Building Insurance on leasehold

Hendry123

Hi all,


I've just purchased my first property last month which is a flat in a converted house (4 flats). I've paid the ground rent and service charge so far and have just received a bill from the freeholder's agent asking for £600.00 for building insurance. Firstly does the service charge usually include insurance for most properties? Can I find out what the service charge is broken down into?


I thought this may be a bit excessive and when I ran a comparethemarket comparison it turns out that I could get buildings insurance for as little as £150 and, out of about 20 quotes, only two were above £600 (just) with the rest being between £150-£300.


I think I've been quite lenient with my estimates of the rebuild cost etc (put this as £250k - it wont be anywhere near this much!) and put the value of the flat as what I've paid for it £355k. It is a fairly small one bed flat and so the £600 does seem quite excessive to me.


I've done a bit of research and it's my legal right to receive a copy of the insurance from the freeholder. I'm also apparently able to challenge through the Residential Property Tribunal if required but don't really want to do down that road...


Can anybody offer me advice as to what my next steps should be please? I had planned to ask for a breakdown of the insurance policy before agreeing to pay and potentially arguing the amount but not entirely sure if there is something else I can do.


Thanks


Tim

katejo

Hendry123 wrote: »

Hi all,


I've just purchased my first property last month which is a flat in a converted house (4 flats). I've paid the ground rent and service charge so far and have just received a bill from the freeholder's agent asking for £600.00 for building insurance. Firstly does the service charge usually include insurance for most properties? Can I find out what the service charge is broken down into?


I thought this may be a bit excessive and when I ran a comparethemarket comparison it turns out that I could get buildings insurance for as little as £150 and, out of about 20 quotes, only two were above £600 (just) with the rest being between £150-£300.


I think I've been quite lenient with my estimates of the rebuild cost etc (put this as £250k - it wont be anywhere near this much!) and put the value of the flat as what I've paid for it £355k. It is a fairly small one bed flat and so the £600 does seem quite excessive to me.


I've done a bit of research and it's my legal right to receive a copy of the insurance from the freeholder. I'm also apparently able to challenge through the Residential Property Tribunal if required but don't really want to do down that road...


Can anybody offer me advice as to what my next steps should be please? I had planned to ask for a breakdown of the insurance policy before agreeing to pay and potentially arguing the amount but not entirely sure if there is something else I can do.


Thanks


Tim

£600 sounds very high. Unfortunately overcharging leaseholders for insurance is very common. My freeholder did it for all the 12 years that I lived there and he is still doing it for the current leaseholder. Have you contacted Lease, the leasehold advisory service? http://www.lease-advice.org/wizard/?step=69

This link takes you to a page about building insurance payment.

G_M

You are getting quotes for rebuilding a flat (I assume). His quote is for rebuilding the entire building divided by number of flats (again I assume).

They will not be the same.

Having said that it does sound high.

Try getting quotes for the whole building, assuming you know the re-build cost.

Firstly does the service charge usually include insurance for most properties? Can I find out what the service charge is broken down into?

What does the lease say?

You should get an annual statement showing breakdown of service charge costs. I'm not sure you are entitled to see last year's (though you should have asked for a copy during conveyancing!!!) and may need to wait for the next annual statement. But no harm asking for a copy.

Have you spoken to other flat/leaseholders? What do they say/think?