Building insurance

lpegden

Hi! Wonder it I could get some advice.
I'm in the process of buying a leasehold flat. It's one of two in a building. In the lease, it says it's the responsibility of the landlord to take out building insurance. This hasn't been the case. For the past four years (maybe longer) the vendor, and the other flat owner, have been taking out building insurance for their parts of the building. My solicitor has asked the landlord to take on this responsibility. She has refused, saying she doesn't want anything to do with the day to day running of the building (it's part of a portfolio of buildings.)

The vendors solicitor is suggesting amending the lease to state that it is my responsibility to insure the flat (at my cost!). My solicitor has also suggested that if I go down this route, I should take out contingent building insurance.

Overall all, my solicitor is saying this situation (flat owners insuring their individual parts) isn't common and it's far from ideal. She says it's crazy that we're being forced to make a perfectly good lease 'worse'. That I might have trouble remortgaging, selling etc not to mention if something happened to the house and having to navigate two separate policies. She has advised me to pull out, as well as a partner of hers. 

Alternatively the vendor (also a solicitor) is saying that this is situation is common. Indeed I know three friends with the same arrangement. During their purchases, the issue of the two flat owners insuring their individusl parts never came up. So is this common or not?!

I know it's about appetite for risk, but does anyone have advice? Pull out it plough on? I have to make a decision today and feeling very unsure.

princeofpounds

It's not a good sign if the freeholder is determined not to live up to their duties. What happens if major works need doing, and the freeholder 'doesn't want anything to do with the running of the building'. That's what freeholders are FOR.

Of course, under the terms of the lease they are obliged to get involved. But do you really want to take them to tribunal to enforce it?

Your solicitor is right that it is best practice (and also better value) to insure the whole block - it prevents insurers arguing over responsibility for joint issues. But it's not unheard of for flat leaseholders to arrange insurance individually. It's not so much this specific problem that would make me wary, but the attitude it stems from.

You could potentially offer to buy out the whole freehold and take over building management. But I bet they say no - wanting the benefits of being a freeholder and none of the obligation.

Sandtree

It is more common on converted houses etc with a small number of units, its very rare (outside of scotland) on larger blocks of flats with notable common areas etc. Even still, most freeholders take their responsibility to insurer the whole property appropriately seriously.

You clearly need to take your solicitors advice, after all thats what you are paying them for. If you are going to be the one insuring it then the lease may well have to change to create an insurable interest in the property. Secondly I’d certainly be getting advice from your solicitor on how to calculate the rebuild cost and how claims on core elements such as the roof or foundations are dealt with if the two units are independently insured. 

loubel

I agree. There's a big difference between a lease set up for self-management and a freeholder ignoring their responsibilities. If the freeholder doesn't want to bother with insurance then what else will they ignore?! The leaseholders could buy the freehold or obtain right to manage to tidy things up,  but neither of these will be a quick fix. If your solicitor is saying don't buy then take their advice! 

caprikid1

"Alternatively the vendor (also a solicitor) is saying that this is situation is common. Indeed I know three friends with the same arrangement. During their purchases, the issue of the two flat owners insuring their individusl parts never came up. So is this common or not?!"
This would worry me a bit, is the Vendor's solicitor a friend of the Vendor ? Same firm ? I bet there is history , it's in his interest to say this is not a problem crack on.