Fire destroys leasehold flat

finst3r

I have an elderly family member who has been living in a leasehold apartment in a retirement complex. The complex was recently destroyed by fire and her apartment no longer exists. The plan is for the complex to be rebuilt over the next 2+ years.
The landlord organisation has buildings insurance, which covers re-building of the complex. The provision in her lease is that the landlord “…will in the event of the Building being …destroyed by fire …as soon as reasonably practicable …lay out the insurance monies in the repair rebuilding or reinstatement of the same”
This begs several questions for me:
- Does she has to wait until her apartment is re-built; or can she expect a share of insurance payout that will enable her to buy somewhere else in the meantime (is that what 'reinstatement of the same' means in this context'?
- Should she expect market value if she does have a share of the payout, given the landlord is still selling the same apartment for the same price elsewhere?
- Can she reasonably expect her rent in temporary accommodation to be paid by the landlord while she waits for her apartment back?
- Is it reasonable that they continue to charge ground rent and various service charges for an apartment that doesn't exist.
Any help would be most welcome!

D_M_E

What you quote means that the block will be rebuilt as it was before the fire, nothing more, I think.

She needs to be provided with a copy of the insurance document and read what it says with regard to provision of alternative accommodation in the event of, for example, destruction of the block by whatever means - are the leaseholders covered for alternative accommodation until the block is reinstated, and does it also cover all fees until such replacement?

did she also have a separate contents policy for her belongings?

Personally, I would dispute the need to pay maintenance fees and such for an apartment block which no longer exists - this cannot be reasonable.

TripleH

Also, the insurance will only pay out the rebuild cost of the flat (which is usually less than its market value). You also need to check what fixtures and fittings will be provided when the flat is rebuilt. You may just get an empty shell, or a basic cheap kitchen and bathroom provided (with very little variation for leaseholders unless they pay). Your relative I believe is expected to have to claim on their contents insurance for some fixtures and fittings (above is my understanding only and may not be completely accurate).

sal_III

Her Lease most likely entitles her to have the property she is leasing rebuild at the Freeholder's expense and some costs while the process is finished - check the details.

The leaseholder is not going to get any payout, as the policy holder is the Freeholder. The insurance payout is the cost to rebuild the block and will be a fraction of the market cost of the properties in it. For example the insurance value of the our block of about 20 flats is ~2 million with average price of about 500k so 1/5th, as that is how much it will cost to rebuild it, the rest is land and developer profit.

I doubt that the Freeholder will allow her to use one of the unsold/new properties on the development as the alternative accommodations are most likely covered by the insurance and makes no financial sense for them to offer that.

I would expect the ground rent to be waived while the flat is uninhabitable/non-existent, but it might be open to debate. Service charge only goes toward actual incurred cost and/or sinking fund, plus small amount (like £50-100/y) in management fee. I wouldn't expect any running costs for non-existing building, but the management fee might be open to debate, based on what the contract with the management company states.

finst3r

Thank you to you all for your helpful replies - especially for their consistency (with each other!) and with other pieces of the jigsaw I am starting to put together.
I have since had sight of the buildings insurance summary cover and it does provide for alternative accommodation costs (across the residents as a whole). The contents insurance is also dealt with (in separate cover). And, together with the leasehold agreement, we should be clear about where the different fixtures and fittings 'sit'.
Again, thank you - it is reassuring to have legalese translated into layman's terms! I am generally much clearer.

eddddy

finst3r wrote: »

- Is it reasonable that they continue to charge ground rent and various service charges for an apartment that doesn't exist.

The management company might well be the people who liaise with the insurers and contractors during the works to rebuild the building.

That's likely to involve more work than their usual management activities, so their fees might well increase.

And the management co might decide that they need to instruct an insurance assessor (to challenge the insurance company's loss adjuster), so those fees could also be recharged to the leaseholders.

PasturesNew

A horrendous situation.

I am assuming it's this one.
I am assuming you are aware of this information page.
https://www.yourhousinggroup.co.uk/yhg-news/beechmere-fire-update/

I am posting this because ... we shouldn't assume - and, in your situation, you might not have had time to think straight and gather all information.