Council leasehold buildings insurance help

lmh503

Hi, 
I am looking for some advice to see if I need to pursue this matter.

We are leaseholders of a 2 bed flat. Our freeholders are Bournemouth Council. Our buildings insurance is arranged by the council, and we pay the premium, so we have no say or input in the arrangements.

Previously, the premium had been under £150 for the year, but last year the council put the contract up for tender and it is now being arranged through Protector. The premium then shot up to £293, and we have been quoted £313 for this year. This really seems excessive to me for a 2 bed flat. I complained to the council, but they said their hands are tied.

For context, I checked with family members who are paying much less for whole detached houses.

Is it worth me trying to complain directly to Protector to challenge the high premium? Or taking the matter to the financial ombudsman? Or would this be futile as they have the whole contract for Bournemouth Council.

Thanks 

Mark_d

I am also a leaseholder.  I pay ground rent to the freeholder.  I pay a service charge to the management company.

The service charge includes maintenance of the building, the ground, and insurance for the building.  And just like with a regular insurance policy, there is a balance to be had between the premium and the excess.

Are the figures you quote purely for your share of the building's insurance?

Insurance prices can increase significantly if there's now reason to believe the building had a higher chance of fire (eg. with certain type of cladding) or if there's a higher chance of collapse (eg. with RAAC).

daveyjp

Insurance has increased across all sectors, as a public body the Council will have tendered the contract and chosen a provider which met its requirements for cost and quality of service.

As long as the tender process was done correctly there isn't much you can do other than ask for how the cost has been arrived at to ensure you are being charged the correct amount for your type of property.

Comparison with houses isn't useful.  If one detached house has a fire it affects one unit, if one flat has a fire it could affect dozens and rebuild costs are potentially much higher for flats than houses.

herebeme

The increase in building insurance for leaseholders is affecting leaseholders across England. Zurich withdrew from the market and in most council regions the only insurer to express interest is Protector, so they can essentially set whatever rate they want as the councils are required by law to take out insurance. If you look at the policy document you’ll also notice the excess has gone up massively too. 

A lot of the increase in premiums is driven by risks which are related to leaks from above (rising numbers of claims), rise in fraudulent claims, fire safety risks, and lack of investment in housing stock which has a knock on effect in terms of risk to building infrastructure. 

Many councils are also unable to provide sufficiently detailed information per building, so the quotes to the council are based on total stock then averaged back over all properties. So if you are in a high-rise you probably got a relatively cheap premium, if you are in a Victorian conversion you probably got a raw deal. 

Your price for 2 beds is less than my 1 bed in London (£650)

Complaining to Protector is pointless. 

If you have lots of energy and time, becoming involved with the local council ie standing for election and / or taking a job on the council housing team will enable you to attempt (likely futilely) to change things from within. 

DullGreyGuy

Ours is £483 for a 2 bed flat leasehold (private)

lmh503 said:

For context, I checked with family members who are paying much less for whole detached houses.

If their neighbour has a burst pipe how much water damage will their detached house get? If they have a fire how about then?

Flats are more expensive to insure because your neighbour upstairs has a major burst pipe then you are also going to have issues, potentially the people below you too. Thats not 1 set of alternative accommodation required but 3 whilst works are done. 

Similarly the cost of building a block of flats (which includes having to safely knock down the existing building) is more complex to deal with than a free standing house. 

Finally, its also a form of commercial insurance and the cost sensitivity and competitive pressures are notably different in this space -v- mass market consumer insurance.

DDav7

Hi lmh503   I have just discovered the problem over buildings insurance for council owned leasehold flats.  Our site of 27 retirement flats is owned by Somerset Council.  It has always been totally leasehold and was not part of the 'right to buy' so never part of social housing.   They changed to Protector Insurance from 1.4.23 with a 3 year contract..  However, they failed to complete the Section 20 Consultation, so are limited to charging us £100 each for insurance.  Didn't even notify the increase in charge until March this year.    I queried what the 'full' premium would be - stated as £8,718.42 for the whole site!  That means an average individual annual charge of around £322 (2 beds a bit higher and one beds a bit lower).  The premium we paid for the site for the Year end 31.3.23 (with Zurich) was £755.  Previous years were similar level.  That is an increase of  1,094% !!!!  Even the 'reduced' amount of £100 means a 258% increase.  Although the council are reluctant to say how they have calculated the premium, I have got enough figures from them to work it out.  They have calculated what percent of the total council leasehold stock rebuild cost relates to our site.  They have then applied that percentage to the Council's total premium for leasehold stock.  No account taken of location, risk factors etc.  So us pensioners will be subsidising those who live in high risk, high premium areas.  It is an absolute disgrace.  I fail to see that this satisfies the legal requirement for reasonableness.  However, I am not sure I have the energy to take this to tribunal or any other residents here.  This is theft from those least able to fight back.