A proposed change to planning rules in England could raise property risks and increase the likelihood the Flood Re scheme will not end on schedule, insurers and other groups have warned.

The government has called for feedback on the updated National Planning Policy Framework as it seeks to deliver on a pledge to build 1.5 million homes by the end of the current parliament.

A letter to the minister overseeing the changes expresses “serious concerns” about allowing developers to bypass a sequential test in areas at high risk of surface water flooding.

The government should instead mandate sustainable drainage systems, it says, while warning the number of new homes at risk of river, coastal or surface water inundation has risen in recent years.

“With climate change worsening, the UK’s flood risk increasing even further and a relaxation of planning rules which could increase flood risk to both pre- and post-2009 properties, this all means that we are not on track to transition from Flood Re to an affordable risk-reflective market when the scheme is due to end in 2039,” the letter says.

“The implication is that high-flood-risk homes have the potential in the future to become uninsurable and struggle to access mortgages.”

A consultation paper says changes would clarify when the sequential test is not required – including when a site is potentially at risk – but an assessment has shown the proposed layout, design and mitigation measures ensure the development would be safe for its lifetime.

The policy would state developments should not occur in risky areas if reasonable alternatives exist, but omits reference to development not being permitted, as it “may still be appropriate for development to proceed” given other considerations and tests.

Signatories to the letter include the Association of British Insurers, the British Insurance Brokers Association, Flood Re, individual insurance and broking companies, and other groups.