Leasehold flat- can lessee change buildings insurance?

[essexlandlord]

Hi All

I have just bought a leasehold flat and the cost of the insurance is being passed on to me...fair enough.

However it is very high and I know I can get a better deal. Can I do this? Or does the freeholder have the right to choose the company he wants.

Thank you

[Corinne Tuplin]

Hi,

Buildings' Insurance is commonly a point of dispute between landlords and tenants.

Unfortunately, although you have the right to put forward various Buildings' Insurance proposals to your landlord, he or she is only obliged to state why the policies will not be purchased. That said, if the Buildings' Insurance is 'unreasonably' high, you can apply to the Leasehold Valuation Tribunal for a determination of cost.

Alternatives to this are the exercise of Right to Manage (www.proleagle.com/righttomanage.htm) and Collective Enfranchisement (www.proleagle.com/collectiveenfranchisement.htm).

I hope this assists.

Regards,

CORINNE TUPLIN
DIRECTOR
PRO-LEAGLE
www.proleagle.com

[Poppy]

Out of interest. Have you actually obtained quotes which properly reflect the nature of the building? Did you specify the number of flats? The number of habitable rooms? The rebuilding cost? Flat roofs? Garages? The age of the property? The type of construction? Previous claims in last 5 years and sums claimed? Lifts? Interested parties?

You need to be properly armed before you can judge whether the premium is too high. If you are truly determined to obtain a better price you need to ask the freeholder to confirm all of the salient details in writing and when the existing policy is due for renewal. You are entitled to know all of this information. Who knows they may be grateful for your assistance.

I think you will be surprised how few insurers will actually consider insuring the building. It can take many hours of rejection before you find appropriate insurance.

I wish some of my lessees took an active interest in obtaining lower insurance premiums. I guess I'm just doing a good enough job of it!

[tenant29]

Hi All

I have just bought a leasehold flat and the cost of the insurance is being passed on to me...fair enough.

However it is very high and I know I can get a better deal. Can I do this? Or does the freeholder have the right to choose the company he wants.

Thank you

You should read the wording your lease and see if it says the lessee is required to pay the lessor the annual contribution cost of insuring the property ? and the lessor has the sole right to decide which insurance company shall provide the insurance cover ? Then you should request in writing a copy of the schedule of insured cover for which the lessor has a duty to provide within 21 days under the Commonhold & Leasehold Reform Act.

The schedule of insured cover will give details of the building "insured" value, the public liability , employee liability, alternative accommodation or loss of rent, Excess cover for water damage etc

Using this schedule , you can get alternative quotations from other brokers.

How size is your flat ( square feet ) ? does it have wooden floors ? and how much premium are you being asked to pay ?.

Is your freeholder company based in Southend on sea ?

[essexlandlord]

Yes they are based in Southend. Does this ring a bell with you. The wording on the leasehold sounds the same (i.e complete gobledygook).

[tenant29]

I suppose they are in Warrior Sq ? If so , your freeholder must be Regis or related company ? What is the name of managing agent ? Pier ?

Does your lease say you must pay insurance contribution to the freeholder or to the service charge account ?

How much is your annual building insurance demand and what is the size of your flat ( sq ft ) ? Are you in a new building ( concrete floors ?) and how many flats in your block?

[essexlandlord]

hi again

The company is Hair and Son

House conversion consisting of two flats. 300 square feet. Property was build in 1930 and has wooden floors.

I have to pay the buildings insurance to Hair and Son who pass it on to the freeholder.

[tenant29]

For a small 2 storey house of only 600 sq ft and this means the declared building re-instatement value is around 60K , I would not expect the annual building insurance to exceed 100 pounds unless there has been a bad past claims record.

You should ask for the schedule of insured cover to see what amount the building has been insured for and who is the insured party and if it says "the interestes of the lessees and mortgage lenders are noted" ?

Have you checked the wording about paying for building insurance on your lease ?

[essexlandlord]

I have been trying to get cheaper quotes and the stumbling block is that the freeholder has insured the building cost of my £118k flat at a cool half a million.

Therefore I think I should refer it to the L.V.T for a determination of costs.

Does anyone know how I could do this?

Thank you in advance

[jeffrey]

Section 30A of LRA 1985, as amended by s.165 of CLRA 2002, gives tenants of flats extra rights to challenge L's insurance: refer to para. 8 of Schedule to 1985 Act. Apply to LVT or County Court to decide if L's insurance is satisfactory and whether its cost is excessive.

[Donkin]

If the insurer is Norwich Union Direct then the half million is a figure they present so as to reduce the paperwork and offer a fixed rate without any determination of sizes, rooms etc.

Our buildings policy is for half million rebuild and costs £451 pa. (Three flats in converted Victorian Townhouse, North East)

[essexlandlord]

Thank you for these replies.

Unfortunately the insurance is due on 01/01/07. I take it that even if I refer this to the LVT then there is no way I can avoid the payment?

[jeffrey]

Thank you for these replies.

Unfortunately the insurance is due on 01/01/07. I take it that even if I refer this to the LVT then there is no way I can avoid the payment?

You've left it rather late. LVT will take weeks/months, not days.