Flood Performance Certificates are coming

What should landlords do before the rain comes?

By Tom Entwistle, LandlordZONE

Last week was the Environment Agency’s Flood Action Week, and it was brought with it a significant announcement. The government along with Flood Re is to pilot Flood Performance Certificates (FPCs). This is supposedly an EPC-style rating of how well a home stands up to flooding. 

As we approach winter and what has become something of a “rainy season” in the UK, thoughts turn once again to flooding and flood risk. Flooding is an existential threat and potential crisis for landlords who own properties in certain locations. It means a danger that has the potential to put someone's very life at risk or merely present a nuisance.

Either way is a major ongoing worry for both landlords and tenants and has major implications for property insurance. 

Some recent press coverage has suggested that every rental property will soon need one of these FPCs. That is not what has been announced by the government, but landlords would be unwise to dismiss the idea. Flood risk is already affecting insurance, finance and tenants’ choices, and the coming weeks are a time to prepare.

This article applies to the private rented sector in England. The article here is for general information only and does not constitute legal, insurance or financial advice. Landlords should take independent professional advice for their own circumstances.

What is the scale of the risk?

The Environment Agency’s national flood risk assessment was published in December 2024. It puts 6.3 million properties in England in the line of fire, areas that are at risk of flooding from rivers, the sea or just surface water. 

The risk has increased with recent weather patterns, the figure is 43 per cent higher than the EA’s previous assessment, though the agency maintains that most of the increase is down to better data gathering and modelling rather than a sudden change in the weather. 

The EA blames climate change, and it expects the total to increase further to approach 8 million properties, roughly one quarter of all properties in England by mid-century, that’s just 25 years away. 

The EA calculates that around 2.4 million properties are at risk from rivers and the sea, but some 4.6 million are at risk from surface water. This is where a heavy downpour rain can simply overwhelm and swamp the drains. 

That type of flooding can affect roads and streets that are nowhere near a river or the sea and some landlords are going to be surprised to find that insurers are loading their premiums, or even declining to quote. This could be on properties that have never flooded before. This issue has been a recurring theme on the LandlordZONE forums.

Whether or not this is a climate change problem, and some still argue that the changing weather patterns are part of a natural weather cycle, flooding incidents are getting more frequent. England had its eighth wettest winter on record last year, according to the Met Office, while this year the first week of this October brought barely a tenth of normal rainfall. 

This lull tells us nothing about the future, but it gives us an opportunity to make some preparations. It’s time to check your gutters, drains and insurance policies. It may be time to work on water diversion measures if you haven’t already done so, and for properties at severe risk, advise tenants on internal measures they need to take. 

 What will a Flood Performance Certificate tell us?

The announcement, made by Defra and Flood Re on 13 October, describes these certificates as a means of giving standardised information about a property’s flood risk, and the steps taken to protect it. 

Flood Re is a joint initiative between the UK government and the insurance industry. It’s designed to make home insurance more affordable and available for properties at high risk of flooding. It applies to residential UK properties built before 2009 but privately rented properties, commercial properties, and newer homes are currently excluded from the scheme.

A property’s “Flood Performance Rating” will break the risk down into categories such as risk exposure, and the characteristics of the building including its resistance to water damage. It draws on data from the government’s existing “Check Your Flood Risk” service. Pilots will begin this year in flood-prone areas and will be extending during future years. 

First thing to bear in mind, this is a pilot, it is not statutory regulation. The government’s press release is addressed to homeowners, insurers and lenders. It does not mention landlords. So far at least, it does not create any obligation to obtain a certificate or hand one over to tenants.  

Second, the real issue here is insurance. Flood Re says it intends to offer premium discounts to households that obtain a certificate or complete an equivalent self-assessment. 

It is quoted as having said it wants certificates to be linked to a discounted premium by 2028. This would be well ahead of Flood Re’s planned withdrawal from the market in 2039. After that flood cover will return to normal risk-based insurance pricing.

Is the FPC the precursor to an EPC type compulsory scheme, voluntary and low key at first, then expected by buyers, lenders and tenants, and eventually a statutory requirement. 

Agents are already expected, under National Trading Standards guidance, to disclose flood risk, including any history of flooding. This is known as material information on lettings listings. 

Insurance for landlords

Flood Re is a reinsurance scheme, funded by a levy on insurers, that has kept flood cover affordable for high-risk properties since its introduction in 2016. Ostensibly, buy-to-let property is excluded. However, the exact position is slightly different. 

