Leaseholder paying building insurance

bryanb

olly300 wrote: »

He does have an insurable interest.

Leases in England and Wales are not all the same.

If the building burns down he loses his home and depending on the wording in the lease the freeholder may not pay for anything in his flat including the division of the walls, kitchen units, fixed flooring and bathroom sanitary ware even though they pay to rebuild the external structure of the building. (OK the leaseholder pays indirectly but the freeholder pays directly.)

When I was looking to buy property in London I was made aware of the different leases people had by asking them.

There were buildings where it was up to you how you divided your space and that meant if the building burnt down, you have to pay for the walls and the suspended floors to be replaced how you had it as well as for the kitchen units, bathroom sanitary ware and fitted flooring.

On the other hand there were buildings where the freeholder paid for what people traditionally associated with buildings insurance.

In the first case you have to have your own building insurance to ensure everything in your flat is covered there as in the second case you only have to pay for contents insurance.

I'm in the middle. I can choose to have extended contents cover but it works out cheaper to have a buildings and contents policy.

I'm not saying he has no insurable interest, I'm trying to establish the basis of his insurance.
Read my post, I said IF he claims AND they find he has no insurable interest.

dacouch

bryanb wrote: »

As I understand things, you must have an insurable interest in something before you can insure it. The freeholder has such an interest, the leaseholder does not. However as said you will pay one way or another. The question is whether the insurance company would pay out to you.
Are you the policyholder?

In the vast majority of cases the leaseholder would have an insurable interest.

It is however best in (England and Wales) most cases for the freeholder to carry the Insurance with the "Interest" of the leaseholders eg flatowners noted on the policy.

The MSE article was once again wrong on the subject

kingstreet

A tenant and a leaseholder are two different animals.

A tenant would not need buildings insurance. As bryanb says, he would have no insurable interest in the building. Although it's my understanding it is the responsibility of the insurer to establish insurable interest exists at the outset, not at the point of claim.

A leaseholder would have an insurable interest and in the case of a leasehold house, it is "normal" for a leaseholder to insure the building. Over the years of a long lease a freeholder often neglects this duty and the leaseholder should insure the building for his own peace of mind.

As an example, my mother in law owns a leasehold house. It has around 890 years left on the lease. She pays around £1.80 a year ground rent, but the freeholder does not insure the building. Therefore she buys her own buildings insurance.

In the case of leasehold flats, it's usual for the freeholder to insure the building and for each leaseholder to pay a proportion of the premium.

Rough guide;-

freehold occupier should always insure his building.

freeholder of flats should insure building.

leaseholder of flat is unlikely to need buildings cover, but leaseholder of house may well be.

tenant won't need buildings insurance at all.

The article has now been amended to remove the word "leaseholder."

Mrs_Arcanum

Another way to look at it is if the dwelling is in a block then the property owner should be buying and approving Building insurance as it should cover the whole block. If the property is a single house chances are they may not & it is worth having your own insurance. We have a weird situation on one shared ownership flat we are paying for the whole block & up to now not re-charging the other residents.

olly300

Mrs_Arcanum wrote: »

Another way to look at it is if the dwelling is in a block then the property owner should be buying and approving Building insurance as it should cover the whole block.

They should be but doesn't mean they do.

Leaseholders can get separate buildings insurance for their own dwelling in the building.

There would obviously be issues if say the building burned down an a few leaseholders didn't have buildings insurance due to the freeholder not bothering to do a joint policy.

Leasehold is a mine field and even when people have share of freehold there can still be issues over buildings insurance depending on the size of the building and number of dwellings in it.

Edited to say: The article now tells you to check with the freeholder if you are a leaseholder. Though it doesn't mention you should check what is and isn't covered.

SteveBentley

If you have a mortgage the lender will probably insist on you having buildings insurance, regardless of whether it's freehold or leasehold.

This is because the lender needs to know that they can recover the money they have lent to you - if the house burns down there's not a lot of point in them repossessing it, but they can claim on the insurance.

kingstreet

SteveBentley wrote: »

If you have a mortgage the lender will probably insist on you having buildings insurance, regardless of whether it's freehold or leasehold

It's probably more accurate to say "the lender will insist on buildings insurance being in place", rather than the borrower necessarily having his/her own cover. Lenders are more than happy to accept block buildings insurance cover on flats, as long as it's index linked, covers the usual risks etc.