Shared ownership and buildings insurance

ricky_v

Hello,
I live in a property half owned by me (well the mortgage company), the other half owned by a housing association.

When I took out buildings insurance the mortgage company told me the rebuild value for insurance purposes is £70,000, so naturally when taking out insurance I told them the rebuild value is £70,000.

Recently I've had a notice of the rent increase for the half I don't own. Attached with this notice is the summary of cover under their buildings insurance policy.

This may seem obvious to you, but should I only get buildings insurance to cover up to £35,000? As it seems to me that I really don't need insurance cover for £70,000, as half is already insured.

Many thanks

Ricky

Mrs_Arcanum

You are responsible for the whole insurance. You could try re-charging them for their half but then they would just add the cost (plus 10 or 15% admin) onto the service charges so you would end up worse off.

G_M

ricky_v wrote: »

Hello,
...
Recently I've had a notice of the rent increase for the half I don't own. Attached with this notice is the summary of cover under their buildings insurance policy.

This may seem obvious to you, but should I only get buildings insurance to cover up to £35,000? As it seems to me that I really don't need insurance cover for £70,000, as half is already insured.

So they are insuring the building? For how much? If it is the full rebuild value (£70K) then clearly you do not need to insure as well!

If it is for less, then clearly they are under-insuring, in which case either :
a) you need to insure to make up the difference or
b) you need to persuade them to increase their cover.

But I suggest as a starting point you read the contract you have with the HA to establish who is actually legally responsible for insuring....

Hump

Is is a flat or a house?

catieeb06

With most (if not all) Shared Ownership properties that i've dealt with the service charge on both houses and flats has also covered the Buildings Insurance and therefore the client hasn't had to arrange for their own, only contents insurance and that's if they wanted it.

Double check with the Housing Association.

ricky_v

Many thanks for the replies,

to Hump the property is a semi-detached bungalow.

G_M the only contract as such is the contract dated back to 1984 with the "Warrington and Runcorn development corporation" (I guess when the estate was built) to the first buyer who paid a tidy sum of £9,000:rotfl:which basically says the lessee shall at his own expense (or through the lending institution) insure the deemed premises in the joint names of the lessee the corporation and any mortgagee of the deemed premises.....(and so on for a couple of more pages) which tells me that I'm responsible for my half, and the HA is responsible for their half, but there again I'm not fluent in legaleese;)

The insurance summary details what causes are covered, the sum insured is £154,019,297 which isn't just my property :rotfl: I imagine it's the entire HA's stock.

Double check with the Housing Association.

I think that's best however it seems odd that the HA is responsible for the whole property in terms of insurance as you said catieb06. I doubt that in the event my house collpases that the HA will take liability for my mortgage, as it isn't their problem. All they care about is their half of the property, not my half which is my responsibility. Mrs Arcanum staes I'm responsible for the whole value, which could be true as I'm responsible for any maintenance of the property, dispite being half rented.

I'll contact the HA by letter to get the answer in writing. I'm in no hurry to find out the what what as I've paid for the insurance in full until November, however it would be useful to know by the time I renew.

Again many thanks for your replies.

Hump

So you will be responsible for the repairs and maintenance of the structure of the building. The shared ownership lease will require the housing association to insure the building and reclaim the cost via the service charge (which will probably be the entire service charge). The housing association will say that the cost they pass onto you will be competitive because they are able to get a reasonable rate due to the quantity of business they have with the insurer. See http://www.direct.gov.uk/en/HomeAndCommunity/BuyingAndSellingYourHome/Leaseholdproperties/DG_193039 and the section on shared ownership leases

Richard_Webster

Usually a SO lease would require the HA to insure the property and you would pay the proportion of their block insurance attributable to the property.

If your lease is unusual and you have to insure, then you should point this out to the HA and ask them to stop charging you for insurance.

ricky_v

Many thanks for the replies,

I'll shoot a letter off to them soon, and see what they come back with. I've insured simply because of the mortgage/investment. I diddn't fancy paying off a £28k mortgage and paying thousands for a smoldering crater:rotfl:the question is, in the event of my home turning into a smoldering crater....

Am I wholly responsible for the £70,000 rebuild cost, therefore insure for £70,000? (So why is there block insurance from the HA for their half?)

Am I half responsible for the £70k, therefore only need to insure £35k.

Is buildings insurance included with the lease?

Thinking back it seemed odd that contracts were exchanged, money paid to the seller, and moved in and not once did the mortgage company ask about proof of insurance before transfering the money (I diddn't get insured until about a month later). But that might be the norm.

Again, many thanks, and thanks to Hump for that link, I couldn't find anything on insurance TBH however I now know that the annual rent cost is 3% of market value of their share.