House Rules: the latest in property law

1. Flood insurance

After months of talks, the UK government and insurance industry have agreed a way forward on insuring homes against the growing risk of damage by flood: a not-for-profit scheme (Flood Re) to allow insurers to pool insurance for properties at higher risk of flooding, spreading the risk and keeping premiums down.

What was the problem? The two sides had to reach a deal because the current agreement under which insurance companies committed to provide flood risk cover came to an end on June 30. Serious flooding in recent years, combined with better data to predict the risk of flood affecting specific properties, meant that high-risk properties could have been left paying vast premiums or with no flood cover at all.

Upside? If Flood Re goes ahead, up to 500,000 UK households could benefit from capped flood risk premiums. Whether a household is eligible for the scheme and what it will pay for flood insurance will depend on its council tax band. The insurer will calculate the hypothetical cost of flood cover for a household without the scheme. If that cost exceeds the thresholds set by the government, the flood part of the policy will go into the Flood Re scheme and the cost of flood insurance to the homeowner will be capped.

Downside? Not everyone will be happy. Homes in council tax band H will be excluded altogether, as will any homes built after January 1 2009, to discourage new building in high flood-risk areas. Small businesses were covered by the industry agreement that has just expired but will be left out of the Flood Re scheme.

What will it cost? Insurers will collectively be charged £180m a year to fund the scheme. This will mean a levy of about £10.50 on every home insurance policy. Insurers say this will not actually increase premiums, because homeowners in low-risk areas already subsidise flood cover for those at greater risk.

Is Flood Re a done deal? No. The government is running a public consultation on its proposals. The biggest challenge will be getting EU approval, which is required because the scheme could distort competition in the EU insurance market. That process could take up to two years. In case Flood Re fails, the government is also working on a back-up plan, which would oblige insurers to offer flood cover to a proportion of the UK’s higher-risk homes.

What now? The new scheme should be in place by summer 2015. For now, insurers will voluntarily continue their current approach to flood cover, so it is business as usual. Insurers will voluntarily continue their current approach to flood cover. Flood insurance will still be offered for homes and small business premises built after January 1 2009, where either there is no significant flood risk or the government has committed to reducing local flood risk within five years.

2. Residential development

In its drive to increase the supply of new homes, the government is trying to clear the way for more residential development by removing red tape.

Planning applications in England for schemes of fewer than 10 homes just got easier From June 25, unless the scheme is in a conservation area or World Heritage Site – or relates to a listed building – applications no longer need to be accompanied by a “design and access statement”. The requirement for design and access statements to accompany most forms of planning application was introduced by the previous government, together with detailed rules and guidance as to their content. There is also now a right of appeal where the applicant thinks the local authority is insisting on information that is unreasonable or unnecessary.

Converting offices to housing In many areas of the country, that is now easier too, because planning permission is no longer needed to use office buildings for residential purposes. The rules changed on May 30.

So local authorities are happy to swap offices for flats? Not all of them. Many local authorities were concerned about the implications of the new freedom for their areas and applied to the government for exemption from the new rules. Save in central parts of London and a few other areas, most authorities’ applications were rejected. Some of the disappointed authorities, including Brighton and Hove City Council and Islington Council, refused to take no for an answer and have now passed “Article 4” directions to overrule the new right. In those areas, office conversions will still require planning permission. Islington Council has gone one stage further and, on July 11, announced that it had launched a challenge of the government’s decision only to exempt the southern part of the borough.

Move quickly Under the 2013 order, the new right applies to uses started before May 30 2016. However, in practice there may be much less time available in areas where authorities are looking to undo the change by other means. Anyone who wants to take advantage of the more relaxed approach should get on and do it while they can.

3. Shorter time limit for judicial review

On July 1, the deadline for challenging a new planning permission in England or Wales by judicial review was halved to six weeks.

Good news for everyone? Great news for planning applicants, who will know that their project is free from legal challenge sooner. But objectors considering legal proceedings will need to move even more quickly than before. The procedure has also been simplified. If a judge reviews the papers and decides the case is “hopeless”, the claimant will no longer be able to try again in person before another judge. The changes are set out in amendments to the Civil Procedure Rules.

SJ Berwin is an international law firm. This column is written by its London real estate team. Except where otherwise noted this column focuses on English law

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