Flat owner responsible for building insurance for maisonette flat - normal or not?

lpegden

Hi

In the process of buying a maisonette flat (one of two flats in the building). I understand usually the freeholder is responsible for taking out building insurance. In my case, I would be responsible for taking out building insurance for my part of the building. I've been advised I would also need to take out contingent building insurance. 

I've been warned by my solicitor that this arrangement can put off lenders/ future buyers. But I also know several people with this arrangement...so how normal is it? And would people stay clear?

NameUnavailable

Who is the freeholder and why aren't they arranging the insurance of their property?

greatcrested

It's not standard, but is relatively common. A guess: 20% of (generally) smaller buildings?

It's far less practical. If the buildig burns down and each leaseholder has insured their flat, the two (or more) insurers can get into arguments about which pays how much.

And if the other leaseholder has failed to insure their half, how does your insurer re-build half a property....?

But if that's what the lease specifies, then that's what must happen.

eddddy

Maisonettes - where there is a downstairs maisonette and an upstairs maisonette - often seem to have this kind of arrangement for insurance in the leases

Also, you'll probably find that the lease makes the downstairs leaseholder responsible for maintaining the foundations and ground floor structure, and the upstairs leaseholder responsible for maintaining the upstairs structure and the roof.

i.e. The freeholder might have no maintenance responsibilities at all, and no responsibility for insuring - so there would be no service charge.

As you probably realise, the contingent buildings insurance is intended to protect you against your neighbour failing to insure adequately.

(But you and your neighbour could jointly agree to insure the whole building under one policy, if you want.)

lpegden

Thank you both for your replies I appreciate it. It sounds like this is a fairly normal arrangement for maisonettes. My solicitor is advising me against going ahead on this basis, which seems fairly extreme?! 

lpegden

NameUnavailable said:

Who is the freeholder and why aren't they arranging the insurance of their property?

I'm not sure, a woman... apparently she has a few properties with the same arrangement. There's no ground rent and I would 'own' the bricks/ foundation of the flat and therefore responsible for any work. Basically she wants nothing to do with the property.

eddddy

lpegden said:

NameUnavailable said:

Who is the freeholder and why aren't they arranging the insurance of their property?

I'm not sure, a woman... apparently she has a few properties with the same arrangement. There's no ground rent and I would 'own' the bricks/ foundation of the flat and therefore responsible for any work. Basically she wants nothing to do with the property.

It's a bit misleading to say "she wants nothing to do with the property".

It might be more accurate to say "the leases don't allow her [the freeholder] to have anything with the property, even if she wanted to".

One option to consider is that you and your future neighbour could get together and buy the freehold, and then manage the building and insurance in whatever way you choose.

(But there seem to be an increasing number of posts about problems with "shared freeholds" - essentially where one of the joint-freeholders won't cooperate.)

GDB2222

lpegden said:

Thank you both for your replies I appreciate it. It sounds like this is a fairly normal arrangement for maisonettes. My solicitor is advising me against going ahead on this basis, which seems fairly extreme?! 

When you come to sell, your buyer will most likely be getting exactly the same advice. At best, it will make the property harder to sell, and it will possibly require you to sell at a discount. 

I would not want to be paying full price for what is effectively a defective property. On the other hand if the price you are paying is bargain basement then I would probably go ahead. Unfortunately, in the current market, I expect that you are paying full whack.

lpegden

eddddy said:

lpegden said:

NameUnavailable said:

Who is the freeholder and why aren't they arranging the insurance of their property?

I'm not sure, a woman... apparently she has a few properties with the same arrangement. There's no ground rent and I would 'own' the bricks/ foundation of the flat and therefore responsible for any work. Basically she wants nothing to do with the property.

It's a bit misleading to say "she wants nothing to do with the property".

It might be more accurate to say "the leases don't allow her [the freeholder] to have anything with the property, even if she wanted to".

One option to consider is that you and your future neighbour could get together and buy the freehold, and then manage the building and insurance in whatever way you choose.

(But there seem to be an increasing number of posts about problems with "shared freeholds" - essentially where one of the joint-freeholders won't cooperate.)

Well... I have been a bit misleading actually (was trying to simplify things!) because actually the lease currently states it's her responsibility to insure the building. She hasn't been, it been the two flat owners. We've asked her to, she refuses, so yeah we'd have to get a deed of variation. So yeah, she's very much choosing not to have anything to do with the property...

NameUnavailable

lpegden said:

NameUnavailable said:

Who is the freeholder and why aren't they arranging the insurance of their property?

I'm not sure, a woman... apparently she has a few properties with the same arrangement. There's no ground rent and I would 'own' the bricks/ foundation of the flat and therefore responsible for any work. Basically she wants nothing to do with the property.

I know you have replied further but I was going to respond to this point - if you have a lease you own the lease, that is you own a pile of paperwork that allows you to live in the property subject to various obligations. You do not own any of the property or ground.

Your freeholder is absolutely responsible for the buildings insurance - it's her building - as well as maintenance albeit that she may be happy to let the leaseholders arrange it between themselves. The details will be within the lease but it is ultimately the freeholders responsibility regardless.

As they are not interested in the property why not make an approach now to buy the freehold - she should be happy to sell it for little or nothing?

greatcrested

lpegden said:

eddddy said:

lpegden said:

NameUnavailable said:

Who is the freeholder and why aren't they arranging the insurance of their property?

I'm not sure, a woman... apparently she has a few properties with the same arrangement. There's no ground rent and I would 'own' the bricks/ foundation of the flat and therefore responsible for any work. Basically she wants nothing to do with the property.

It's a bit misleading to say "she wants nothing to do with the property".

It might be more accurate to say "the leases don't allow her [the freeholder] to have anything with the property, even if she wanted to".

One option to consider is that you and your future neighbour could get together and buy the freehold, and then manage the building and insurance in whatever way you choose.

(But there seem to be an increasing number of posts about problems with "shared freeholds" - essentially where one of the joint-freeholders won't cooperate.)

Well... I have been a bit misleading actually (was trying to simplify things!) because actually the lease currently states it's her responsibility to insure the building. She hasn't been, it been the two flat owners. We've asked her to, she refuses, so yeah we'd have to get a deed of variation. So yeah, she's very much choosing not to have anything to do with the property...

No - not 'a bit misleading'.

You have been very misleading by omitting this critical infomation! It changs everything.

The insurance is not the responsibility of the flat owners (leaseholders), and the whole issue of whether it is common for them todo this seperately is irrelevant.

There are legal mechanisms for forcing a freeholder to comply with their legal obligations.

There is also the option for the two leaseholders to apply for RTM.