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CSM0nk3yCSM0nk3y Forumite
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MoneySaving Newbie
Hello,

I own a leasehold ground floor flat in Victorian terrace with the upstairs flat holding the freehold for the property. The elderly upstairs owner had to sell due to health issues and whilst dealing with his solicitor to extend my leasehold prior to the sale, I was charged for half of the buildings insurance for the next year.
I had previously arranged my own buildings and contents insurance for my flat, which is due to expire shortly.
Is this a common thing, to have a shared building insurance? Do I need to change my new insurance to just my contents cover? It's my 1st property so it's all a bit new to me.
If the new owners increase the value of the upstairs flat, would I end up paying for it in a higher premium?

Thanks

Richard

Replies

  • edited 12 October at 9:42PM
    user1977user1977 Forumite
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    edited 12 October at 9:42PM
    What does your lease say about insurance? It is normal (though not ubiquitous) for the freeholder to arrange buildings insurance for the whole building and charge you a proportion. Wasn't this explained to you by your solicitor when you bought?
  • eddddyeddddy Forumite
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    CSM0nk3y said:

    If the new owners increase the value of the upstairs flat, would I end up paying for it in a higher premium?


    As above, the lease will tell you who is responsible for buildings insurance. 

    Typically, if it's a converted terraced house, it's likely to be the freeholder who insures. Your lease will tell you the percentage of the cost that you have to pay (but as there are 2 flats, it's likely to be 50%).


    You are only required to contribute to the cost of insuring the building as it was when the lease was granted. If the upstairs owner makes improvements (e.g. luxury kitchen and bathroom, loft conversion), you don't have to contribute towards any increase in the premium that results from that.


    (But if they do something like covert the loft, maybe you want to renegotiate other aspects of the lease - like whether the split in all costs should change from 50/50 to 60/40 etc.)




  • SandtreeSandtree Forumite
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    The issue with buildings is they are a whole thing and, for example, if the flats were reversed and there was subsidence how could your insurers as the covers of the top floor deal with the root cause that is under the flat they arent insuring? Worse still if the building was gutted with fire and needed to be rebuilt how could your insurers only rebuild the upper floor if it turned out the person in the lower flat was uninsured? 

    Double check your lease but its normal practice outside of Scotland for the freeholder to insure the whole building and then charge the leaseholders their share. Even in scotland its become more common for the factoring company to do this.
  • CSM0nk3yCSM0nk3y Forumite
    2 Posts
    First Post
    MoneySaving Newbie
    Thanks for answers, it now makes sense regarding the whole building being covered and the charges being split.
    The previous freeholder was very elderly and I wasn't sure if the insurance was in place, hence why I took out cover for my flat and contents, but in my lease extension paperwork earlier this year, I can see I have paid for half of the whole building insurance until next year.
    I will chat with the new freeholders when they finish moving in about looking for a good deal when this policy expires.

    Thanks again for the help  :)
  • eddddyeddddy Forumite
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    CSM0nk3y said:

    I will chat with the new freeholders when they finish moving in about looking for a good deal when this policy expires.


    If the freehold building has a new owner, I'd have thought the old freeholder would have to cancel their policy, and the new freeholder take out a new one - maybe others can confirm that.

    If that's correct, you should make sure that your share of the new premium is adjusted correctly


    e.g. If you paid the old freeholder for 12 months cover, but you've only had 8 months cover so far - you shouldn't have to pay the new freeholder anything for the next 4 months of cover.

  • SandtreeSandtree Forumite
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    eddddy said:
    CSM0nk3y said:

    I will chat with the new freeholders when they finish moving in about looking for a good deal when this policy expires.


    If the freehold building has a new owner, I'd have thought the old freeholder would have to cancel their policy, and the new freeholder take out a new one - maybe others can confirm that.

    If that's correct, you should make sure that your share of the new premium is adjusted correctly


    e.g. If you paid the old freeholder for 12 months cover, but you've only had 8 months cover so far - you shouldn't have to pay the new freeholder anything for the next 4 months of cover.

    Depends on who/what the freeholder is... its not uncommon for it to be a company and therefore the new owner becomes the shareholder and director and the existing insurance can continue as the owner is still the company.
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