Buildings insurance for Leasehold flat?

chicarg

Maybe someone knows about this?

We are in the process to buying a ground floor Victorian conversion flat.

There are only 2 flats in the building (a victorian house): ground floor and 1st floor. There are no service charges as such, but repairs are done on a “when and if” basis, shared with other flat. Both flats are leasehold (the freeholder has offered us to buy the lease from him but that’s another thread… as we have been advised not to do it as freehold flats can be really difficult to mortgage although we would like to own the lease…)

Anyway.. question is: we need to arrange buildings & contents insurance as there is none included with the lease. But having tried comparison sites such as moneysupermarket or confused, they come up with no quotes as most insures do not insure flats apparently??

Any suggestions on how to get competitive insurance? We’ve been quoted £44.50 pm from an insurer, is this reasonable?

Advice appreciated!

lynzpower

seems a lot that per month.

I pay 23 with the CIS including contents & legal cover, ground floor flat inner london

chicarg

Hi Lynz! Thanks for that..

But I have just tried to get a quote online with the CIS and comes up at 60 pm! We are also inner London...

Your Quote
Monthly Direct Debit:
Annual premium: £686.54
Credit Charge (13.7% APR): £41.19
Initial payment: £60.69
Monthly Payments: £60.64
Total Premium: £727.73


This includes cover for:
Buildings: £498.62
Contents: £333.58
Personal Possessions: Not Selected
Caravan: Not Selected
Multi-trip travel: Not Selected
Home Rescue Plus: Not selected

Our legal expenses cover is included free of charge.

This includes these discounts:
Multiple-Module Discount: £37.45
No Claim Discount: £83.22
Buildings Transfer Discount: £25.00
Total Discount: £145.67


Maybe i should try ringing some insurers around?
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prudryden

lynzpower wrote:

seems a lot that per month.

I pay 23 with the CIS including contents & legal cover, ground floor flat inner london

Lynz - That seems very low. How many flats are in your building?

mrtaus

I found AA very much cheaper than anyone else, next best was tesco. I cannt remember the exact fugures as I found out building insurance was included in our service charge.

On the Leasehold / freehold issue, I would not see a problem with morgages on freehold property, If anything I would think better to have share of freehold as there is no lease running down. Once you get to around 70 years on a lease it is v difficult to get mortgage. I would check with a Financial Advisor.

kjl26

On the leasehold/freehold issue I thought it was flats that owned the freehold for the whole building that were difficult to mortgage (for e.g. ground floor flat is the freeholder and upstairs is still a leaseholder); share of freehold flats should be fine (or that's the impression I retain from when we were buying. didn't go for share of freehold in the end so not certain).

prudryden

Chicarg - It is always safer for the freeholder (the senior partner) to take out the insurance and list the interests of the leaseholders (the junior partners) in the policy.
Am I right in assuming that you and the 1st floor flat are taking out this policy jointly? If not, then there will always be a potential problem on which policy covers (if covered at all) the common parts, drains, roof, foundations, the staircase (Who owns the staircase?)

sarah_elton

If it's a leasehold flat (am I reading the situation right?), you can't take out buildings insurance. You need contents insurance for your stuff, but the freeholder has to get buildings insurance.

As a leaseholder, you don't own the building, and you can't insure something you don't own (you have no 'insurable interest' which is a prerequisite for insurance).

I don't know where the law stands on if the freeholder *has* to have buildings insurance, but you as a leaseholder can't.

chicarg

Thanks. Thing is the vendor owns both flats, and he is also the freeholder. He has building insurance for the whole house but he is not continuing it as he has created 2 leasehold flats out of it; hence we have to arrange our own.

The flat upstairs is for sale also, so we cannot buy the insurance jointly with them since it has not been bought yet and we have to have insurance in place for exchange…

Does that make sense?

sarah_elton

chicarg wrote:

Thanks. Thing is the vendor owns both flats, and he is also the freeholder. He has building insurance for the whole house but he is not continuing it as he has created 2 leasehold flats out of it; hence we have to arrange our own.

If this is what the vendor is saying, he doesn't understand insurance.

As I said, you have no insurable interest on the building because it's not yours. Suppose the whole place blew up - it's the freeholder who should get the £400k or whatever rebuild cost, not you as a leaseholder.

Speak to the EA or solicitor about the issue and get them to have words with the freeholder. I understand insurance but not the other complexities around freeholding - if I were you I'd be looking up other freeholder's responsibilities and checking he understands those too....

chicarg

Thanks. Thing is the vendor owns both flats, and he is also the freeholder. He has building insurance for the whole house but he is not continuing it as he has created 2 leasehold flats out of it; hence we have to arrange our own.

The flat upstairs is for sale also, so we cannot buy the insurance jointly with them since it has not been bought yet and we have to have insurance in place for exchange…

Does that make sense?

And is this correct?

sarah_elton wrote:

If it's a leasehold flat (am I reading the situation right?), you can't take out buildings insurance.

If so, why is the lender AND the estate agent asking us to do so? confused!
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