Problems with Freeholder (insurance)

Kayjo

I own the lease to my flat and the freeholder is the Management Company that owns and lets the flat beneath me (think Victorian conversion).

I have just received the Buildings Insurance invoice for period May 06 to May 07 and it has doubled from the previous year although we've had no claims - definitely none from my flat for 4 years.

A quick search on the web shows me that building insurance can be bought for the whole building for less than the premium the management company is charging me. They give me no details of their insurance company and as they own quite a few properties they could easily be ripping me off - getting a far cheaper insurance and just charging me what they like to make a quick profit.

Not sure what my rights are and what I can do.

Any advice would be really, really welcome.

cattie

They should provide you with a copy of the insurance details if you ask them.

I'm not sure if you have the right to challenge the insurance company chosen by the freeholder. It will be written in your lease somewhere that service charges including buildings insurance are payable to the freeholder.

One thing you have to bear in mind is that a single dwelling buildings insurance will always be cheaper than one with 2 seperate dwellings, so you can't base an internet search on basic figures.

There are lots of variables with buildings insurance, type of construction, accidental damage included, any claims made in the past etc can all relate to the premium.

Because of the increase in claims due to bad weather etc over the past couple of years a lot of insurance companies are hiking up their premiums. Then we come down to the fact that some companies do charge more than others & maybe the freeholder isn't interested in having to shop around each year to get a lower price if he has been satisfied with the company they have been using for years.

You can get impartial advice about the ins & outs of leasehold properties & what your rights are here http://www.lease-advice.org/newintro.htm
It's a goverment funded agency.

missk_ensington

They are not allowed to bill you for anything unless thye can provide THREE COMPETITIVE QUOTES. Ask for site of these, and dont pay up unless they cab provide them. If not you may have to seek legal advice.

Out of interest, if they have taken out insurance by a local firm you should be asking questions of scamming, this is very common for Management Companies to put trade in the way of local firms for a fee....

Good luck x

Doozergirl

You can purchase insurance without three seperate quotes. It's maintenance work where you need quotes.

I'm a freeholder too and I use a local insurance broker to organise the insurance, because they're local and convenient, not because they pay me! I am guilty of making the assumption that they find the best deal for the money. I don't check as I would for my own insurance, as it's not me paying.

I do believe in people taking responsibility for the management of their homes and I'd encourage people in small blocks to take the 'right to manage' so that they can always seek to find best deals on everything, themselves. I don't know how it works where the freeholder is the other flat owner of only two though The link provided by cattie is the ultimate source for all things lease related, RTM included.

bionic_banjo

As a residential tenant you have quite alot of rights - I think the RICS books do a ' estates gazette professional guide' on this subject - which you can buy online - of go to your CAB. All service charge costs incured must be of a reasonable nature - and this reasonableness depends on each circumstance. Finchbourne Ltd v Rodrigues [1967] 3 All ER 581 is the bench mark case - it held that all landlords much provide high levels of maintainnence etc and the costs of this must be fair and reasonable. Best practice is to get three formal quotes if you are a landlord- and if prices are going up its always best to work with the tenants in advance so they are prepared for the bill. From what I remember residential tenants do have the right to be provided with an audited copy of the serivce charge accounts - and of course you can ask to see all 3 quotes to check the service charge is being administered appropriately.

Kayjo

First of all a BIG thank you for all your replies - I really do appreciate them.

I don't pay a service charge to the landlord as in the lease i'm responsible for the roof and he (as the owner of the bottom flat) is responsible for the foundations etc. I only pay him ground rent and buildings insurance.

However, I can't believe Freeholders can just charge what they like for insurance, even though as Dozergirl says it's not skin off their nose as they're not paying. I go through Martin's advice on this website with a fine tooth comb and have reduced my outgoings right down and there's something very depressing over the fact I have no control over the buildings insurance and have to pay whatever the freeholder feels like charging me. In fact the figure this year is exactly double what is was last year and in that respect I don't think that can be called a 'reasonable' increase!

I have contacted the Leasehold Advisory Service as recommended and have an appointment two weeks today - the earliest I could get. In the meantime I've written back to the Freeholder suggesting he's made a mistake with the insurance quote as indeed he had done by asking for arrears of both ground rent and building insurance - which I have proof of payment for fortunately - so no issue there.

I guess this guy owns quite a few properties - do you know if I can ask for proof of what he's being charged as to be honest I suspect him of trying to profit out of me? I'll need to check whether I can ask for three separate quotes or whether that's just for maintenance works.

pip_on_the_move

The freeholder doesn't have to get three quotes before deciding on an insurer, but he does have to provide you with insurance information. LEASE will be able to tell you which insurance info you're entitled to.

hazeyj

They are also not allowed to make money from the premiums collected they collect from you.

Kayjo

But how can I prove that he isn't making money from me if I can't ask what premium he has paid?

If he only has to provide info then I'll just get something saying he has insured it against fire etc, etc and nothing about how much he has been charged for the insurance.

I've spent all evenign poring over the lease but the problem is it's all in legal gobledegook and I really don't understand it.

Further problem is that neighbours are doing a loft extension and have been in touch with my freeholder who has requested a survey of my loft. The loft access is restricted by a very large cupboard and I have a feeling it will be damaged by moving it. From what I can ascertain from the lease tonight is that the Freeholder doesn't have to pay me any monies to compensate for any damage his surveyor does. So basically I could end up with a damaged wardrobe and have to pay hundreds to get it fixed replaced all because neighbours want a loft extension. Surely this can't be right?