Buildings Insurance on Leasehold Property - Who pays?

Cardinal-Red

Hi there...

I am the director of the management company which runs our building, consisting of 4 custom built flats in private grounds. All 4 properties are owner occupied.

The freehold is owned by the builder and we pay a ground rent for that. There are no service charges as such.... the 4 of us split costs as they are incurred and do most of the maintenance of shared areas ourselves.

The buildings insurance is up for renewal. All 4 properties have their own contents insurance arranged individually.

So my question is - typically, whose responsibility is the buildings insurance. My gut instinct is that its the freeholder who should pay. After all they own the building and land, and so it's their property that is being insured.

I've examined our lease and there's nothing specific mentioned in there.

Could anybody advise me on the standard procedure in this situation?

Cheers!

Tustastic

I've lived in several leasehold properties in my time. With two of them, I as the leaseholder had to pay for the buildings insurance but the policy was arranged by the freeholder and I just got the bill. This was specified in the lease.
In this property (sounds similar to yours) the leaseholders have to arrange and pay for the buildings insurance. We all have separate policies.HTH:)

Cardinal-Red

So basically at no point did it ever fall on the freeholder to pay it?

Thought it would be too good to be true :-P

mattymoo

The freeholder might pay it but it will be charged back to the leaseholders in the service charges.

Cardinal-Red

Oh well worth a go!

Cheers!

courtjester

It might depend on the relative interests of the leaseholders versus the freeholder - I am surprised that the leases are silent on the subject of insurance. The usual situation is that each leaseholder contributes their share of the premium - 25% each if there are 4 flats with the freeholder contributing nothing.

The building is owned by the freeholder and hence primarily it is the freeholder's responsibility to insure.

However, the leaseholders all have an (insurable) interest in the continued existence of the building without which there would be no accommodation. If the leases are long (999 years) then effectively the freeholder has only a virtual interest and for practical purposes the leaseholders 'own' the building in all but documentation.

However, if the leases are shorter (say 100 years), the freeholder has a much larger interest as the building could be sold on once the leases expire.

I am surprised that the builder has not assigned the freehold to the management company unless they are retaining some share of interest in the property... is there still some money to be made out of the building by the freeholder, by say selling off part of the land or converting the roof...?

Delboy70y

Have found this a very interesting post as I am in the process of purchasing two year old Lease Hold apartment and have noticed within the Lease Documents that I am to provide my own Buildings insurance as there are no Management arrangements. To enable to obtain a Mortgage I also have to have in place this same insurance. Currently I am with the Abbey ( Norwich Union ) for both Contents and Buildings Insurance for current property. So phoned the help desks for advise and was told that lease hold insurance was not available for individual lease holders. So where do I go from here as have checked most details available on the Web Pages but can not find the answer. So found this interested site. Please help.

Del

oldwiring

IIRC the freeholder pf the property usually insures the building and recoups from the leaseholders.

Delboy70y

Hi oldwiring thanks for your reply and yes that is what I had assumed when we put an offer on the property but the Lease received states that they do not provide Maintenance Management Services or Buildings insurance and these are to be provided by the individual apartment leasers/purchasers. So here we are where do I find a suitable company that will accept this type of Buildings Insurance Risk.

This is a Two year old Two story apartment block which has 6 apartment units per block and several of these blocks are linked by attached archways leading into the rear parking areas.

If I can not obtain any insurance the mortgage will fall through so no purchase.

Currently waiting reply from Abbey my current Contents & Buildings insurer.

Any help would be appreciated in resolving this issue as we like the area where the apartments are located.

Del