Shops and industrial businesses in risk areas may be forced to cease trading, says RICS
The exclusion of commercial property from compulsory flooding cover under the Flood Re scheme threatens the recovery of the high streets in some UK regions, the Royal Institution of Chartered Surveyors (RICS) is warning.
According to the RICS UK Commercial Market Survey for Q4 2013, demand for shops and industrial units saw the biggest growth since 1998 as the economic recovery began to gather pace.
But under Flood Re, being introduced as part of the Water Bill, which saw its second reading yesterday, commercial property will not be entitled to cover. RICS says this could leave businesses in flood risk areas unable to afford insurance and therefore ceasing trading, with a knock-on effect on the local economy in some regions of the UK.
RICS UK head of policy Jeremy Blackburn said: “While signs are much more positive for the commercial sector, it was disappointing to see that the government is going to allow the Water Bill to pass without reference of commercial premises and business owners’ rights to affordable insurance cover. Due to the government’s failure to bring in adequate insurance provisions to protect the likes of shops and offices in flood risk areas, we could well see smaller local economies hit hard.”
Flood Re is a government-backed flood insurance pooling scheme for high-risk properties that is due to come into force in summer 2015.
It will replace the Statement of Principles, under which the insurance industry provides affordable flood cover to high-risk homes in return for government flood defence spending.