Leasehold CoachHouse Insurance Query

tkitmike

Hi there,

I'm having a bit of a dilemma right now about Buildings insurance.

I'm about to exchange for a new-build leasehold Coachhouse. This is the type of property, which has 4 garages underneath, which 3 are owned by my neighbours.

So my mortgage broker, says I need to buy buildings insurance to cover the whole property, including the 3 garages. Now, if the property was freehold, I can understand this. However, generally most leasehold properties are insured by the freeholder and the leaseholder pays a service charge.

Again, if it was freehold, surely I would 'rent' the garages to my neighbours in order to claim back the additional cost of insurance?

So, as I'm leasehold, how does this work? - I don't own the garages, or the property, so why do I need to insure them?

At a cost of nearly £1,000 for insurance, I don't want to waste money.

I've spoken with my solicitors, who are 'investigating'

Any advice here guys?

Quentin

When you say your "broker" has told you this, is he passing on a condition the mortgagee has put on that must be adhered to in order for them to agree the loan (in which case your solicitor dealing with the mortgage should know about), or is the broker just trying it on to get you to buy this ("enhanced") policy through him?

tkitmike

It's a condition of the mortgage..

Quentin

In that case you could be stuck with it. Or try and get an offer elsewhere that doesn't insist on it.

benjaminM

Your solicitor should contact the ground landlord to see if there is any cover in place. Its quite possible that ground landlord does not cover the building and in that case it would be your responsibility. If you do have to insure it you dont have to do this through your broker you could try a specialist company such as Vasek, Ellis David, Arthur Savage or Towergate.

Quentin

benjaminM wrote: »

Your solicitor should contact the ground landlord to see if there is any cover in place.

It makes no difference if there is other cover in place - the mortgagee cannot insist the "ground landlord" continues with any policy that may be in place now, and is making it a condition of the mortgage to ensure that cover is continuous until the mortgage is paid off.