leasehold property buildings insurance

mbiranek

In one of Martins recent shows on ITV, he mentioned that for leasehold property that the landlord was responsible for taking out buildings insurance. I presume therefore the landlord is responsible for valuing the property and payment of the premium if I understood his comment correctly.

I currently live in a development of shared ownership flats where the owners can either rent or take up equity in 25% chunks, so some are part owned while others are fully owned on leases.

The landlord makes us value our own property from time to time but provides absolutely no guidance as regards to current market value.
Each tenant is charged with the insurance premium of the insurance company chosen by the landlord on an annual basis. Therefore all tenants are responsible for insuring and paying for the buildings insurance on their own leasehold property. 

Is this arrangement correct as it seems to contradict the comment made on Martins ITV programme? I emailed Martins ITV programme martinlewis@itv.com several weeks ago but sadly no reply!

Bue21

My understanding is that, although freeholders/landlords are responsible for insuring the building, the cost for this will invariably be passed on to leaseholders. This could be as part of the ground rent or service charges. It sounds to me like the arrangement you have is just a little more transparent. I should add I have no legal qualifications in this area though - just helped manage a block of flats at one time!

eddddy

Your lease will tell you who is responsible for arranging buildings insurance.

With blocks of flats, it's almost always the landlord/freeholder who is responsible for arranging buildings insurance.

mbiranek said:

Each tenant is charged with the insurance premium of the insurance company chosen by the landlord on an annual basis. Therefore all tenants are responsible for insuring and paying for the buildings insurance on their own leasehold property. 

Typically, the landlord/freeholder will take out a single insurance policy for the whole building/block of flats. Then each flat owner (leaseholder) will pay a share of the premium.

For example, if there are 20 flats, each flat owner might pay 1/20th (or 5%) of the premium.  Your lease will tell you what fraction or percentage you have to pay.

(Or the landlord/freeholder might insure multiple buildings/blocks of flats on a single insurance policy. So your share might be calculated differently.)

mbiranek said:

The landlord makes us value our own property from time to time but provides absolutely no guidance as regards to current market value.

I'm not sure what you're referring to here. Buildings insurance isn't based on market value. It's based on the cost to re-build the building.

For example, if the whole building/block of flats was destroyed by a fire, how much would it cost to re-build everything?

The only thing I can guess is that the landlord/freeholder is asking you to value any improvements you've made to your flat. For example, if you've installed a luxury kitchen, luxury bathroom, etc.

Because the value of those might need to be added to the re-building cost on the insurance policy. Because if the building is destroyed by fire, you would want your flat rebuilt with an equivalent luxury kitchen, luxury bathroom, etc.