diff --git a/neutron/tests/common/helpers.py b/neutron/tests/common/helpers.py
index 21540516fc4..63a132b8cdb 100644
--- a/neutron/tests/common/helpers.py
+++ b/neutron/tests/common/helpers.py
@@ -13,6 +13,8 @@
 #    under the License.
 
 import datetime
+from distutils import version
+import functools
 import os
 import random
 
@@ -22,6 +24,7 @@ import six
 import testtools
 
 import neutron
+from neutron.agent.common import ovs_lib
 from neutron.common import topics
 from neutron import context
 from neutron.db import agents_db
@@ -220,3 +223,21 @@ def get_not_used_vlan(bridge, vlan_range):
     used_vlan_tags = {val['tag'] for val in port_vlans}
     available_vlans = vlan_range - used_vlan_tags
     return random.choice(list(available_vlans))
+
+
+def skip_if_ovs_older_than(ovs_version):
+    """Decorator for test method to skip if OVS version doesn't meet
+       minimal requirement.
+    """
+    def skip_if_bad_ovs(f):
+        @functools.wraps(f)
+        def check_ovs_and_skip(test):
+            ovs = ovs_lib.BaseOVS()
+            current_ovs_version = version.StrictVersion(
+                ovs.config['ovs_version'])
+            if current_ovs_version < version.StrictVersion(ovs_version):
+                test.skip("This test requires OVS version %s or higher." %
+                          ovs_version)
+            return f(test)
+        return check_ovs_and_skip
+    return skip_if_bad_ovs
diff --git a/neutron/tests/contrib/gate_hook.sh b/neutron/tests/contrib/gate_hook.sh
index 1911ec0f729..bbd82e4ffc1 100644
--- a/neutron/tests/contrib/gate_hook.sh
+++ b/neutron/tests/contrib/gate_hook.sh
@@ -63,14 +63,11 @@ case $VENV in
 
     configure_host_for_func_testing
 
-    # Kernel modules are not needed for functional job. They are needed only
-    # for fullstack because of bug present in Ubuntu Xenial kernel version
-    # that makes VXLAN local tunneling fail.
-    if [[ "$VENV" =~ "dsvm-functional" ]]; then
-        compile_modules=False
-        NEUTRON_OVERRIDE_OVS_BRANCH=v2.5.1
+    # Because of bug present in current Ubuntu Xenial kernel version
+    # we need a fix for VXLAN local tunneling.
+    if [[ "$VENV" =~ "dsvm-fullstack" ]]; then
+        upgrade_ovs_if_necessary
     fi
-    upgrade_ovs_if_necessary $compile_modules
 
     # prepare base environment for ./stack.sh
     load_rc_hook stack_base
diff --git a/neutron/tests/functional/agent/test_ovs_flows.py b/neutron/tests/functional/agent/test_ovs_flows.py
index 48e323064f8..2dad61f8a07 100644
--- a/neutron/tests/functional/agent/test_ovs_flows.py
+++ b/neutron/tests/functional/agent/test_ovs_flows.py
@@ -32,6 +32,7 @@ from neutron.plugins.ml2.drivers.openvswitch.agent.common import constants
 from neutron.plugins.ml2.drivers.openvswitch.agent \
     import ovs_neutron_agent as ovsagt
 from neutron.tests.common import base as common_base
+from neutron.tests.common import helpers
 from neutron.tests.common import net_helpers
 from neutron.tests.functional.agent import test_ovs_lib
 from neutron.tests.functional import base
@@ -387,6 +388,7 @@ class OVSFlowTestCase(OVSAgentTestBase):
         self.assertIn(("dl_src=%(gateway_mac)s" % kwargs),
                       trace["Final flow"])
 
+    @helpers.skip_if_ovs_older_than("2.5.1")
     def test_install_flood_to_tun(self):
         attrs = {
             'remote_ip': '192.0.2.1',  # RFC 5737 TEST-NET-1