Buildings insurance for Leasehold flat?

sarah_elton

Just noticed you said the lender's telling you to as well. The lender will usually want proof of buildings insurance (they did for my leasehold flat), so I sent the copy of the freeholder's policy.

I assume the lender is aware it's leasehold?

Unless I'm missing something, and this isn't a standard leasehold??

chicarg

OK, I will contact all relevant parties and find out more about it. I totally understand what you are saying and it does make sense, but I am confused at to why would they tell me I need it then.

Just to add, our mortgage broker (who obviously is perfectly aware we are buying a leasehold flat as she has arranged the mortgage as such) has provided us with quotes on BUILDING and contents insurance for us to take?

sarah_elton

Some more info:
http://england.shelter.org.uk/advice/advice-186.cfm

Note that this does say leaseholders may be asked to pay a proportion of the buildings insurance taken out by the freeholder. Nonetheless, the policy has to be taken out by them.

See also here re repairs etc:
http://england.shelter.org.uk/advice/advice-4317.cfm

sarah_elton

chicarg wrote:

Just to add, our mortgage broker (who obviously is perfectly aware we are buying a leasehold flat as she has arranged the mortgage as such) has provided us for quotes on BUILDING and contents insurance for us to take?

Do you have the contact details for the insurer the quote is from? If so, I'd phone them up and explain you're going to be a leaseholder, is the buildings quote still valid?

Don't panic, it'll all get sorted out.

prudryden

You can insure the building (including common parts which is the freeholders responsibility, this would include the roof, unless the roof is specifically listed as part of the 1st floor flat in the leaseholders deed), but how will you insure the 1st floor flat and the freeholder pays their share. You are basically paying all the buildings insurance for everyone else's interest.

sarah_elton

You may have thanked me too soon......

Just looked it up some more and found this page:
http://www.which.co.uk/reports_and_campaigns/money/reports/insurance/House%20insurance/Buildings%20insurance/buildings_insurance_essential_574_74759_9.jsp

That says that in some cases flat owners do take their own buildings insurance, although I've not heard of someone doing so before. As the page says, insurers usually prefer to insure a whole building, or the definition of who owns communal parts etc gets messy. You learn something new every day....

The best solution may still be to get the freeholder to take out the policy, and you and the 1st floor flat owner split the premium 50/50. This makes it simpler, but if there's a claim the freeholder has to deal with the insurer.

chicarg

From your Which? LinK: "But sometimes each owner will be responsible for their own buildings insurance - if, for example, a building has been converted into two self-contained flats."

This is our case then... but much more difficult to get quotes online in this scenario!

I dont think the freeholder is interested in taking out insurance to split the premiums between both flats, otherwise the EA would not have asked us to do it separately, but I will ask anyway.

I guess will have to go with the expensive quotes otherwise...

EdInvestor

The freeholder has to insure the building.

The cost of the policy is then split 50/50 between the two flats.

The lender will not normally accept any other arrangement.

For the moment, until he sells the other flat, the freeholder will have to pay that half of the cost .But the cost will then be apportioned to the new leaseholder on sale.

All this should be in your lease.Get a copy of the lease via your solicitor and read it in detail before you buy.

Also see this website, which explains who is responsible for what:

https://www.lease-advice.org.uk

Quite frankly I would think twice about buying a flat with a flaky freeholder,there are enough potential hassles with leasehold already.

prudryden

chicarg wrote:

From your Which? LinK: "But sometimes each owner will be responsible for their own buildings insurance - if, for example, a building has been converted into two self-contained flats."

This is our case then... but much more difficult to get quotes online in this scenario!

I dont think the freeholder is interested in taking out insurance to split the premiums between both flats, otherwise the EA would not have asked us to do it separately, but I will ask anyway.

I guess will have to go with the expensive quotes otherwise...

So - the freeholder is basically telling you, "if you want the flat, then you insure my building for me, otherwise, I don't sell the flat to you." Go back and ask him to throw in 100% of the freehold then. For a few extra £'s, I think he might be interested.

chicarg

Thanks

I get it, and obviously we won’t pay for the whole building if we only get the ground floor.

It is just that according to the Which article where Sarah kindly pointed me to, it says that leasehold flats can sometimes get their own building insurance. So being back and forward in this thread from: “can we, as leaseholders, get building insurance JUST for our flat; or can’t we?” it seems like we can.

As I said, we have been provided with quotes for this from our mortgage broker so maybe it is the case that we need to take insurance separately from the other flat.

Still all very confusing though; so as we are meeting with the estate agent tomorrow I will ask more questions about the vendor’s building insurance. Hopefully will shed some light over this issue!

prudryden wrote:

Go back and ask him to throw in 100% of the freehold then. For a few extra £'s, I think he might be interested.

I mentioned above he has already offered us to buy our share of the freehold, but we have been advised that it might affect our chances of re-selling since lenders don’t like freehold flats….we haven’t made our mind about this yet as the vendor said he will offer it to us after competion.