Insurers have spent years telling ministers that the sequential test is the main thing stopping new homes going up where they can't be insured. A High Court judgment has now shown how little that test can count for in practice.
The case concerns up to 190 homes at Rectory Farm (North), on the edge of Yatton in north Somerset. The land is in flood zone 3a on the Environment Agency's flood map for planning, meaning a high probability of flooding from rivers or the sea. The only category above it is 3b, land whose job is to hold water in a flood.
North Somerset Council didn't decide Persimmon Homes Severn Valley's outline application in time, so the developer appealed on grounds of non-determination. At the inquiry, the council argued the scheme should be refused, partly on flood risk. On 18 March 2025, inspector David Prentis allowed the appeal anyway.
Under the National Planning Policy Framework, developers must show that no reasonably available land at lower risk could take the same scheme. Prentis found that Persimmon hadn't done so, and identified 12 alternative sites. The Environment Agency had also objected on flood risk grounds.
The council challenged the decision in the High Court and lost. In a judgment handed down on 12 June, Mrs Justice Jefford rejected the council's argument that a failed sequential test should close the door on any further weighing of safety and wider benefits.
She found the inspector hadn't formally applied the exception test. He had treated the same factors as material considerations in the overall planning balance, and he was entitled to do that. She said the council's case drew "a distinction without a difference".
The ruling is back on the agenda after a flood resilience conference last week, where parliamentarians agreed to press the government for a change to national planning policy. Tessa Munt, Liberal Democrat MP for Wells and Mendip Hills, chairs the all-party parliamentary group on flooding and flooded communities. She will meet housing and planning minister Matthew Pennycook to argue the framework needs amending before other developers try the same route.
Speaking to the Guardian, Munt called the case a "dangerous and nationally significant exploitation of planning loopholes". In her view, it cuts against years of effort by the insurance and lending industries, Flood Re and government agencies to keep new homes out of harm's way.
It isn't the first time Yatton has reached Westminster. Munt secured a Westminster Hall debate on the planning frameworkin July, where the case was raised directly. One MP told the chamber the judge had accepted that residents would have enough time to leave their homes before floodwater arrived. That was a finding about safety, not about damage to property or the cost of insuring it.
The developer's side agrees the case matters, though for opposite reasons. Lord Banner KC of Keating Chambers acted for Persimmon, and according to the Guardian, the chambers expects the planning and development sector to watch the ruling very closely.
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Homes built after 1 January 2009 can't be ceded to Flood Re, so every house at Rectory Farm will have to be priced on its own risk from the start. Flood Re itself is due to leave the market in 2039, and the industry has repeatedly warned that the move to risk-reflective pricing is off track.
This isn't the industry's first planning setback this year. In March, Aviva, Allianz, Zurich, Flood Re and the ABI co-signed a letter to ministers. It opposed a proposal letting developers skip the sequential test on land at risk only from surface water, and that exemption survived into the final framework published in August.
Yatton is a different kind of case, because its zone 3a status reflects river and sea risk. Taken together, though, the two developments suggest the sequential test is carrying less weight than insurers had hoped.
The scale of the problem is already visible. Aviva's analysis found that one in nine new homes in England built between 2022 and 2024 sit in areas of medium or high flood risk.
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People living next to the site say the insurance fallout has started before construction has. Neighbours whose houses overlook the fields, told the Guardian that three major home insurers had declined to cover them, citing the added flood risk from the development. Insurance Business has not independently verified this.
The inspector's decision relied heavily on his conclusion that the development could be made safe for its lifetime. That's where the insurance industry's other worry comes in. Research commissioned by Flood Re found that no systematic process confirms approved flood mitigation is actually installed once a development is finished. Flood Re's proposed Flood Performance Certificates are meant to close that gap, but pilots aren't expected until the end of this year.
The Yatton case was decided under the previous version of the planning framework. Some flood risk specialists argue that the tougher refusal wording in August's rewrite will make a repeat harder. Insurers, who have watched the sequential test lose ground twice this year, may not want to rely on that.
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