Buildings insurance on leasehold property

Abatement

(originally posted on house buying board, but thought might get a good response here as well...)

I'm in the process of buying a leasehold flat in a house that is split into 5 flats. The buildings insurance policy is arranged by the freeholder but paid for by the leaseholders. Our flat is the largest so pays 25% of the total. The seller originally told us that the insurance cost for our flat was £900 per year but it now turns out to be about £1100 per year.

That seems like a huge amount for insurance - a total of £4500 per year for the house as a whole. I've seen the insurance policy and the "building sum insured" is £1.5m, with a "building declared value" of £1.1m (whatever that means...). It's a property in London.

Does anyone else think £4500 seems a bit on the high side? If so, it is possible to challenge this and require the freeholders to get a more competitive rate?

Grateful for any thoughts, as always...

Sa-ra-ra-ra

Yes, you can challenge it. Even if the freeholder retains the right of insurance under the terms of the lease, it still has to be 'reasonable', as per the Landlord and Tenant Act 1985.

Ask them for a claims history and do a market test; you may need to go through a broker but IME the main insurers for blocks are Aviva, Zurich, AXA and Allianz. Freeholders often have a vested interest in keeping the premium cost up, they usually get some form of commission on it.

It could be that there have been a lot of claims made, or one large one, which will increase the cost to everyone - in which case it would be considered reasonable. But if you find a number of quotes on a like-for-like basis which undercut it, I'd suggest writing to the freeholder, pointing out that it has to be reasonable.

If you don't get any response, you always have recourse to the Leasehold Valuation Tribunal who arbitrate on this sort of matter. Good luck!

dacouch

How old is the building ?

Does it have a flat roof ?

Which area in London is it ?

Abatement

dacouch wrote: »

How old is the building ?

Does it have a flat roof ?

Which area in London is it ?

Late 19th century I think. No flat roof. Stoke Newington...