage lenders, and other organisations to develop and pilot FPCs and also plans to introduce premium discounts for households that obtain a certificate or complete an equivalent self-assessment. This should allow insurance pricing to recognise measures installed at individual properties rather than relying mainly on risks associated with a postcode or wider area.
Property owners considering flood-resilience improvements should keep clear evidence of the work completed, including specifications, invoices and guarantees. However, the cost of obtaining a certificate, whether certificates will become mandatory and precisely how they may affect mortgages or property transactions have not yet been confirmed.
Build Back Better will be strengthened
The programme can provide up to £10,000 towards property flood-resilience measures as part of an eligible insurance claim. Instead of simply restoring a flooded home to the same condition, measures can be installed to reduce damage and disruption if flooding happens again.
Flood Re intends to encourage more insurers to provide this support by applying a lower claims cap where Build Back Better is not offered.
Property owners should check whether Build Back Better is included when comparing policies. It may fund measures such as flood-resistant materials or changes that make a property easier to clean, dry and restore, subject to the insurer’s terms and the needs of the individual building.
Significant gaps in eligibility remain
The announcement does not immediately resolve the exclusions that continue to affect parts of the property market. Many leaseholders, private landlords, properties built after 2009 and some homes within larger blocks cannot currently benefit from the scheme.
Emma Hardy MP, the Minister for Water and Flooding, confirmed that eligibility will remain under review, including how the rules apply to leaseholders. However, the UK Government has no current plans to extend Flood Re to businesses.
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.