Flood Re’s own eligibility list does include residential buy-to-let, but only where eight qualifying criteria are met. One of these is that the policyholder or their immediate family lives in the property for some or all the time, or that it is unoccupied. 

Obviously, most tenanted rentals fail that test, so in practice let property falls outside the scheme. Homes built after 1 January 2009, and blocks of more than three flats, are excluded, whatever the ownership.

Tenants though are treated differently. Flood Re will cover a tenant’s contents even where the building itself is ineligible. From April 2027 the premium it charges insurers for contents-only policies in Council Tax Bands A and B will be more than halved, from £52 to £25. This change in emphasis is to target lower-income households and renters, and insurers are expected to pass on the savings.

A warning

Propertymark, the agents’ professional body, has warned that rental homes remain outside the scheme despite these reforms, and it means that when landlords are unable to afford cover, it can affect a landlord’s ability to obtain a mortgage. 

That is of real concern. Landlords with property in a risk area must find cover on the open market. Where mainstream landlord insurers won’t quote, a specialist or commercial broker is usually the route to take – your broker should advise. 

You should read your policy very carefully. Check the flood excess, any exclusions, and whether loss of rent and alternative accommodation are covered, and how long does it last. Refurbishing after a major floor can take a long time.  

What happens after the water comes in?

Landlords usually assume they are legally bound to put everything right after a flood. The statutory position is not cut and dried on this. The repairing covenant implied by section 11 of the Landlord and Tenant Act 1985 expressly does not require a landlord to rebuild or reinstate premises damaged by fire, tempest, flood or other incidents, and the fitness for human habitation covenant in section 9A contains a similar exception.

That does not give you licence to walk away from the problem. Most tenancy agreements contain an express undertaking to insure and reinstate. Your mortgage conditions will usually require it, and councils can still act under the Housing Health and Safety Rating System if a home is left hazardous. 

Long-term the coming Decent Homes Standard, due to apply to private lettings from 2035, and Awaab’s Law to follow, will tighten the situation for landlords. In practice however, it is the landlord’s insurance that decides how quickly a flooded property is put back into use.

There is there any general duty on a private landlord to rehouse tenants after a major flood. Does rent stop while a home is uninhabitable? This depends on the tenancy agreement as many contain a clause suspending rent where the property is seriously damaged. 

 Some policies pay loss of rent in these serious events. Under the Renters’ Rights Act, tenants can end their periodic tenancy by giving two months’ notice, and of course some will want to leave. 

Calderdale Council area was involved in one of the most flood-affected parts of England couple of years ago. It noted that landlords there ended up paying for repairs, waiving rents and in the meantime, funding alternative accommodation.

When tenants are left without a home, there’s always the local authority safety net. Section 189(1)(d) of the Housing Act 1996 gives a priority for accommodation to anyone made homeless or threatened with homelessness. But landlords should keep in touch with their tenants, explain what the insurer is doing, and where possible agree on a realistic return date.

What measures can landlords take?

There’s an industry Code of Practice for property flood resilience. It’s published by the Construction Industry Research and Information Association (CIRIA) and divides the flood options into two groups: resistance measures to keep the water out, and recoverability measures to limit the damage and speed up re-occupation. 

The government’s advice includes such measures as self-closing air bricks, flood barriers, flood-resilient kitchens and other common measures including non-return valves on drains, raised electrical sockets, and tiled or concrete floors as an alternative to timber floors or carpets. 

If Flood Re’s discount model spreads become part of the wider property insurance market, evidence of these measures to add resilience may reduce premiums at renewal. 

In the past, after major floods councils have administered government grants of up to £5,000 per property for resilience works under the Flood Recovery Framework, though availability of grants are likely triggered only for these specific events.

The way ahead

Flood risk has always been an issue in some locations and certain parts of the country, the Somerset levels being a major case in point. But what is changing is that it is now affecting more and more locations, and flash floors are capable of affecting any area. 

 Food Performance Certificates are a long way off being compulsory, and nothing in last week’s announcement put any new duties on landlords. But this is an indication of the future direction of travel. Landlords who understand their exposure, insure it properly and invest sensibly in resilience will find their properties easier to insure, finance and let as Flood Re’s 2039 exit deadline approaches.

[Main image credit: Helena Jankovicova Kovacova]