The three 1/2 bed flats in our house (just off the Ladder) are all owned by leaseholders. The freeholder (who none of us have ever met, and lives at the end of a big long chain of management companies) likes to charge us a fortune in buildings insurance.
This equates to about £800 each (or £2,400 for the house) per year. Which seems ludicrous. I know London will be premium prices, and this probably includes terrorism cover etc. - but I know people who pay £250 a year to insure 4 bedroom houses outside London!
Short of looking into buying the freehold, does anyone know if there's anything we can do about this? I've tried communicating with the management company which arranges the insurance on the freeholder's behalf - but usually get fobbed off saying it's 'market rate', or that the quotes I've sourced 'aren't comparable'.
Any experiences or advice much appreciated. I know there was briefly a retired law professional offering advice in Wood Green Christian Centre - a free service like that would be handy.
Thanks all! Not the most exciting subject I'm aware!
That is an outrageous amount. Buildings insurance for a 4 bed Victorian terrace is about £80 a month. They cost bugger all to rebuild compared to the value of the land they sit upon.
I had a similar experience as a leaseholder and couldn't work out how this particular 'arrangement' works eg. the freeholder has no interest in going for the cheapest insurer (as they just recharge to the leaseholders) but I suspected they didn't pay the insurer the amount on the invoice (both parties very uncommunicative on the matter).
I have the same issue, our freeholder via managing agent charges about £400 each for the two 2-bed flats in our building. I made a big fuss last year and they knocked 5% off the cost which I suppose was better than nothing:
You might find this useful:
Section 7.3 is useful if you live in a leasehold house, but doesn't apply to flats:
Some leases, usually of houses, require the leaseholder to insure the property with an insurer nominated or approved by the landlord. Under the above Act the leaseholder of a house is entitled to place the insurance with his own choice of insurer, as long as he gives notice to the landlord and complies with certain requirements relating to the cover arranged. Please note this only applies to leasehold houses, NOT flats.
Have you actually been provided with a copy of the insurance schedule? You are entitled to ask for a copy of this under Section 22 of the Landlord and Tenant Act 1985. With that in hand, you would be able to obtain entirely comparable quotes from other insurance companies. Ask for the Landlord's details from the management company. Again, you are entitled to this information (same Act, Section 1) if you put your request in writing, they must answer within 21 days. Then contact the Landlord direct with details of your cheaper quote. There's nothing in it for them either way, so they should cooperate with your request. Threaten to exercise the "right to manage" if they don't play ball. Most landlords don't want control taken away from them. For the record, a house split into flats will have higher premiums than a single occupancy house, but that quote does seem very high.
Are you sure there is nothing in it for them? If they buy the insurance via a broker (that they own) that broker gets a commission, etc, etc.... no?
It does seem steep. That said, Leasehold flats in a single house are often more expensive to insure as the risk is higher. We own a share of our freehold (2 leasehold flats within a late Victorian house), and the joint insurance premium between us and our co-freeholders is around £600-700 - much less than you are paying.
Can you get a copy of the policy schedule? Might be worth checking the limit and making sure it hasn't just been set to the market value. The insurer usually asks the policy holder to set the limit, and I'm guessing your freeholder or their agent would rather be over-insured than under, and so might have entered something much higher than the true rebuild cost just to be sure. That might make a difference.
Thanks all for the replies - very useful! Also good to feel reassured that the amount currently charged is crazy.
I did request the policy details a couple of years back. I received a couple of pages of A4 with an AVIVA logo at the top. It included spelling mistakes. Not suggesting anything but... well, it's probably not the full policy detail.
I also suspect what you say is true alistairj - sure my solicitor mentioned some ridiculous loophole when I was in the process of buying the flat.
I'll request a the full insurance policy detail in the meantime - perhaps first seeking online comparative quotes, looking at what info I need to be able to give them, so that I can request this specifically from the landlord/managing agent. I'll also bear in mind the 'right to manage' and check the limits currently set.
And I'll report back here!
I own a flat in a house with four flats in total. We have bought the freehold and insure the building for under £1000. Like you it was way more before.
Interesting! If you don't mind me asking, was the freehold expensive? And was the process a nightmare? How did you go about it, and have you any idea on what (legal) basis the freeholder can value the freehold, other than years remaining on lease?
Happy to help. We all noticed that our pathetic 99 year lease was getting to a worrying length. the option is to get an extension or buy the freehold. We used Layzells in Muswell Hill who seem to have experience. Providing enough people qualify you have a legal right to buy the freehold. There is I think a requirement of two years leaseholding and a majority of leaseholders need to be for it. The freeholder is made an offer(there is an equation to work this out and you should bid within the valuation to be taken seriously should it go to tribunal) Obviously you start at the low end. If the freeholder isn't interested you take it to a tribunal which sets a price. We were fortunate that our **** of a freeholder didn't respond to our offer so in legal terms the tribunal granted us the freehold at the asking price which was great. Then we gave ourselves a 999 year lease! It really is a good deal even tho you have to pay the freeholder lots of money for nothing. I reckon the value of my flat increased by the amount I paid as my share of the freehold. Can't give you a figure but I paid about £20k for my share of the freehold of the house. My flat which then (about 2010) was worth about £450k. Interestingly, if one of the leaseholders can't or won't join in,the others become the freeholder and they then have to pay you to extend their lease! There is no right to buy into the freehold once one person declines to join in but the purchase goes ahead. good luck! Happy to answer any more questions as its just great to own a share of the freehold...
To support FPR's cautionary words above -
If you are in a shared freehold you will still have to share payment of things like building insurance, maintenance, exterior decoration, etc.
You have to think about what you are going to do if one of the shared freeholders won't or can't pay their share of the communal bills.