The British Property Federation has accused the government of making empty promises over the Flood Re scheme designed to ensure affordable insurance cover for people and properties in high flood-risk areas.
In its response to a government consultation on Flood Re, BPF warned that it would leave millions exposed to 'rocketing' insurance premiums.
The scheme, which is the result of a deal struck between the insurance industry and the government, will be financed by a national levy. It is set to be introduced next year to keep down the cost for cover for hundreds of thousands of households.
But BPF said it is concerned over the lack of flexibility in the regulations. The federation, which represents real estate owners and investors, argued that the scheme would not cover leasehold properties in large blocks, private rented homes, properties in council tax band H and those built after 2009.
The BPF wants the government to include leasehold properties within the scope of the scheme, adding that it would be 'grossly unfair' to discriminate between those who live in a house and those who live in a flat.
It said it had continually asked the government for proof that leaseholders would not be adversely affected by exclusion.
The government published its Flood insurance: regulations for the Flood Reinsurance Scheme consultation in July, looking into how the insurance industry could implement the new scheme. The deadline for submission was September 16. The government said it would monitor the impact on various excluded groups.
But BPF said it was 'anxious' over the government's proposal because the regulations showed no evidence of a mechanism that would allow Flood Re to be amended to include new categories of property at a later date. It added: 'The commitment to monitoring the effects on leaseholder properties is an empty one.'
Ian Fletcher, BPF director of policy, said: 'There is a last chance for parliament to amend the legislation on Flood Re, so that leaseholders, small businesses and other groups enjoy the safety net it provides.
'Having been campaigning for the inclusion of leasehold properties in Flood Re for a while, a repeated source of frustration has been the lack of explanation or evidence for many of the decisions made, and the regulations that have been set out so far do not do much to assuage these.'
Michelle Banks, chief executive of the Association of Residential Managing Agents, added: 'I am pleased that the government is committed to monitoring the Flood Re Scheme, and that there is industry-wide support for the regulations to ensure homes in high risk areas are able to access affordable insurance.
'However, I am concerned that there appears to be no mechanism to amend the regulations to include new properties at a later date.
'Without this the government's commitment to monitor the impact on leaseholder properties is an empty one, and the chances of leaseholders in high-risk areas who are currently excluded from Flood Re being added to the scheme are low.'
